COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 15.04.1998 
COM(1998) 237 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
OPERATIONAL CONCLUSIONS 
Regional Approach to the countries of South-Eastern Europe: 
Compliance with the conditions in the Council Conclusions of 29 April 1997 
Bosnia and Herzegovina, Croatia, Federal Republic of Yugoslavia, 
former Yugoslav Republic of Macedonia and Albania 

INTRODUCTION 
In the context of the Regional Approach to the countries of South-Eastern Europe', the Council 
established political and economic conditions^ to be fulfilled by these countries, as the basis for a 
coherent and transparent policy towards the development of bilateral relations with these countries in the 
field of trade, financial assistance and economic cooperation, as well as of contractual relations. 
The present Commission Conclusions are accompanied by a factual report^ which monitors compliance 
by Bosnia-Herzegovina, Croatia, the Federal Republic of Yugoslavia (FRY), the former Yugoslav 
Republic of Macedonia, and Albania with these conditions. For each, compliance has been monitored 
under the following headings: democratic principles; human rights and the rule of law; respect for and 
protection of minorities; market economy reforms; regional cooperation^ and, where relevant, 
compliance with obligations under the Dayton and Erdut Agreements and the Sintra and Bonn Peace 
Implementation Councils. 
While progress has been made in some areas, the compliance by some countries in the areas of 
democratic reforms, respect for human and minority rights, economic reforms and regional cooperation 
has been less than satisfactory. Improvements are also necessary with regard to the return of refugees 
and displaced persons to their place of origin, cooperation with the International Criminal Tribunal on 
former Yugoslavia, the implementation of the peace agreements (e.g. that agreements with the entities of 
Bosnia-Herzegovina must be made compatible with the Bosnia-Herzegovina Constitution, that 
functioning common institutions must be established in Bosnia-Herzegovina), Eastern Slavonia in the 
case of Croatia and the establishment of constructive dialogue with the Kosovo Albanians in the case of 
the FRY. 
At this time, the Commission has therefore concluded that the present level of relations with the 
countries covered by the Regional Approach should continue i.e. that there should be no extension of the 
autonomous trade regime (to FRY) or the PHARE programme (to Croatia or FRY), and no opening of 
negotiations for Cooperation Agreements (with Bosnia-Herzegovina, Croatia or FRY). 
1 Conclusions of the General A flairs Council of 26 February 1996, followed by a Commission report on 
common principles for future contractual relations with certain countries in South-Eastern Europe: Report from the 
Commission to the Council and the European Parliament, COM(96)476 final of 2.10.96 
2 Conclusions of the General Affairs Council of 29 April 1997 
3 Commission Staff Working Paper: Regional Approach to the countries of South Eastern Europe: 
Compliance with the conditions in the Council Conclusions of 29 April 1997: Bosnia and Herzegovina, Croatia, 
Federal Republic of Yugoslavia, former Yugoslav Republic of Macedonia and Albania [SEC( 1998)586 of 
30.03.98] 
A See the Commission Staff Working Papet : Second Report on Economic Relations between the countries of 
SouthEastern Europe concerned by the EU's Regional Approach SEC(98)381 of 27.2.98 which covers 
developments during 1997 
CONCLUSIONS 
On the basis of the factual report contained in the Commission Staff Working Paper on compliance, by 
the five countries concerned, with the conditions set out in the Council Conclusions of 29 April 1997 
[SEC (1998)586 of 30.03.98], the Commission has reached the following conclusions. 
Section 1 
1 Bosnia-Herzegovina 
1.1 General Assessment 
There has been progress on democratization and human rights, though significant pressure by the 
international community has been needed. Much, however, remains to be achieved. Particular attention 
needs to be paid to private property rights (linked to free movement and the return of refugees / 
displaced persons) and to fully independent public service television. 
The creation of a market economy proceeds, not without difficulties, but there is a clear lack of progress 
in establishing a regulatory framework. The conditions for the successful conclusion of the ongoing 
discussions with the IMF and other international financial institutions need to be met rapidly to avoid a 
serious handicap to further economic progress. Privatization has been heavily influenced by political 
considerations. 
Compliance with the Dayton Accords has been patchy, with missed deadlines and a clear reluctance on 
the part of the parties to implement certain commitments except under the powers of the High 
Representative. There must be free movement of citizens, including the return of refugees and the right 
of settlement, and determination to pursue interethnic reconciliation, if there is to be a lasting peace in 
the region. This has yet to be achieved, even if significant progress has been made in recent months. 
The appointment of the new government in the RS, committed to the Dayton process and putting a high 
priority on economic progress and refugee return, is a very substantial step forward. 
1.2 Operational Conclusions 
At present, given the improved respect for fundamental principles of democracy and human rights, 
Bosnia and Herzegovina continues to benefit from the autonomous trade preferences extended by the 
European Community. The maintenance of these benefits assumes continuing progress in these fields. 
In accordance with the Council Conclusions of 29 April 1997, PHARE assistance to Bosnia and 
Herzegovina is limited to projects in direct support of the peace agreements, as long as Bosnia and 
Herzegovina does not comply with the conditions relevant for access to full PI IARE assistance. Bosnia 
and Herzegovina is presently eligible for reconstruction assistance under the PHARE programme, 
targeted at reconstruction, institution-building and refugee return. Recent political developments in 
Republika Srpska have made it possible to attribute an increased share to Republika Srpska. A 
progressive extension of PHARE programmes will depend on the country's and the entities' compliance 
with the relevant conditionality. 
The time has not yet come to begin negotiations on a Cooperation Agreement with the Community. 
2 Croatia 
2.1 General Assessment 
There have been, in recent weeks, many statements of Croatian commitments to European norms and 
objectives, about progress in refugee return and the willingness to welcome citizens of all ethnicities, 
Dayton implementation, democratic reform and reconciliation. 
In practice, however, progress has not matched commitments. Increased respect for fundamental 
human and minority rights is needed, as well as a determination to apply democratic processes. There 
are certain key areas where outstanding commitments, had they been implemented in advance oi' this 
report, could have altered the conclusions e.g. reform of state broadcasting (to increase the distance 
between HRTV and the government and ruling party, and to open the way to alternative national TV 
stations); property issues (the much-promised reform of the Law on Temporary Takeover and 
Administration of Specified Property); refugee returns (where concrete proposals are awaited, and for 
which there is a long-standing offer of assistance); clarification of the amnesty law. The Government 
needs to persuade their own Croatian Serb citizens that they can safely remain in Croatia, without fear of 
harassment or intimidation; to convince refugees that they can return and remain in safety; to explain to 
local authorities and individuals that reconciliation must be implemented, at all levels - authorities in 
Zagreb are not responsible for individual acts of harassment or intimidation, but rather for creating / 
contributing to circumstances in which this occurs (either by act or omission). 
2.2 Operational Conclusions 
Croatia has, like the other countries of the Regional Approach, the real opportunity to achieve its 
aspirations. This, however, requires compliance with the relevant conditions, a matter which is entirely 
under its control. Without a clear commitment to and implementation of its obligations under the Dayton 
and Erdut Agreements, ethnic reconciliation and democratic reform, Croatia is continuing to seriously 
hamper its chances of realizing its European ambitions. 
At present, Croatia benefits from autonomous trade preferences extended* by the European 
Community. Unless Croatia makes progress in relation to the relevant criteria, and avoids moving away 
from the Conditionality criteria, the justification of these benefits may be questioned. 
Despite positive declarations by the Croatian authorities in recent months, the Commission considers 
that, at present, Croatia has not fulfilled the relevant conditions for additional progress in its relations 
with the Community, in particular the (even partial) lifting of the suspension of its eligibility for 
PHARE. Discussion of the possible opening of negotiations on a Cooperation Agreement is therefore 
also premature. 
3. Federal Republic of Yugoslavia 
3.1 General Assessment 
The picture is mixed, with contrasting developments in the two republics that make up the Federal 
Republic of Yugoslavia. 
The outcome of the various elections in Serbia in the second half of 1997 has led perforce to increased 
contacts between President Milosevic's party and at least some elements of the opposition. But the 
other democratic shortcomings identified in the Gonzalez Report of December 1996 remain largely 
unaddressed. There has been no progress in relation to the exercise of certain fundamental human 
rights. While there is a certain awareness of the need for market economy reform, and some initial 
efforts have been made, little has been done in terms of practical implementation, and there is still no 
credible commitment to reform. While certain efforts in relation to the establishment of a government 
in Republika Sprska are welcome, there has been no general improvement in relation to Dayton 
obligations. There has been a marked deterioration in the protection of the human and minority rights of 
Kosovo Albanians, with many casualties in recent police operations. While for almost the entire 
reporting period there has been no progress on Kosovo, heavy international pressure in recent weeks has 
resulted in some indications of movement with regard to the Education Agreement and dialogue. 
In Montenegro, by contrast, Djukanovic's inauguration has resulted in some evidence of a commitment 
to democratic reforms, although the time for assessment has, as yet, been short. There are indications of 
progress in relation to fundamental human and minority rights, and economic reforms, with good 
prospects regarding regional cooperation, both economic and political, with neighbouring states. A 
commitment has been given to contribute to respect for and implementation of all obligations under 
Dayton, including full cooperation with the ICTY. 
3.2 Operational Conclusions 
Recent events in Kosovo have led the European Union to adopt a Common Position (19 March) on 
various punitive measures and, in the event of the non-implementation by the FRY of international 
demands, the Union will move to further international measures. The Commission will take the 
appropriate initiatives to contribute to the implementation of this Common Position. 
Given the failure of the FRY, as a whole, to comply with the conditions relevant for inclusion in the 
autonomous trade regime, notably due to the lack of respect for the fundamental principles of 
democracy and human rights, the Commission does not consider that the FRY should, at present, be 
included in this regime. 
At present, the FRY as a whole has not fulfilled the relevant conditions for eligibility for the PHARE 
programme. Discussion of the possible opening of negotiations on a Cooperation Agreement is 
therefore also premature. 
Section 2 
4. Former Yugoslav Republic of Macedonia 
4.1. General assessment 
Taken overall the former Yugoslav Republic of Macedonia complies with democratic principles and the 
principle of regional cooperation and shows a credible commitment to continue on the path of 
democratization and good-neighbourly and cooperative relations within the region. A credible 
commitment can be observed in the fields of human rights and the rule of law, respect for and protection 
of minorities, market economy reform, but further progress is needed, particularly in the following 
specific areas: public administration reform including the judiciary and law enforcement, education for 
the Albanian minority; minority representation in the security forces; private sector development 
including the promotion of foreign direct investment; the banking sector. 
4.2. Operational conclusions 
The former Yugoslav Republic of Macedonia already benefits from regular PHARE assistance and has 
contractual links with the European Community on the basis of the Cooperation Agreement. The 
country will continue to benefit from Community assistance, notably in the framework of PHARE with a 
view to achieving further progress in the fields of democratization, human rights and the rule of law, 
respect for and protection of minorities, market economy reform and regional cooperation. It is important 
that the agreed programmes are fully implemented. The Commission will examine, together with the 
authorities of the former Yugoslav Republic of Macedonia, possibilities of specifically contributing 
through PHARE to further improvement of inter-ethnic relations in the country. In this context, support 
for the implementation of the Law on the Pedagogical Faculty at Skopje University will be considered. 
Regarding contractual relations with the Community, the Cooperation Agreement and the Agreement 
in the Field of Transport must be fully implemented. The holding of the first meeting of the Cooperation 
Council on 20/21 March 1998 was an important step, and the working parties established on this 
occasion will provide the appropriate framework for continuous discussion between both sides at expert 
level. Relations will develop on this basis, including in the framework of the Political Dialogue. A 
possible upgrading of relations between the Community and the former Yugoslav Republic of 
Macedonia will be considered at a later stage, taking account of the implementation of the Cooperation 
Agreement and of assistance under PHARE, as well as developments in the country inter alia in the 
above-mentioned areas. 
5. Albania 
5.1. General assessment 
Following the major crisis of 1997, the new government has shown a credible commitment to embark on 
a process of stabilization, recovery and democratization in the country. This process has started but has 
developed rather unevenly and is confronted with many structural problems which pre-date the crisis. 
The new government has made progress in terms of macro-economic stabilization which needs to be 
continued and underpinned by a medium-term structural reform programme currently being negotiated 
with the IMF. Rapid completion of the winding up of the pyramid schemes is expected. First sieps with 
respect to institutions and public administration arc encouraging but should be confirmed. Public order 
and the security forces remain, however, the subject of serious concern, and political normalization in the 
country leaves much to be desired. Law enforcement and progress in the field of individual civil rights 
will require the effective strengthening of the judiciary. Additional effort is also required regarding 
electronic media. Compliance with the principle of regional cooperation is satisfactory. 
5.2. Operational conclusions 
Albania will continue to benefit from Community assistance, notably in the framework ofPHARE with 
a view to achieving further progress in stabilization, recovery and démocratisation in the country, and to 
enhancing regional cooperation. The implementation of agreed programmes in particular in the fields of 
public administration reform, agriculture, large infrastructure and local community development is of 
crucial importance. In this context, it is important that Albania provides the necessary conditions in terms 
of public order and security. The stabilization and recovery process also presupposes continued efforts to 
reform the financial sector and to stabilize political life. 
Contractual relations with the Community are based on the 1992 Trade Cooperation Agreement and 
the connected Declaration on Political Dialogue. The second meeting of the Joint Committee on 23/24 
March 1998 highlighted the need to use this agreement more actively through annual Joint Committee 
meetings and, where appropriate, regular meetings of working parties. Further progress, especially in 
those political and economic areas where significant problems are still being noted, is indispensable 
before consideration can be given to intensification of relations with the European Community 

ISSN 0254-1475 
COM(98) 237 final 
DOCUMENTS 
EN 02 11 13 10 
Catalogue number : CB-CO-98-263-EN-C 
ISBN 92-78-35253-5 
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