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
Date: 1998-04-15
Institutions: European Commission
Subjects: Central and Eastern Europe, EU relations, cooperation agreement (EU), development aid, economic situation

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 
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. 

the  Bosnia-Herzegovina  Constitution, 

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 
There  has  been  no  progress  in  relation  to  the  exercise  of  certain  fundamental  human 
unaddressed. 
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 
important  step,  and  the  working  parties  established  on  this 
Council  on  20/21  March  1998  was  an 
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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