CELEX: 52004PC0206
Language: en
Date: 2004-03-30
Title: Proposal for a Council Decision on the principles, priorities and conditions contained in the European Partnership with Serbia and Montenegro including Kosovo as defined by the United Nations Security Council Resolution 1244 of 10 June 1999 {SEC(2004) 376}

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                        Brussels, 30.3.2004
                                                        COM(2004) 206 final
                                           Proposal for a
                                     COUNCIL DECISION
   on the principles, priorities and conditions contained in the European Partnership with
    Serbia and Montenegro including Kosovo as defined by the United Nations Security
                           Council Resolution 1244 of 10 June 1999
                                  (presented by the Commission)
                                        {SEC(2004) 376}
EN                                                                                         EN
 ---pagebreak---                             EXPLANATORY MEMORANDUM
The Thessaloniki European Council of 19 and 20 June 2003 reiterated its determination to
fully and effectively support the European perspective of the Western Balkan countries and
stated that “the Western Balkans countries will become an integral part of the EU, once they
meet the established criteria”. It endorsed the Council’s Conclusions of 16 June 2003 on the
Western Balkans including the annex “The Thessaloniki Agenda for the Western Balkans:
moving towards European integration”, which aims at further intensifying relations between
the European Union and the Western Balkans, building also on practices used in the
enlargement process, inter alia through the introduction of European Partnerships. The
Commission has been invited to submit the first set of European Partnerships to the Council
for approval with the next Annual Reports on the Stabilisation and Association process (SAp)
due end of March 2004.
The European Partnership for Serbia and Montenegro including Kosovo as defined by the
United Nations Security Council Resolution 1244 is based on the provisions of Regulation
(EC) No. XXX/YY. It lists short- and medium term priorities for the preparations of Serbia
and Montenegro including Kosovo as defined by the United Nations Security Council
Resolution 1244 for further integration with the European Union identified in the
Commission’s 2004 Annual Reports and serves as a checklist against which to measure
progress. The European Partnership for Serbia and Montenegro including Kosovo as defined
by the United Nations Security Council Resolution 1244 reflects the current stage of
preparation of the country and is tailored to its needs in full compliance with United Nations
Security Council Resolution 1244. Serbia and Montenegro including Kosovo as defined by
the United Nations Security Council Resolution 1244 is expected to respond to the European
Partnership by preparing plans with a timetable and details of how it intends to address the
European Partnership’s priorities. The progress in implementing the priorities will be
monitored regularly by the Commission, notably in the SAp Annual Reports and through the
structures set up under the SAp.
The events that occurred in Kosovo in March 2004 are a major setback. These events confirm
the need for firmly anchoring Kosovo into the Stabilisation and Association Process. In this
respect, the European Partnership will contribute to provide the necessary guidance to ensure
a stable future for a secure, democratic and multi-ethnic Kosovo with its place in Europe. In
the light of further developments and of a thorough assessment of the causes and
consequences of recent events, the elements of the proposal related to Kosovo might need to
be adapted later on in consultation with the United Nations Interim Administration Mission in
Kosovo and other actors of the wider international community.
The European Partnership priorities should form the basis for programming of the financial
resources making up Community assistance, which will continue to be the assistance provided
for under existing financial instrument(s), in particular Council Regulation (EC) No
2666/2000 of 5 December 2000 (CARDS).
The proposed Council Decision has no financial implications.
In view of the above, the Commission invites the Council to adopt the attached decision.
                                                2
 ---pagebreak---                                           Proposal for a
                                    COUNCIL DECISION
  on the principles, priorities and conditions contained in the European Partnership with
   Serbia and Montenegro including Kosovo as defined by the United Nations Security
                            Council Resolution 1244 of 10 June 1999
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No xxx on the establishment of European
Partnerships in the framework of the Stabilisation and Association process1 and in particular
to Article 2 thereof,
Having regard to the proposal from the Commission,
Whereas:
(1)     The Thessaloniki European Council of 19 and 20 June 2003 endorsed the
        “Thessaloniki Agenda for the Western Balkans: moving towards European
        integration” where the drawing-up of European Partnerships is mentioned as one of
        the means to intensify the Stabilisation and Association process.
(2)     Council Regulation (EC) No xxx sets out that the Council is to decide, by a qualified
        majority and following a proposal from the Commission, on the principles, priorities
        and conditions to be contained in the European Partnerships, as well as any subsequent
        adjustments.
(3)     Council Regulation (EC) No xxx states that the follow up of the implementation of the
        European Partnerships will be ensured through the mechanisms established under the
        Stabilisation and Association process, notably the Annual Reports.
(4)     The 2004 Commission's Annual Report presents an analysis of the preparations of
        Serbia and Montenegro including Kosovo as defined by the United Nations Security
        Council Resolution 1244 for further integration into the European Union and identifies
        a number of priority areas for further work.
(5)     In order to prepare for further integration into the European Union, the competent
        authorities in Serbia and Montenegro should develop a plan with a timetable and
        details in terms of measures Serbia and Montenegro intends to take to this end. As
        Kosovo is at present under international interim administration pursuant to United
        Nations Security Council Resolution 1244, a separate plan addressing the priorities
1
        OJ L […], […], p. […].
                                                 3
 ---pagebreak---         concerning Kosovo should be developed under the authority of the United Nations
        Interim Administration in Kosovo.
HAS DECIDED AS FOLLOWS:
                                            Article 1
In accordance with Article 1 of Council Regulation (EC) No xxx, the principles, priorities and
conditions in the European Partnership for Serbia and Montenegro including Kosovo as
defined by the United Nations Security Council Resolution 1244 are set out in the annex
hereto, which forms an integral part of this Decision.
                                            Article 2
The implementation of the European Partnership shall be examined through the mechanisms
established under the Stabilisation and Association process.
                                            Article 3
This Decision shall take effect on the third day following its publication in the Official
Journal of the European Union.
Done at Brussels, […]
                                              For the Council
                                              The President
                                              […]
                                                4
 ---pagebreak---                                                 ANNEX
1.        INTRODUCTION
The Thessaloniki Agenda identifies ways and means of intensifying the Stabilisation and
Association process, inter alia through the introduction of European Partnerships.
Based on the Commission’s Annual Report, the purpose of the European Partnership for
Serbia and Montenegro including Kosovo as defined by the United Nations Security Council
Resolution 1244 is to identify priorities for action in order to support efforts to move closer to
the European Union within a coherent framework. The priorities are adapted to specific needs
and stage of preparation of Serbia and Montenegro including Kosovo as defined by the United
Nations Security Council Resolution 1244 and will be updated as necessary. The European
Partnership also provides guidance for financial assistance to Serbia and Montenegro
including Kosovo as defined by the United Nations Security Council Resolution 1244.
It is expected that Serbia and Montenegro including Kosovo as defined by the United Nations
Security Council Resolution 1244 will adopt plans including a timetable and details in terms
of how they intend to address the European partnership priorities. The plan should also
indicate ways to pursue the Thessaloniki agenda, the priorities on fighting organised crime
and corruption identified at the 2002 London Conference and at the Ministerial meeting held
in Brussels on 28 November 2003 in the framework of the EU-Western Balkans Forum and
the measures presented by each of the Western Balkan countries at the meeting of 5
November 2003 in Belgrade as a follow-up to the Ohrid Conference on integrated border
management.
2.        PRINCIPLES
The Stabilisation and Association process remains the framework for the European course of
the Western Balkan countries, all the way to their future accession.
The main priorities identified for Serbia and Montenegro including Kosovo as defined by the
United Nations Security Council Resolution 1244 relate to its capacity to meet the criteria set
by the Copenhagen European Council of 1993 and the conditions set for the Stabilisation and
Association process, notably the conditions defined by the Council in its Conclusions of 29
April 1997 and 21-22 June 1999, the content of the final declaration of the Zagreb Summit of
24 November 2000 and the Thessaloniki agenda.
3.        PRIORITIES
The Commission’s Annual Report assesses progress made and notes areas where the country
needs to increase its efforts. The priorities listed in this European Partnerships have been
selected on the basis that it is realistic to expect that Serbia and Montenegro including Kosovo
as defined by the United Nations Security Council Resolution 1244 can complete them or take
them substantially forward over the next years. A distinction is made between short-term
priorities, which are expected to be accomplished within one to two years, and medium-term
priorities, which are expected to be accomplished within three to four years.
                                                   5
 ---pagebreak--- The European Partnership indicates the main priority areas for the preparations of Serbia and
Montenegro including Kosovo as defined by the United Nations Security Council Resolution
1244 for further integration into the European Union, based on the analysis in the 2004
Annual Report. It should be recalled that where legislative approximation is concerned,
incorporation of the acquis into legislation is not in itself sufficient; it will also be necessary
to prepare to its full implementation.
The priorities concerning Serbia and Montenegro and the priorities concerning specifically
Kosovo are presented in the lists attached.
4.        PROGRAMMING
Community assistance under the Stabilisation and Association process to the Western Balkan
countries will be provided by the relevant financial instruments, and in particular by Council
Regulation (EC) No 2666/20002; accordingly, this Decision will have no financial
implications. In addition Serbia and Montenegro including Kosovo as defined by the United
Nations Security Council Resolution 1244 will have access to funding from multi-country and
horizontal programmes. The Commission is working with the European Investment Bank and
the International Financial Institutions, in particular the European Bank for Reconstruction
and Development and the World Bank, with a view to facilitate the co-financing of projects
relating to the Stabilisation and Association process.
5.        CONDITIONALITY
Community assistance under the Stabilisation and Association process to the Western Balkan
countries is conditional on further progress in satisfying the Copenhagen political criteria and
in particular progress in meeting the specific priorities of this European Partnership. Failure to
respect these general conditions could lead the Council to take appropriate measures on the
basis of Article 5 of Council Regulation (EC) No 2666/2000.
Community assistance shall also be subject to the conditions defined by the Council in its
Conclusions of 29 April 1997 and 21-22 June 1999, in particular as regards the recipients’
undertaking to carry out democratic, economic and institutional reforms.
6.        MONITORING
The follow up of the European Partnership is ensured through the mechanisms established
under the Stabilisation and Association process, notably the Annual Report on the
Stabilisation and Association process.
2
        OJ L 306, 7.12.2000, p. 1.
                                                6
 ---pagebreak---                                SERBIA AND MONTENEGRO3
       SHORT-TERM PRIORITIES
POLITICAL SITUATION
DEMOCRACY AND RULE OF LAW
•      Constitutional issues - Fully respect the Constitutional Charter and ensure the
       effective functioning of the state. In particular, fulfil all outstanding commitments
       laid down in the Constitutional Charter, notably the establishment of the State Court
       including agreement on the exact scope of its powers. Revise the republican
       Constitutions in line with the Constitutional Charter. Adopt the State Parliament’s
       Rules of Procedures and establish its committees. Ensure the financial viability of the
       state institutions, through regular financing in accordance with agreed principles and
       the preparation of individual institutional budgets (covering staff and operating
       costs).
•      Army reform - Adopt a defence strategy and military doctrine in line with
       democratic principles; prepare and adopt a transparent and appropriate legal
       framework to clarify the outstanding issue of military property.
•      Electoral law reform - In Serbia: complete the ongoing electoral law reform
       (including electorate register) to bring the electoral system up to international
       standards notably by revising electoral laws, in line with ODIHR recommendations
       and fully implementing legislation on financing of political parties.
•      Public Administration Reform:
       Strengthen and maintain administrative capacity of the institutions dealing with
       European integration at the state and republican level (in terms of staff, training,
       equipment) and improve co-operation among them.
       In Serbia: Adopt a comprehensive strategy on Public Administration Reform
       including a precise calendar of actions, in particular address civil service pay system
       reforms and related human resource development measures; establish and maintain
       the relevant institutions and allocate the necessary resources; prepare the legislation
       on Government and Civil Service.
       In Montenegro: Implement the strategy on Public Administration Reform, in
       particular adopt and start implementing the legislation on civil service to ensure
       professionalism and accountability. Adopt the law on salaries of civil servants and
       public employees.
•      Judicial reform:
       Ensure the smooth transfer military jurisdiction to civilian courts in line with the
       Constitutional Charter.
3
      Not including Kosovo as defined by United Nations Security Council Resolution 1244 of 10 June 1999.
                                                  7
 ---pagebreak---       In Serbia: Modernise and increase efficiency and independence of the court system,
      in particular its commercial courts; ensure the functional independence of war crime
      prosecutor. Prepare for the setting-up of administrative and appellate courts.
      In Montenegro: Continue preparations for implementation of the Criminal Code and
      of the Criminal Procedure Code, and law on prosecutors, in particular ensure
      functional independence of special prosecutor for organised crime. Set up
      administrative and appellate courts.
•     Fight against corruption:
      In both republics: Prepare a comprehensive anti-corruption strategy in line with
      Council of Europe standards and adopt law on conflict of interests.
HUMAN RIGHTS AND PROTECTION OF MINORITIES
•     Council of Europe obligations - Fulfil all short term obligations arising out of
      membership of the Council of Europe including uniform effective implementation,
      throughout the State Union, of European Convention on Human Rights and
      Fundamental Freedoms and European Convention for the Prevention of Torture.
•     Ombudsman:
      In Serbia: Adopt the legislation to set-up a Human Rights Ombudsman Office.
      In Montenegro: Strengthen the administrative capacity of Ombudsman Office.
•     Elimination of torture: In both republics: Take comprehensive and transparent
      action in all alleged cases of torture.
•     Freedoms of expression and association:
      In Serbia: Depenalise slander. Enforce media legislation in particular Broadcasting
      Law, adopt law on free access to information, in line with Council of Europe
      standards. Create an environment (including financial aspects), conducive for the
      development of NGO and civil society organisations including social partners,
      notably by adopting the law on associations, and a law on the legal status of foreign
      NGOs.
      In Montenegro: Adopt law on access to public information in line with Council of
      Europe Standards. Adopt strategy on cooperation between NGOs and governmental
      bodies.
•     Property rights: In both republics: Adopt legislation on property restitution.
•     Refugees, displaced persons and minorities: Ensure adequate co-operation
      between the State Union and Republics as regards the legislative basis and practical
      protection of the rights of refugees, displaced persons and minorities. Strengthen co-
      operation with Bosnia and Herzegovina and Croatia to enable returns. Engage in
      dialogue with Pristina on return of displaced persons and related issues such as
      property and social rights. In both republics: amend legislation to repeal all
      discriminatory provisions. In Montenegro: abolish legal prohibition for refugees to
                                              8
 ---pagebreak---        work and amend restrictive provisions to allow them possibility to apply for
       citizenship.
REGIONAL AND INTERNATIONAL CO-OPERATION/OBLIGATIONS
•      Ensure full co-operation with International Criminal Tribunal for the former
       Yugoslavia.
•      Fully respect the UNSCR 1244 and continue dialogue with Pristina on practical
       issues of common interests. Ensure recognition of UNMIK travel documents and car
       plates.
•      Strengthen stability and regional co-operation. Comply with the Stabilisation and
       Association process requirements and Thessaloniki commitments in terms of
       regional co-operation. Ratify and fully enforce all free trade agreements concluded
       by the state. Start implementing the Memorandum of Understanding on the
       Development of the South East Europe Core Regional Transport Network and in
       particular take measures to set up the cooperation mechanisms, inter alia, the
       Steering Committee and the South East Europe Transport Observatory. Make
       progress in meeting commitments under the 2003 Athens Memorandum of
       Understanding on the Regional Energy Market in South East Europe.
ECONOMIC SITUATION
MARKET ECONOMY AND STRUCTURAL REFORMS
•      Sustain macroeconomic stability. Implement a 2004 budget that reflects further
       necessary fiscal adjustment and consolidation. Continue efforts with a view to come
       to an agreement with commercial creditors (London Club) on debt restructuring. In
       particular, in Serbia: continue with a prudent monetary policy stance, backed by
       appropriate exchange rate policy, and establish more efficient monetary
       instruments with a view to improve the targeting of monetary aggregates.
•      Liberalise remaining prices and remove administrative controls. In particular
       adjust energy prices towards cost recovery levels, also gradually replacing all
       existing price subsidies to poor consumers by direct transfers.
•      Speed up the restructuring, privatisation and/or liquidation of large socially- and
       state- owned enterprises. Accelerate also the restructuring, of large publicly-
       owned utilities (electricity, oil and gas, railway, airline, telecommunications etc.).
       Continue banking sector reform more vigorously and in particular the preparation of
       privatisation in Serbia of the majority of the state-owned banks. Ensure allocation of
       sufficient budgetary resources for redundancy and restructuring costs.
•      Develop a stable and functioning land/real estate market. Prepare legislation on
       cadastre.
•      Employment Policy
       In both republics: develop and implement a comprehensive strategy to promote
       employment and combat unemployment, in particular with regard to vocational
       training and labour market reforms, involving all relevant actors; improve public
                                              9
 ---pagebreak---        employment services and allocate sufficient staff and financial resources to the
       implementation.
•      Develop reliable statistics. Revise and adopt the master plan on statistics with a
       view to ensure a clear allocation of responsibilities among the three Statistical
       Offices at State Union level and the republican level and an effective co-ordination
       among them. Adopt the laws on statistics at the State Union level and in both
       republics.
MANAGEMENT OF PUBLIC FINANCES
•      Continue to formalise the grey economy and broaden the tax base
       through implementation of Public Expenditure Management System (treasury, public
       internal financial control) and comprehensive tax reforms, with fewer exemptions
       and lower rates in particular on labour and improved implementation of tax laws.
•      In particular, in Serbia, adopt and implement the tax reform package, including the
       adoption of VAT and necessary related IT systems. Continue to strengthen and
       modernise the Public Revenue Agency, focussing on revenue collection and control
       in order to reduce tax fraud.
•      In Montenegro, start reviewing the present tax legislation and the administrative
       procedures in order to ensure effective and non-discriminatory enforcement of tax
       legislation. Strengthen the administrative capacity of the tax legislation to effectively
       collect and control fiscal revenues, in particular VAT.
•      For both republics, the legislation and implementation of VAT throughout the State
       Union should be harmonised in order not to lead to obstacles to the functioning of the
       internal market.
EUROPEAN STANDARDS
INTERNAL MARKET AND TRADE
•      Complete and fully implement all elements of the Internal Market / Trade
       Action Plan. In particular, urgent attention should be given to the definition of
       common tariffs for all products and harmonise all additional import levies and
       charges, in line with the respective tariff harmonisation schedule.
•      Abolish all import levies and additional charges that were introduced in violation of
       the standstill clause enshrined in the EU’s autonomous trade preferences.
•      Abolish the import licensing system for steel and iron products that was introduced
       in violation of the standstill clause enshrined in the EU’s autonomous trade
       preferences. Abolish export duties on ferrous and non-ferrous metals and raw hide.
•      Ensure the necessary institutional set-up for the state to act as a single
       trade/customs interlocutor internationally, especially by strengthening the Joint
       Customs Office, the veterinary/phyto-sanitary Liaison Offices and the Statistical
       Office, and by granting these institutions the necessary powers.
•      Continue to modernise the customs administrations in order to ensure the
       development of a high level of administrative capacity. Strengthen administrative
                                              10
 ---pagebreak---        cooperation and ensure continuous observance of obligations related to the
       implementation of preferential trade measures (origin).
•      Dismantle existing and avoid new obstacles to the state’s internal market as
       provided in the Constitutional Charter. Ensure state-wide market access for domestic
       and foreign operators regarding goods, services, capital and persons. Ensure
       legislative consultation and apply the principle of mutual recognition of all
       republican decisions on market access.
•      Implement a consistent and effective public procurement regime in Serbia and
       Montenegro. Ensure transparent procedures, regardless of the value of the contract
       concerned, and non-discrimination between Serbian and Montenegrin suppliers.
•      Install a direct link between business registers to safeguard free state-wide
       establishment. In Serbia, adopt the Law transferring the business register from the
       Commercial Courts to an independent agency.
•      Ensure a state-wide anti-trust regime, applicable to all anti-competitive effects
       both within and between the republics, as well as to effects on bilateral trade with the
       EU. Ensure the administrative capacity for the efficient and independent enforcement
       of these rules, including the strengthening of the Joint Competition Commission on
       state-level. Establish State aid coordination points and create full State aid
       transparency, as a first step towards State aid control. Ensure a coherent horizontal
       approach to promote competition policy.
•      Strengthen the protection of Intellectual Property Rights by adopting a set of
       revised Laws. Ensure harmonised penal provisions and strengthen implementation
       capacity in this field, notably in border services.
•      Implement a system of corresponding accounts in commercial banks to ensure the
       free movement of capital between the republics.
SECTOR POLICIES
•      Agriculture:
       In Serbia: Adopt Food Safety legislation and strengthen food safety laboratories;
       adopt legislation on veterinary matters and strengthen controls. Establish Food-Chain
       Laboratories Agency.
       In Montenegro: Adopt Law on Veterinary Matters (including fishery products) and
       establish the veterinary and phyto sanitary laboratories, including for fish and wine;
       strengthen controls.
•      Transport:
       In Serbia: Adopt law on Railways. Begin development of a national transport
       strategy, including economic viability of the sector.
       In Montenegro: Adopt and start implementing the road transport law (including
       establishment of the relevant implementation structures) and adopt the Law on Rail
       Transport.
                                              11
 ---pagebreak--- •      Energy:
       In Serbia: Adopt the Energy Law and establish the independent Energy Regulatory
       Agency, continue environmental audits on energy plants and address worst polluters.
       In Montenegro: Prepare and adopt the energy development strategy, also covering
       energy efficiency strategy; strengthen the administrative capacity of the Ministry of
       Economy as regards energy; unbundle and restructure the electric power utility.
•      Industry and SMEs:
       In both republics: Continue implementing the European Charter for Small
       Enterprises.
       In Serbia: Adopt the amended bankruptcy law.
       In Montenegro: Transform and rationalise the institutions involved in restructuring
       and privatisation of enterprises, notably, the Development Fund. Establish an
       autonomous investment promotion agency. Continue implementation of the newly
       established national guarantee fund.
•      Telecommunications:
       In both republics: Ensure that the electronic communications sector is liberalised
       effectively including the strengthening of regulatory bodies and the adoption of
       suitable laws and policies for the sector.
•      Environment:
       In Serbia: Adopt a Law on Environment Protection and set-up and operationalise the
       Environment Protection Agency.
       In Montenegro: Adoption of the strategy on waste water and solid waste with a view
       to approximating with EU acquis.
CO-OPERATION IN JUSTICE AND HOME AFFAIRS
•      Law enforcement reform: Improve judicial and law enforcement co-operation both
       within each republic and between republics. Full implementation of Memorandum on
       Cooperation, signed between Republican Ministries of Interior in December 2003.
       In Serbia: Adopt law on Police in order to improve professionalism and
       accountability. Implement a revision of the laws on the organisation of the judiciary
       (Law on Courts, Law on Judges, Law on Prosecutors, and Law on High Judicial
       Council) and on Criminal legislation (Criminal Procedure Code, Criminal Code and
       Law on Enforcement of Criminal Sanctions), as provided for in the protocol on co-
       operation with the Council of Europe.
       In Montenegro: Adopt Laws on Police and State Security to ensure professionalism
       and accountability.
                                              12
 ---pagebreak--- •      Border Management: develop a state-level approach and mechanisms and ensure
       consistent implementation at the republican level in line with the Memorandum of
       Understanding. As a follow-up to the Ohrid regional Conference on border security
       and management in May 2003, start implementation of the short term measures that
       were adopted by the Government and presented at the meeting of JHA ministers
       within the framework of the EU-Western Balkans Forum on 28 November 2003.
       In Serbia: Take further steps to implement best practices concerning Border Police,
       in line with European Standards; proceed in co-ordination with the State level
       authorities with demilitarisation of the border control.
       In Montenegro: Strengthen civilian control of borders (including training, equipment
       compatible with Schengen).
•      Fight organised crime, trafficking, drugs and money laundering, terrorism:
       Strengthen inter agency co-operation within the republic and formalise inter
       republican co-operation. Develop the capacity to seize assets. Strengthen criminal
       intelligence. Start implementing the specific action oriented measures that were
       agreed at the JHA ministerial meeting in November 2003. Take the necessary steps
       to prepare for the conclusion of a co-operation agreement with Europol. Increase
       capacity to fight against drug trafficking and develop a national drugs strategy in line
       with the EU Drugs Strategy and Action Plan on Drugs. Strengthen fight against
       trafficking of human beings, including by providing adequate assistance and
       protection to the victims. In particular in Montenegro: Implement anti-money
       laundering law notably by setting up financial investigation unit.
       Increase international cooperation and implement relevant international conventions
       on terrorism; improve cooperation and exchange of information between police and
       intelligence services within the State and with other States; prevent the financing and
       preparation of acts of terrorism.
•      Visa, asylum and migration: Develop a unified state-level approach to issues
       related to visa, asylum and migration in line with the Constitutional Charter, notably
       with the complete harmonisation of visa regimes as applied in the republics, the
       adoption of the Asylum Law and the further conclusion and implementation of
       readmission agreements. Put in place the mechanisms to monitor the implementation
       of policies in the areas of asylum, migration and visa which are elaborated at the
       state level but which are implemented at the republican level. In particular for both
       republics, full participation in the co-ordination mechanisms for the adoption and
       implementation of the relevant state level policies.
       MEDIUM-TERM PRIORITIES
POLITICAL SITUATION
DEMOCRACY AND RULE OF LAW
•      Continue process of restructuring of the armed forces, including as appropriate
       military conversion and downsizing (taking into account the social impact).
                                              13
 ---pagebreak--- • Continue Public Administration Reform:
  Further develop the European Integration structures, notably by strengthening the
  European Integration Offices, establishing smooth cooperation mechanisms as well
  as European Integration Units in the line of Ministries of State and Republican level.
  At the State level: Ensure appropriate administrative capacity to adequately perform
  the State competences and that a reform strategy for the State Public Administration
  is developed and implemented, including the necessary legislative basis.
  In Serbia: Adopt civil service and Public Administration Laws. Implement civil
  service human resources development measures. Strengthen capacity (policy making
  and inter-ministerial coordination) of the public administration at government and
  local levels, notably by establishing a centralised payroll system. Strengthen the
  economic policymaking process, e.g. through continued support to strengthen the
  statistical services and the creation of a medium term economic planning unit.
  In Montenegro: Implement the law on civil service and set up the agency for human
  resources management (which needs to become sustainable). Develop training and
  recruitment policy. Strengthen policy making process, e.g. through continued support
  to strengthen the statistical services and the creation of a medium term economic
  planning unit.
• Parliament:
  In Serbia: Develop and implement a reform strategy for the Parliament to bring its
  working standards and resources to a level at which it can act as an effective
  institution.
• Promote local government:
  In Serbia: Adopt and implement decentralisation reform and ensure sufficient local
  capacities to deal with, among others, administrative and financial issues and
  forthcoming regional programmes.
  In Montenegro: Implement law on local government, notably by establishing the
  equalisation fund.
• Continue the judicial reform:
  In Serbia: Ensure full legal and practical safeguards for independence and efficiency
  of the courts, including the reform of the current system of appointment procedure;
  implement legislation on mandatory training and ensure budgetary sustainability of
  the Judicial Training Centre; create an IT network for prosecutors at all levels; ensure
  enforcement of court decisions. Develop the capacity to try war crimes domestically
  in full compliance with international obligations as to cooperation with ICTY. Set up
  appellate and administrative courts.
  In Montenegro: Ensure mandatory training of judges, through revision of the law on
  courts and budgetary sustainability of the Judicial Training Centre. Implement the IT
  strategy for the judiciary.
                                          14
 ---pagebreak--- •      Prison conditions:
       In Serbia: Improve prison conditions in line with Council of Europe standards, in
       particular as regards vulnerable groups such as juvenile offenders; ensure further
       training of penitentiary staff and improvement of facilities.
       In Montenegro: Further training of penitentiary staff and improvement of facilities.
•      Fight against corruption:
       In both republics: Adopt and implement a comprehensive anti-corruption strategy.
HUMAN RIGHTS AND THE PROTECTION OF MINORITIES
•      Council of Europe obligations. Put in place the necessary mechanisms to monitor
       and ensure a coherent and consistent implementation of all Council of Europe
       obligations as provided for under the accession commitments.
•      Equality: Adopt/implement anti-discrimination legislation.
•      Freedom of expression:
       In Serbia: Transform Radio Television Serbia into a public service broadcaster.
       Support development of media in line with European standards. Foster
       professionalism of journalists and media operators.
       In Montenegro: Continue the transformation of Radio Television Montenegro into a
       public service broadcaster; support development of media in line with European
       standards. Foster professionalism of journalists and media operators.
•      Refugees, displaced persons and minorities: In both republics: ensure full respect
       of their human rights, including access to health services, and easy access to personal
       documents; ensure right of a real choice between sustainable return and integration;
       facilitate integration for those who choose not to return. In Serbia: Adopt new
       legislation on refugees; continue to implement the National strategy.
REGIONAL AND INTERNATIONAL CO-OPERATION
•      Further improve regional co-operation. Further deepen regional trade
       liberalisation on the basis of the Free Trade Agreements in force. With regard to the
       Athens process on the Regional Energy Market in South East Europe, prepare Serbia
       and Montenegro for the establishment in 2005 of an integrated regional energy
       market. Continue to implement the Memorandum of Understanding on the
       Development of the South East Europe Core Regional Transport Network.
ECONOMIC SITUATION
MARKET ECONOMY AND STRUCTURAL REFORMS
•      Continue sustainable macroeconomic policies: Continue fiscal adjustment and
       consolidation to reduce relatively high fiscal and in particular external imbalances.
       Take account of the inevitable costs of structural reforms and rising interest
       payments, clearly prioritise public spending in short and medium term budgeting; in
                                             15
 ---pagebreak---        particular reduce subsidies, transfers and the civil service wage bill. Continuously
       reduce overall public spending as a share of GDP and complement prudent monetary
       policy with careful exchange rate policies. In Serbia: Reform the health system, in
       particular, the health insurance fund, with a view to ensure its financial sustainability
       and with a view to improve health protection and the health of the population.
•      Complete the privatisation process and financial (bank) restructuring.
•      Strengthen a business environment conducive to private sector development and
       employment with competitive markets, level playing fields and access to finance
       through financial sector development.
•      Achieve a stable and functioning land/real estate market. Adopt and implement
       legislation on cadastre. Start land reform, restructuring and privatisation of large
       farms.
MANAGEMENT OF PUBLIC FINANCES
•      Improve the budget process and financial management: Strengthen capacity
       building for budget preparation and execution to enable prioritisation. Improve
       financial management at central and local government level. Adopt the Law on the
       Supreme Audit Institution.
•      Establish effective procedures for the detection, treatment and follow-up of cases of
       suspected fraud and other irregularities affecting national and international funds.
•      Continue reviewing the fiscal legislation and the administrative procedures in order
       to ensure effective and non-discriminatory enforcement of the tax legislation.
       Continue strengthening the administrative capacity of the Tax Administrations.
EUROPEAN STANDARDS
INTERNAL MARKET AND TRADE
•      Fully establish a single external trade regime under the Internal Market / Trade
       Action Plan. Enforce common tariffs, levies and charges for all products after the end
       of the transition periods foreseen.
•      Ensure the full implementation of the customs reform plan to secure a high degree
       of administrative capacity.
SECTOR POLICIES
•      Industry and SMEs:
       In Serbia: Implement the European Charter for SMEs. Rationalise complex Chamber
       of Commerce organisation. Make arrangements to facilitate NGO micro credit
       facilities.
       In Montenegro: Implement the European Charter for SMEs. Proceed with the
       development and establishment of a national guarantee fund. Further develop
       dialogue between government and private sector, including through the SME
       Agency, by establishing a formal forum for consultation and business advocacy.
                                             16
 ---pagebreak--- • Telecommunications:
  Transpose and implement the new EU framework for electronic communications.
• Agriculture:
  In Serbia: Further build administrative capacity for policy formulation and
  implementation. Design and start implementing a rural development policy. Continue
  strengthening veterinary, sanitary, phyto-sanitary and food-safety legislation and
  controls, including wine laboratories. Improve waste management and reduce
  agricultural pollution.
  In Montenegro: Adopt an overall strategy covering agriculture, rural development,
  fisheries, phyto-veterinary matters. Increase capacity building of the Ministry of
  Agriculture. Adopt the law on phytosanitary matters.
• Transport:
  In Serbia: Adopt and implement a transport policy strategy (road, rail, aviation and
  waterways). Strengthen capacity building, including project preparation for large
  investments. Earmark sufficient resources for the maintenance of transport
  infrastructures and institutions.
  In Montenegro: Earmark sufficient resources for the maintenance of transport
  infrastructures and institutions.
• Energy:
  In Serbia: Ensure unbundling in view of restructuring and privatisation. Set up the
  necessary institutional structures: Transmission System Operator, Market Operator,
  and Energy Regulatory Agency. Progress towards a regional energy market
  (including through feasibility studies on interconnectivity).
  In Montenegro: Strengthen the energy regulator. Complete restructuring and
  liberalisation of the internal energy market; Privatise and/or allow development of
  public/private partnerships in the sector.
• Environment:
  In both republics: Adopt and implement legislation on environmental impact
  assessment in line with the EU acquis.
  In Serbia: Adopt and start implementing a strategy on pollution of air (notably from
  power plants), water (waste water) and soil (solid waste); Strengthen administrative
  capacity notably as regards planning, permitting, inspecting, monitoring, as well as
  project management. Develop a multi-annual plan for financing investments, based
  on estimations of costs and realistic sources of public and private funding.
  In Montenegro: Develop an overall environmental strategy (waste water, solid water,
  air) with a view to adopt environmental protection framework legislation
  approximating with the EU acquis and set up an environment protection agency.
                                         17
 ---pagebreak--- CO-OPERATION IN JUSTICE AND HOME AFFAIRS
•      Continue restructuring the police: ensure accountability; reform police education;
       ensure co-operation among law enforcement agencies.
•      Border management:
       In both republics: On the basis of state level policy, develop the technical
       infrastructure and human resource capacities to implement the Integrated Border
       Management policy including strengthening the border police and the customs
       services. Improve cross-border facilitations through new border posts.
•      Fight against organised crime, trafficking, drugs and money laundering:
       In both republics: Develop an effective system of witness protection which
       incorporates republican but also regional elements. Reinforce the fight against
       economic and financial crime (including money-laundering and counterfeiting of
       currencies), fraud and corruption as well as improve the related national legislation
       In Serbia: Strengthen capacity building at the Ministry of Interior (notably
       directorate for organised crime) Develop procedures and the capacity to share
       intelligence between agencies. Develop an effective system of witness protection
       which incorporates republican but also regional elements. Set-up Financial
       Investigation Unit in the Ministry of Finance.
       In Montenegro: Increase administrative and judicial capacity to implement the new
       criminal code as regards organised crime. Strengthen the Unit for fight against
       organised crime at the Ministry of Interior and ensure co-ordination of all the
       enforcement bodies.
                                             18
 ---pagebreak---                                            KOSOVO
              as defined by United Nations Security Council Resolution 1244
         SHORT-TERM PRIORITIES
GENERAL PRIORITY
– In order to ensure a stable future for a secure, democratic and multi-ethnic Kosovo,
   make substantial progress in achieving the Standards for Kosovo, which were
   presented by the UN Special Representative of the Secretary General and representatives
   of the Provisional Institutions of Self Government in December 2003 and endorsed by the
   UN Security Council. In particular, carry out the concrete actions set in the Kosovo
   Standards Implementation Plan covering :
         • Functioning of democratic institutions;
         • Rule of law;
         • Freedom of movement;
         • Sustainable returns and rights of communities and their members;
         • Economy;
         • Property rights;
         • Dialogue with Belgrade;
         • Kosovo Protection Corps.
In addition to the above general priority, the following complementary priorities need to be
addressed:
POLITICAL SITUATION
DEMOCRACY AND RULE OF LAW
– The Provisional Institutions of Self Government must take all necessary steps as
   required by the United Nations Interim Administration in Kosovo to overcome the
   consequences and address the causes of the March 2004 events, notably by explicitly
   condemning violence against minority communities, fully co-operating with UNMIK-
   KFOR to bring those responsible to justice, encouraging witnesses, restoring and
   rebuilding properties and allowing return of displaced persons.
– EU compatibility: Develop the EU orientation of the Kosovo Government policy-making
   by institutionalising within the Prime Minister Office the mechanism for effective
   verification of EU consistency of government policies and draft laws; developing at the
   ministerial level and the Assembly of Kosovo capacity to ensure EU compatibility.
                                              19
 ---pagebreak--- – Fight against corruption: Improve cooperation between UNMIK and PISG effectively to
   implement the “zero tolerance” policy against corruption, notably by providing all
   necessary support to the investigations undertaken by OLAF and OIOS (the UN internal
   audit service).
REGIONAL AND INTERNATIONAL CO-OPERATION
• Ensure full co-operation with ICTY
– Effectively participate in the Working Groups established in the context of Pristina-
   Belgrade dialogue on practical issues of common interests, which is part of the Standards
   for Kosovo.
– Enhance regional co-operation. Further integration into the regional network of Free
   Trade Agreements under the Stability Pact MOU on Trade Liberalisation and Facilitation
   in South Eastern Europe, in compliance with UNSCR 1244. Start implementing the
   Memorandum of Understanding on the Development of the South East Europe Core
   Regional Transport Network and in particular take measures to set up the cooperation
   mechanisms, inter alia, the Steering Committee and the South East Europe Transport
   Observatory. Make progress in meeting commitments under the 2002 and 2003
   Memoranda of the Athens process on the Regional Energy Market in South East Europe.
ECONOMIC SITUATION
MARKET ECONOMY AND STRUCTURAL REFORMS
– Define the macro-economic priorities for Kosovo in close co-operation with IMF.
– Revitalise the privatisation process to support economic development.
MANAGEMENT OF PUBLIC FINANCES
– Develop technical support systems and procedures to ensure transparency, efficiency, and
   better control of public spending.
– Establish effective procedures for the detection, treatment and follow-up of cases of
   suspected fraud and other irregularities affecting national and international funds.
EUROPEAN STANDARDS
INTERNAL MARKET AND TRADE
– Continue development of a legislative and policy framework for trade and trade-related
   policies, ensuring EU- and WTO-compatibility. Fully implement the new Customs Code.
   Adopt a Domestic Trade Law and a Law on Trade Inspection.
SECTOR POLICIES
– Environment:
Prepare a comprehensive environmental action plan, particularly relating to public health
issues, with a view to approximating with the EU acquis.
                                              20
 ---pagebreak--- Adopt and implement legislation on environmental impact assessment in line with the EU
acquis.
– Transport
Prepare and adopt a transport policy framework on transport including the gradual
development of a multi-modal transport strategy.
Develop the civil operator of Pristina Airport, its staff and facilities, to ensure an adequate
level of security and sound and accountable management.
– Energy
Establish effective and functioning governance structures in the energy sector to ensure the
viability and sustainability of Kosovo electricity company (KEK) notably by substantially
increasing revenue collection.
CO-OPERATION IN JUSTICE AND HOME AFFAIRS
– Implement the new Criminal and Criminal Procedure Codes.
          MEDIUM-TERM PRIORITIES
POLITICAL SITUATION
DEMOCRACY AND RULE OF LAW
– Improve EU compatibility: Strengthen the capacity of all Kosovo institutions to enact and
   effectively enforce EU compatible policies and legislation, notably by reinforcing the
   structures dealing with European integration in the context of the SAP.
– Strengthen public administration reform: Implement a Public Administration reform in
   order to streamline public administration and build a professional and accountable civil
   service able to attract and retain qualified staff. Improve the capacity of local
   administration to provide services to their constituencies in an equitable and effective
   manner.
– Reinforce judicial reform: Strengthen the judiciary and law enforcement agencies,
   notably by improving infrastructure, equipment and training. Transform the Kosovo
   Judicial Institute into a viable future institution responsible for judicial training. Ensure the
   viability of a comprehensive legal aid system for Kosovo. Improve the penitentiary system
   with particular attention to management, vocational training and reintegration schemes.
– Fight against corruption: Implement a comprehensive anti-corruption strategy
   comprising prevention measures and an effective investigation and prosecution, notably by
   strengthening local capacity, in line with Council of Europe standards.
HUMAN RIGHTS AND PROTECTION OF MINORITIES
– Ombudsman: Ensure the viability and the continued independence of the Ombudsman
   institution in Kosovo.
                                                  21
 ---pagebreak--- – Further develop freedom of expression: Ensure the long-term viability of the public
  broadcaster and its capacity to perform its role as a public service broadcaster to all
  communities.
– Improve protection of minorities: Ensure the viability of minority communities and their
  non-discriminatory participation in Kosovo society, notably by establishing the necessary
  framework to ensure the equitable provision of public utilities and universal services.
ECONOMIC SITUATION
MARKET ECONOMY AND STRUCTURAL REFORMS
– Ensure viability of a borrowing and debt management capacity.
– Develop guarantee mechanisms for political risk to attract foreign investment.
– Further develop the regulatory framework for public utilities with regard to EU and
  international standards, notably by adopting and implementing subsidiary legislation,
  procedures and guidelines. Strengthen the administrative capacity of the regulators. Ensure
  that regulators have suitable local staff and develop their professional skills and technical
  equipment to discharge their functions.
– Develop the capacity of the banking sector to provide long-term financing to the
  economy.
– Develop a social policy to promote employment and social cohesion, to address poverty
  and social exclusion, to further improve social standards and to develop effective social
  protection systems.
– Increase efforts to ensure the compatibility of the statistical system with EU standards.
MANAGEMENT OF PUBLIC FINANCES
– Develop capacity of the Tax Administration in order to increase non-customs revenue
  (direct and indirect taxation) through the progressive development of a taxation system
  based on EU standards. Start reviewing the present tax legislation and elaborate and
  implement a realistic action plan in order to progressively strengthen the administrative
  capacity of the Tax Administration.
– Ensure viability of the budget cycle notably by capacity building for budget preparation
  and execution. Develop the capacity of the Assembly of Kosovo to effectively participate
  in the public finance process. Ensure smooth spending across the financial year and the
  “carry-over” principle for unspent funds.
EUROPEAN STANDARDS
INTERNAL MARKET AND TRADE
– Continue gradual alignment of Kosovo's legislation with all aspects of the EU's company
  law acquis.
                                              22
 ---pagebreak--- SECTOR POLICIES
– Agriculture:
Develop a regulatory framework and appropriate mechanisms to ensure food safety and
improved phyto-sanitary controls in line with relevant EU standards, also to improve
Kosovo’s export opportunities. Develop a policy and a regulatory framework to support
viable land reform. Support the protection of agricultural land against unplanned urban
development.
– Environment:
Adopt and implement the environmental action plan with a view to approximating with the
EU acquis.
– Transport
Implement a transport policy framework on transport including the gradual development of a
multi-modal transport strategy.
– Energy:
Develop policy framework for public-private partnerships and mixed investments in the
energy sector.
CO-OPERATION IN JUSTICE AND HOME AFFAIRS
– Strengthen cooperation between border/boundaries management agencies and strengthen
   capacity for implementation of veterinary and sanitary and phytosanitary standards as a
   part of the integrated border management system.
                                             23