CEOL
Balkan Stability Pact dreams far from reality

VIDIN, Jul 26, 2000 -- (Reuters) A network of modern roads and bridges to transport prosperity and growth to the Balkans sounded almost too good to be true when it was proposed.

A year after Western countries sealed the stability pact for southeast Europe in the wake of the Kosovo conflict its promise of $1 billion of infrastructural renewal is still more dream than reality.

Donor caution, bureaucratic inertia and poor leadership have stalled the creation of the good roads and railways that were to link central and western Europe to Greece and Turkey, the Middle East and eventually the Caucasus and Central Asia.

The transport links would carry cargo and people, create jobs, prop up faltering economies and attract investors to a region previously spurned as too risky and too poor.

They would skirt Yugoslavia, historically the hub of Balkan traffic and equipped with good roads but now off limits while President Slobodan Milosevic, an indicted war criminal and international pariah remains in power in Belgrade.

Infrastructure was to be the economic engine of the Balkan Stability Pact launched by major powers in Sarajevo on July 31 last year to bolster a region shaken by a decade of brutal ethnic warfare across former Yugoslavia.

"Infrastructure could play the same role for the Balkan countries which coal mining and metal production played for your states 50 years ago," Bulgarian President Petar Stoyanov told ambassadors from the European Union states this month.

The EU evolved from the European Coal and Steel Community, founded in the 1950s. Its objective was to make war not merely unthinkable but materially unwinnable by transferring control of the two industries essential for modern warfare out of national hands.

A YEAR ON AND LITTLE TO SHOW

Impatience is growing among the main intended beneficiaries of the Stability Pact, the front-line states around Yugoslavia whose economies have suffered badly from the decade of ethnic conflicts and sanctions involving their neighbor.

"It should be a matter of concern for the whole European community, not just for this region that, so far, these roads exist only on maps," said Nikolai Karadimov, Bulgaria's coordinator for the Stability Pact.

"At times the work of the Pact has been too slow," said Gramoz Pashko, the Pact's Albanian government coordinator. "It has neither achieved a miracle nor has it failed."

A meeting of international donors in March allocated 2.4 billion euros ($2.24 billion) for the Pact, with 1.1 billion earmarked for infrastructure projects that are central to an EU vision of transport corridors linking the whole continent with Asia and the Middle East.

Officials say nearly one billion euro has been allocated to various projects but in reality work has started on just two - a road in Albania and a bridge in Bosnia.

A planned second bridge over the Danube between Bulgaria and Romania, one of the fast-track projects agreed by the donors this year, exemplifies the problems.

The $180 million cost was to be financed by a grant, probably from the EU pre-accession program, a loan from an institution like the European Investment Bank and some contributions from the two government's own funds.

But to arrange a grant takes between six and 12 months, while approval for a credit takes around a year.

There has been a pledge to speed up the process. "I am a little skeptical but let's wait and see," said Karimov.

Work on the much-needed bridge which would greatly increase traffic between Berlin and Istanbul, by-passing Yugoslavia, is not likely to start until the end of 2001 or early 2002.

When the Pact's German coordinator, Bodo Hombach, visited the site of the bridge recently all he saw on the Bulgarian side at Vidin, 200km (120 miles) north of Sofia, was a narrow road that ended yards from the Danube and a dirty beach.

Hombach, himself criticized for failing to push Stability Pact projects quickly enough, warned of "a downward spiral of disappointment," unless bureaucratic obstacles were cleared.

WHY SO SLOW?

The Pact grew out of a Western realization that states around Yugoslavia were being weakened economically and politically by nearby wars and needed to be bolstered to prevent instability rippling outwards.

The Pact initialed after NATO conducted an 11-week bombing campaign of Yugoslavia to halt Belgrade's repression of Kosovo's ethnic Albanian majority has three main areas, economic recovery, improving security and human rights and democracy.

But progress in all departments has been slow because there is no sign that Milosevic will be ousted from power for some time to come.

"With Milosevic in power and embargo in place we can't speak about real stability in the region," said Karadimov.

Potential investors see the whole area as unstable, with poverty proving fertile ground for organized crime and corruption, making the Balkans a crossroads for illegal trafficking in drugs, people and stolen cars.

"Unfortunately it is a reality," Karadimov said.

In light of Milosevic's longevity practical steps have to be taken to jump-start projects, he added. A donors' conference held just once a year slows decision making. Karadimov has suggested setting up a virtual projects funding network.

There, donors and recipients could propose projects, agree financing and then move on to implement them.

Coordination should be partly moved to the region, away from its current Brussels base, which Karimov said had just Western European staff.

"Expertise and the real experience is here, not in Brussels," Karadimov said.

Albania's Pashko said it was time for the West to act.

"Enthusiasm for the Pact has fallen and it is the duty of those who launched it to bring it back," he said.



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