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2000 In Review: Cross-Border Cooperation Essential In Balkans

The year 2000 brought dramatic democratic changes to the Balkan peninsula -- above all to Croatia and federal Yugoslavia. The changes have forced the international community to shifts agenda for the region from one of containment to reconstruction. RFE/RL's Ron Synovitz looks at some of the projects and problems for regional development.

Prague, 15 December 2000 (RFE/RL) -- European leaders have hailed the changes of leadership in the Balkans during the year 2000 as a major breakthrough for democracy.

From Croatia's electing a new Western-leaning president in January to the ouster in Yugoslavia of president Slobodan Milosevic in October, the political landscape in the Balkans has been altered to such an extent that French President Jacques Chirac described the events as opening a new page in European history.

Experts from international financial institutions say the best way to consolidate those gains now is to foster economic stability and growth. To that end, international institutions are trying to attract private investment to key regional infrastructure projects -- like the building of trans-Balkan highways and railroads, telecommunication networks, water supply systems, airport improvements and better border crossings.

This regional approach, with a focus on improving cross-border trade and cooperation, is a strategy that was used in the reconstruction of western Europe under the Marshall Plan following World War Two.

The World Bank says its experience around the world supports the concept that economic development is key to establishing and maintaining peace and stability. It says there is a close link between economic development and trans-frontier cooperation.

World Bank experts say Balkan leaders must avoid replicating the mistakes made by the successor countries of the Austro- Hungarian Empire after the World War One -- the destruction of regional trade.

Instead, they say Balkan leaders must follow the historic lessons of post-World War Two reconstruction. They point to improved trade ties across the French-German border near the regions of Alsace and Lorraine, a disputed region which had changed hands many times in history.

So far, suspicions and jealousies between Balkan states have resulted in a lack of state financing for cooperative projects in border regions. That leaves the frontiers of Albania, Romania, Bulgaria, and the former Yugoslav republics devoid of the infrastructure needed to allow the quick movement of trade and traffic.

The year 2000 marked the emergence of the European Union's so-called Balkan Stability Pact as an important entity trying to encourage regional cooperation on trans-border infrastructure.

Until November, when federal Yugoslavia formally joined the Stability Pact, such regional cooperation in the Balkans seemed like a far-fetched notion.

Stability Pact coordinator Bodo Hombach admits that Yugoslavia's geographic position at the center of the Balkans means that Belgrade's participation is essential to region-wide success.

Yet as soon as Yugoslavia was admitted to the Pact, the governments of countries like Bulgaria, Romania, and Albania began to express fears that aid promised to them would be diverted instead to Yugoslavia.

Willem Buiter, the chief economist of the European Bank for Reconstruction and Development, says reconstruction aid will not favor Yugoslavia any more than the other Balkan countries.

Buiter says the EBRD considers its future projects in Yugoslavia to be part of a wider regional program aimed at eventual EU membership for all of southeastern Europe.

"There is a general need, both from a political and economic point of view, to make sure we don't replace after 10 years the Iron Curtain in Europe with a 'Brussels lace curtain' between the ins and the outs of the EU. It is important, especially for an institution like ours, that we make sure that those who remain outside the European Union are not cut off from some of the benefits of European integration."

Pedro Solbes, the EU's Monetary Affairs Commissioner, says there is a coherent strategy for the reconstruction of southeast Europe as a whole -- both in the short term and the long term.

Solbes says immediate emergency EU aid to Yugoslavia is aimed at helping the people there get through the coming winter. Solbes says Yugoslavia will have to stand on its own after this winter. In the long term, Solbes says EU officials think Yugoslavia must be treated like any other country.

That means Belgrade must turn to major global financial bodies like the World Bank and the International Monetary Fund, or to private financing and investment, to meet its funding needs.

To attract such investment, experts say each Balkan country must improve its legal environment. Nina Ramondeli, vice president of Moody's Sovereign Ratings Group, says the internal reforms of each Balkan country have become the key issues for foreign investors since the ouster of Milosevic.

"We have spoken to investors that were very concerned about the implication of Yugoslavia and the instability in the region. But again, the rating of Romania does not stand alone on the situation in Yugoslavia."

Nicholas Bray, a spokesman for the Paris-based Organization for Economic Cooperation and Development, or OECD, says meetings between government officials from across the Balkans since Milosevic's ouster have, so far, focused on how new policies can contribute to reconstruction of the region. Bray says the OECD has attempted to identify specific problems and offer advice on how direct foreign investment can be increased with an improved investment environment.

"There's a whole range of legal issues that need to be addressed. They cover such things as bankruptcy law. Under the old Communist regime, companies in these countries went on existing, went on accumulating debts and eventually became a great burden on the economy. These countries, until now, in many cases, simply have not had any concept of bankruptcy. That's the kind of rule of law that is very much needed in a commercial environment. Another example would be the enforcement of contracts."

It is the investment levels of the year 2001 that will show how well the governments of each country have proceeded with putting their own house in order.