Stability Pact for Southeast Europe / SECI
Business Advisory Council for Southeast Europe
Herceg Novi, Montenegro
May 30-31 2005
SUMMARY AND OPERATIONAL CONCLUSIONS
· Invoices for 2005 membership fees of €1.000,00 will be sent out to all members.
· The BAC will organize a business mission to Bucharest between June 20-21 to meet with the new government, and a mission to Kosovo between October 18-19. The next meeting will be held in Moldova between September 28-29 and the last meeting for 2005 will be held in Belgrade between November 29-30.
· The BAC will address a letter to the SEECP Chairmanship concerning the promotion of a regional airline system and the adoption and implementation of a single free trade agreement to replace the existing network of 28 bilateral FTAs.
· The PROs are public private partnership mechanisms which can serve the goal of trade and transport facilitation in the region. Local BAC members will be invited to hold meetings with their respective PRO Committees and report on the developments phasing the local PRO partners. Mr. Nikos Efthymiadis will write a letter to local members inviting them to engage in a closer relationship with the PROs.
· The BAC endorses the general spirit of the Amato paper as a valuable contribution concerning the future of the Balkans in Europe and the Euro-Atlantic institutions, and would like to see the region integrate with the EU in 2012. Reflecting the positions of the BAC, the Chairman of Board will address a letter to all EU and SEE Prime Ministers and the issue will be brought up with the Commission, and members will write articles in their local countries and stimulate debate, based on the text of the above mentioned letter.
· The total cost of the EPA pilot project is estimated at €100.000. €52.000 has been secured. Members who have not contributed for the EPA project already, will be invoiced by the BAC for the amount of €2.500,00, expecting a minimum of €1.000,00 contribution. In case members are not able to contribute at all, they would be invited to explain in a written form their reasons. Should contributions not reach the requested amount, the BAC will use part of its reserves for that purpose. The amount which will be invoiced for the EPA project is in addition to regular membership fees.
· Following the change of career of Ms. Vera Budway, Ms. Maria Bozoudi will undertake her tasks under the BICC umbrella, which will provide the necessary facilities, for the cost of €25.000 per six months (€50.000 annually), plus travel expenses. The above cost of the Secretariat until the end of 2005 will be covered by the existing Austrian fund, as guaranteed by Dr. Busek, and, if this is not enough, by part of the existing BAC reserves. Members have been invited to submit to Mr. Aldo Fumagalli concrete and clear proposals (who, where, how and at which cost) alternative to the BICC proposal, so that a final decision for the future of the Secretariat can be decided at the Moldova meeting. Even though an increase in membership fees is not necessary for 2005, it might be for the next year. Alternative means of financing the Secretariat will be investigated as well.
Meeting report and minutes
Mr. Nikos Efthymiadis opened the meeting by welcoming the participants and thanking the Montenegrin government for the hospitality offered to the BAC members. Special thanks were extended to BAC members, Mr. Bosko Kostic and Mr. Vladimir Cupic, for their personal support to organize this meeting.
He thanked Deputy PM Ivanisevic for his presence and explained briefly the assets and goals of the Business Advisory Council for regional development. Deputy PM Ivanisevic welcomed the participants to Montenegro and expressed his eagerness on behalf of the government to receive advice and suggestions on how to attract FDI in the country and how to best cooperate with IFIs for project development.
1. Administration and Membership issues
The Skopje report was unanimously adopted.
Mr. Efthymiadis welcomed the new members, and brief presentations of Mr. Harrison, Mr. Zlokovic, Mr. Antesberger and Mr. Radman followed. Mr. Efthymiadis then informed the group of the resignation of Mr. Hufnagl from the Board and the BAC, due to a change in his career. He then informed members that following the change of career of Mr. Muhtar Kent and his appointment in Coca Cola, EFES has suggested Mr. Ahmet Boyacioglu as his replacement. While the Secretariat awaits his CV to be circulated amongst all members, Mr. Efthymiadis informed members that the Board is in search of an additional new member from Turkey and asked for suggestions for possible candidates.
With regard to the membership fees for 2005, it was suggested by Mr. Efthymiadis and agreed by the members that annual membership fees will remain at €1.000,00 for 2005, and that following the clarification of the accounting system of the OSCE, invoices will be sent to all members to submit their dues.
2. Next meetings and missions
Mr. Efthymiadis informed the members of a planned business mission to Bucharest on June 20-21st, on the occasion of the Vienna Economic Forum, in order to meet with the new government. The mission will be supported by the local BAC member, Mr. Misu Negritoiu, the Vice Chairman of the Chamber of Commerce, Dr. Stephan Popa, and Mr. Michael Mix, who is also based in Bucharest. Initial contacts have already been done on behalf of Dr. Busek with Minister for Foreign Affairs Mihai Ungureanu, and there are plans to meet with the prime Minister and the Minister of Economics on June 21st. Contacts will also be sought with local agencies for SMEs and privatization.
Dr. Busek asked members for their input on issues which are considered key in order to better prepare for this mission. Mr. Michael Mix agreed to send some ideas, while cooperation with the local FIC and the local OECD desk will also be helpful.
With regard to the next meeting of the BAC in Moldova, between September 28-29, Mr. Fumagalli expressed his optimism, based on the very successful mission that took place last year. Seeing Moldova as a bridge to the CIS, the private sector should press harder for the country to overcome obstacles to investment and doing business. Dr. Busek agreed that Moldova does not have any membership prospects, as it falls within the EU Neighborhood Policy. He noted that there are high corruption levels in the country and that the GUAM (Georgia, Ukraine, Armenia, Moldova) policy supported by the USA ascribes to the country a more important role than before – which is exactly why the BAC has to be there. He also noted that it is important for the BAC to pursue meetings with the EU mission and the EU special representative in Chisinau.
Dr. Popa informed the BAC of an upcoming bilateral meeting of the Romanian and Moldovan PRO Committees at the border between the countries, aiming at identification of NTBs and transport facilitation.
Mr. Efthymiadis invited members again to contribute their points and views for developments in Moldova prior to the meeting, so that the group can be best prepared.
With regard to the Kosovo mission, Dr. Busek confirmed his participation, and so did Mr. Vebi Veljia.
Mr. Fumagalli clarified it to new members that the BAC holds four regular meetings a year, plus business missions, according to the stimulation received.
With regard to the planned Kosovo mission, Dr. Busek expressed his optimism about the business mission this time, stressing that with unemployment at 50% Kosovo is in immediate need of foreign investment.
3. Interaction with Dr. Busek
Dr. Busek started his comments with the outcome of the French referendum, noting that it is postponing something, but not canceling it. He reflected on the referendum as a lesson to governments that people need to know what integration is and be on board this effort. The referendum outcome might also be perceived as an indication of some additional pressure to the current accession negotiations with Turkey, but these are all aspects to be revealed in time. He noted that for the region, the result of the referendum does not mean anything. He stressed that the EU requests from Croatia to FULLY COOPERATE before starting negotiations, which could make it easy to get a negative view in Croatia for the EU, making it a matter of discussion how the ICT and Hague will be presented to the Croats.
With regard to the Regional Table meeting in Sofia, Dr. Busek expressed his content that it was a very outspoken meeting, which dealt with the issue of how regional ownership can be really achieved. Dr. Busek was the first to raise the issue of phasing out the Stability Pact through the strengthening of regional ownership, but highlighted the fact that maybe various centers are operating from inside the region, yet their content, staff and finance is coming and going out of the region. Referring to the policies of the US State Department, he noted that the latest year of their involvement will be 2008. He stressed that the BAC is one initiative that should remain following the phase out of international assistance. He therefore stressed the need for sustainability of the BAC and of the presence of the business community even after the phase out.
Dr. Busek commented on the new group which has been formed under Ms. Loyola de Palacio, focusing on the new priorities for transport Corridors in the region: number X remains a priority, while the western part of Corridor VIII does not attract interest, with Corridor V being under doubt. This situation demonstrates the results of lack of cooperation between the governments. Corridor VII remains a priority and more initiatives are undertaken to build ports, logistics facilities and bridges across and around the Danube. Therefore, Corridor VII requires the involvement of the business community. Referring to the Vidin-Kalafat bridge across the Danube in particular, Dr. Busek said that construction may start in May 2006. Finally, he stressed the competition between Corridor IV with the Bucharest-Budapest route, noting that the Romanian government cannot do both.
Dr. Busek suggested that it would be very important for the BAC to support the establishment of a regional airline system, and invited the BAC to address a letter to all prime Ministers in the region, noting that this is imperative at a time when a single European sky is discussed in Brussels. Dr. Busek invited the BAC to ask local governments to do something about the capacity of local airlines, noting that there is enough funds available, but the elaborated proposals are missing.
Finally, Dr. Busek discussed the idea of establishing a PPP Center in Sofia, suggesting that the BAC clearly states what is expected by the Stability Pact, the EU and the local governments - namely cooperation with each other.
In conclusion, Dr. Busek noted that Director of WT II, Dr. Bernard Snoy, will start working with the OSCE and will therefore continue to work closely with the BAC, while at the same time there is some “new blood” in the WT II, with Laurent Guy, who should be invited at the next meeting.
Reflecting on the Regional Table meeting, Mr. Aldo Fumagalli stressed that the BAC was referred to as a body with an important role, and that two papers were circulated – one on FTAs and one on PPPs and infrastructure. Mr. Fumagalli reported to the BAC that his intervention during the meeting was related with the need to proceed with the introduction and implementation of a single Free Trade Agreement in the region (versus the existing network of 28 bilateral ones), and that the construction of basic infrastructure is essential for the attraction of FDI in the region. He concluded by saying that the business community cannot wait for much longer and it is important for local governments, the IFIs and the EU to work on a regional basis and use PPPs, developing further transparency and clear rules.
Mr. Oswald Hutter, Expert of the Stability Pact and guest at the meeting made a brief comment about the fact that in the past EU funds have been used for feasibility studies in the transport sector. It is estimated that in 2020 there will be a new division of the region along Corridor X.
Mr. Michael Mix took the floor with regard to the transport network in Romania and the competition presented between the EU defined Corridor IV and the Bucharest-Budapest axis. He noted that Romania has loans with the EIB and the EBRD since 1998 which have not been used for a number of reasons (the local share cannot be found, the feasibility study is not done, the projects lack economic viability, etc). He stressed that Corridor IV goes through very difficult terrain and does not meet the 15% return on investment threshold. What his company is doing is a road that is not actually competing with Corridor IV, as the Carpathian mountains lie in between the two roads. In addition, Romania needs to have some additional kilometers of road to comply with the EU standards and be ready for accession in accordance with the chapter on transport. He also noted that currently Romania has huge foreign reserves which are not invested back in the country, creating inflationary pressures to the economy.
Dr. Stephan Popa, the representative of the SECIPRO network, commented that the government is too slow in taking any action, as if it was surprised to get elected, and has a volatile majority.
Dr. Busek noted that there is a very small crew to do a lot of job in the country. With regard to Corridor IV, he stressed the importance of building the Vidin-Kalafat bridge, since there is no bridge across the river for approximately 500km. Vidin has lost some 20-30% of the population and overall rural Romania is emptying. He concluded by saying that migration is a field where the EU must develop a common strategy sooner rather than later.