Emerging Economies in South- Eastern Europe Relationship with the EU - Stabilization and Association Process (SAP) Prof. Vito Bobek University of Maribor, Slovenia Faculty of Economics and Business

INTRODUCTION 1.The role of the EU in the Western Balkans has been strengthening since the end of the wars in the region at the end of 1990s. 2.The major framework for EU’s relations with the Western Balkans is the Process of Stabilisation and Association. 3.The EU has granted membership perspective to Western Balkans countries. 4.Stabilisation of the region and its integration with the EU is one of the priorities of Slovenian activities within the EU. 5.Challenges in the future?

STRONG ROLE OF THE EU IN THE REGION  The first initiative with a strong EU support: Stability Pact in 1999  EU Missions of civil crisis management and first EU military missions launched in the area of Western Balkans – Western Balkans as learning ground for Common Foreign, Security and Defence Policy EU Police Mission to Bosnia and Herzegovina: first mission under European Security and Defence Policy (launched in January 2003) Concordia: first EU military operation in FYROM (March to December 2003) Proxima: EU police mission to FYROM (launched in December 2003) Althea: EU military operation in Bosnia and Herzegovina (launched in July 2004)  Process of Stabilisation and Association.

 After wars in republics of ex-Yugoslavia had ended, the EU decided to launch a long term approach to the region of Western Balkans in 1999 by introducing Stabilisation and Association Process (SAP)  Ideas underpinning the SAP: i)close relation with the EU and a prospect of eventual accession to the EU can encourage Western Balkan countries in their political, economic and social reforms; ii)a need for enhancing regional co-operation. STABILISATION AND ASSOCIATION PROCESS (I)

 Main elements of the Stabilisation and Association Process: 1.Preparation for Stabilisation and Association Agreements (SAA)  EU proposes signing a Stabilisation and Association Agreement when a country is prepared for it. 2.Negotiating, signing and implementing SAA  SAA represents a legal framework for co-operation between WB countries and the EU,  Agreement for each country is tailored to its specific needs and circumstances. STABILISATION AND ASSOCIATION PROCESS (II)

STABILISATION AND ASSOCIATION PROCESS (III)  Contents of SAA (e.g. SAA with Croatia)  political dialogue (respect of fundamental democratic principles);  regional co-operation (foster good neighbourly relations);  the four freedoms, with the creation of a free trade area by 2007 for industrial products and most agricultural products;  approximation of the legislation of Croatia to the EU acquis;  wide-ranging co-operation in all areas of EU policies, including in the area of justice, freedom and security;  trade provisions of the SAA asymmetrically in favour of Croatia.

STABILISATION AND ASSOCIATION PROCESS (IV)  Regional Co-operation Besides development of close bilateral relations with each partner country SAP has a strong regional component. Fulfilling the criterion of regional co-operation is a condition for progressing in the SAP. EU’s policy objectives: i)close contractual relations between countries in the region; ii)Free trade agreements iii)Gradual integration of the region into European infrastructure networks (e.g. transport, energy etc) iv)regional co-operation against common threats (e.g. organised crimes, illegal immigration etc).

STABILISATION AND ASSOCIATION PROCESS (V)  Financial Assistance to Western Balkans countries – CARDS Supports the objectives and mechanism of SAP – financial help to the region in order to meet obligations from SAA For the period the EU has provided € 5.4 billion to achieve the following objectives: i)reconstruction, democratic stabilisation, reconciliation, return of refugees; ii)Institutional and legislative development; iii)Sustainable economic and social development; iv)Promote regional co-operation.

Multi-Annual Indicative Financial Framework: Breakdown of the Instrument for Pre-Accession Assistance Envelope For into allocations by country and component (1)

Multi-Annual Indicative Financial Framework: Breakdown of the Instrument for Pre-Accession Assistance Envelope For into allocations by country and component (2)

Multi-Annual Indicative Financial Framework: Breakdown of the Instrument for Pre-Accession Assistance Envelope For into allocations by country and component (3)

Multi-Annual Indicative Financial Framework: Breakdown of the Instrument for Pre-Accession Assistance Envelope For into allocations by country and component (4)

Multi-Annual Indicative Financial Framework: Breakdown of the Instrument for Pre-Accession Assistance Envelope For into allocations by country and component (5)

STABILISATION AND ASSOCIATION PROCESS(VI)  State of play FYRoM: SAA signed in 2001, entered into force in April 2005; Croatia: SAA signed in 2001, entered into force in February 2005 Albania: SAA signed on 12 June 2006, expected to be ratified in 2 years. Montenegro: SAA negotiations with Montenegro are launched - First Official Round and First technical Round on 26 September December 2006: technical part of SAA negotiations is completed. SAA signed in October Serbia: Launching the negotiations for SAA in October Negotiations with Serbia and Montenegro called off on 3 May 2006 as the country did not fulfil its commitment to fully co- operate with the ICTY. SAA- signed in january Bosnia and Herzegovina: negotiations for conclusion of SAA opened in November : Technical talks for a SAA are finalised, but the initialling and signature of the Agreement depend on political conditions.

 The EU granted membership perspective to the Western Balkans (European Council in Feira (PT) in 2000, reaffirmed several times).  Significance of membership perspective: i)It has proved to be a very successful and effective external policy tool of the EU (lessons learned from 2004 enlargement). ii)Combined with objectives of the SAP it is a crucial motivator for stabilisation, democratisation of the Western Balkans and for further reforms. iii)Countries’ commitments to the EU defined in SAAs; progress towards the EU depends on how quickly and effectively countries deliver their commitments – principle of conditionality.  Croatia and FYROM given candidate status in June 2004 and December 2005 respectively.  Croatia started accession negotiations in October MEMBERSHIP PERSPECTIVE FOR WESTERN BALKANS

WESTERN BALKANS – A PRIORITY FOR SLOVENIA (I)  In its strategic documents on Slovenian activities in the EU the government has declared that progress of the Western Balkans towards the EU is a Slovenian priority. (Slovenia's Priorities for the Work in the Council of EU for 2004, 2005 and 2006)  Slovenia supports membership perspective of the Western Balkans countries. However, the speed of their progress on the way to the EU depends on how successful they are in meeting commitments to the EU.

WESTERN BALKANS – A PRIORITY FOR SLOVENIA (II)  Why a stable, democratic and economically prosperous Balkan region is in Slovenia’s vital interest? i)Geographic proximity; ii)Clearly defined rules and provisions on the four freedoms in SAP facilitate economic co-operation with the region; iii)SAP is a basis for co-operation in the area of justice and home affairs: co-operation in areas like illegal immigration; drug and human trafficking; organised crime; fights against terrorism; cross-border co-operation etc. Important in the light of Slovenia’s accession to the Schengen area.

WESTERN BALKANS – A PRIORITY FOR SLOVENIA (III)  Examples of co-operation with Western Balkans: i)Slovenia supports progress of the Western Balkans to the EU through projects of EU assistance for institution building, i.e. twinning projects. Since 2002 Slovenia has participated in 13 CARDS twinning projects in Croatia, Macedonia, Bosnia and Serbia and Montenegro either as a junior partner or as a leading partner, ii)Slovenian co-operation with the Western Balkans countries in the framework of the Stability Pact initiative, iii)Slovenia – a desired partner in the region.

FUTURE CHALLENGES IN EU-WB RELATIONS (I) Challenges for the Western Balkans: Successfully meet the EU commitments and make progress in the SAP (regional co-operation, cooperation with the ICTY, legal approximation etc.) Post-conflict reconciliation process, finding a long-term solution to minority questions Achieve a sustained economic and social development Question of future status of Kosovo? Possible constitutional reform in Bosnia and Herzegovina? Maintain sufficient support of domestic public for reforms and progress in the SAP.

FUTURE CHALLENGES IN EU-WB RELATIONS (II) Challenges for the EU: To respond successfully to the challenges facing the Western Balkans and help the region to make further progress. Absorption capacity of the EU after 2004/2007 enlargement? Enlargement fatigue? Political support for further EU enlargement has been vanishing in some Member States. Negative referendums on the Constitutional Treaty – no legal basis for further enlargement. Public concerns for further enlargement in the EU.

FUTURE CHALLENGES IN EU-WB RELATIONS (III) Challenges facing the EU:  Commission’s enlargement strategy published in November 2005 attempts to respond to these challenges by suggesting: i)Consolidating EU’s commitments to enlargement: EU should not abandon enlargement as a successful external policy tool, ii)Applying fair and rigorous conditionality: EU must demand fulfilment of its criteria, but should reward progress fairly and duly, iii)Communicating enlargement: to better communicate objectives and challenges of enlargement.

FUTURE CHALLENGES IN EU-WB RELATIONS (IV)  Challenges facing the EU: Commission’s communication: The Western Balkans on the road to the EU: consolidating stability and raising prosperity (January 2006) i)Reaffirming that the Western Balkans remains high on the EU agenda ii)A basis for further discussion of enlargement issues under the Austrian EU presidency, foreseen for informal EU foreign ministers meeting in Salzburg in March 2006.