BALKAN REGIONAL PROFILE:

THE SECURITY SITUATION AND THE REGION-BUILDING EVOLUTION OF SOUTH-EASTERN EUROPE

(A Background and May - June 1999 Issue in Brief)

© Institute for Security and International Studies (ISIS), Sofia

Research Study 8, 1999

Hard copy: ISSN 1311 - 3240

 AN I S N SPONSORED MONTHLY ELECTRONIC PERIODICAL


I. INTRODUCTION

II CONFLICTS AND POST-CONFLICT DEVELOPMENTS IN THE BALKANS

III THE NATIONAL PERSPECTIVES OF THE BALKAN COUNTRIES: SPECIFIC ISSUES

IV THE BILATERAL AND THE MULTILATERAL RELATIONS IN THE BALKANS. THE STATE OF THE  REGIONAL INITIATIVES

V THE ECONOMIC SITUATION OF THE BALKAN COUNTRIES AND THE REGION

VI THE INFLUENCE OF EXTERNAL FACTORS ON THE REGION: NATIONAL GREAT POWERS AND INTERNATIONAL INSTITUTIONS

VII THE SECURITY SITUATION AND THE REGION-BUILDING EVOLUTION: CONCLUSIONS


I. INTRODUCTION

In the last 5-7 years Yugoslav politologists have accentuated on the concept of the 'integrated Balkans' as an alternative and in opposition to European integration. This idea has been much in service of the militant and destructive policy of FRY in the region. In May and June 1999 the life of this artificial conceptual construct has been drawn to a close: the destructive policy of ethnic cleansing was reversed and the model of ethnic tolerance experienced in other Balkan countries in harmony with their Euroatlantic integration designs triumphed.

Though things in real life are not as definite as stated here and ethnic tolerance does not come overnight in the Balkans the chances of security stabilisation greatly improved and a slowed-down process of region-building - due to the wars in former Yugoslavia, received a new momentum by the end of the last one - in Kosovo.

 

II Conflicts and Post-Conflict Developments in the Balkans

The conflict and the post-conflict landscape of the Balkan region was dominated by the Kosovo conflict - the crisis in the province and the strike of NATO against FRY. The air campaign of NATO produced negative results for the military machine of FRY. The latter was additionally worsened from the degraded economy and infrastructure of the country, from the political criticism that was evolving from the ranks of the opposition and from the growing humanitarian crisis of the Serbian people. The NATO military domination from the air was asserted in the beginning of May 1999 when Bulgaria and Romania officially provided zones of their air-space for the "Allied Force" operation of NATO. Practically FRY was encircled by NATO or NATO dominated air-space. For 77 day of war more than 35,000 sorties have been carried out by the Allied air-force. The level of 'suffering' as perceived by the Yugoslav leadership reached in the end of May 1999 a hardly manageable scale. The military casualties of FRY are calculated to be a loss of 50% of its artillery, more than 30% of the armoured vehicles and a major part of its air-defence system. Just a few days after the 3d Yugoslav army suffered heavy losses in Kosovo Belgrade decided to accept the conditions of NATO.

The economy of FRY has been degraded to the level of the end of the Second World War. At the same time the strategy of Milosevic to inflict pain on the Western societies by sending bodybags of their soldiers back home, causing political discontent in the respective countries and to induce disunity within the Alliance failed. This was a decisive prerequisite for the diplomatic efforts on various fronts, including an active Russian participation and initiative to reinforce each other in a way that led to a breakthrough of the politically deadlocked situation. The indictment and the issued warrants of arrest against the Presidents of FRY and Serbia, one of the FRY Deputy Prime Ministers, the Chief of Staff of the Yugoslav Army and the Minister of Internal Affairs of Serbia on 27 May 1999 by the International Criminal Tribunal for the former Yugoslavia (ICTY) with charges of committing murder, persecutions, deportation, etc. have also pushed Belgrade to accept the conditions of the G-8 for regulating the conflict of 6 May 1999. On 8 June 1999 the G-8 meeting of the Foreign Ministers in Cologne, Germany finalised a draft UNSC resolution that was passed on 10 June 1999 and set out plans for peacekeeping and administration in Kosovo. A day earlier, on 9 June, 1999 the British Lt. Gen. Sir Michael Jackson signed the Military Technical Agreement for Kosovo on behalf of NATO and two Serbian Generals - on behalf of FRY. The agreement regulates the withdrawal of the Yugoslav army and the deployment of an international security force (KFOR) in the province. A verifiable compliance with the agreement led to the suspension of the NATO air campaign and to the declaration of the end of operation "Allied Force" of NATO on 20 June 1999. A Russian solo and uncoordinated military overture in the KFOR context has been successfully managed within the Alliance scenario by the US and NATO diplomacy (political and military) in a broader package with financial measures in favour of Russia. The latter was also satisfied both for its new virtual international profile, reminder of its traditional Balkan connection and for the domestic reactions to the military demonstration in the aftermath of the war.

The humanitarian aspect of the conflict, mainly the plight of the refugees/deportees was not just a side effect of the war. This was the fundamental element of this war. The planned ethnic cleansing in Kosovo did not just prepare the terrain for introducing eventually Serbian population in the province. This was also the Milosevic regime's weapon of destabilising other countries from the Balkan region. This is why the strategy of post-conflict financing will be sound if it meets both the immediate needs of the refugees and if it strengthens the whole region in countering this unprecedented challenge.

The magnitude of human suffering has been really appalling: 250,000 refugees in FYROMacedonia, 450,000 - in Albania, more than 100,000 in Montenegro, Bosnia and Herzegovina and Bulgaria, more than 75,000 in EU, NATO and other Western countries, some 800,000 Kosovars in hiding in the province itself. 20 nations participated in the NATO organised operation "Allied Harbour" for delivering humanitarian aid to the refugees in Albania. The major concern of the Balkan humanitarian situation is the approaching winter and the immensity of the task to prevent hundreds of thousands of refugees living in the open.

A dramatic component of the security situation in the Balkans has become the worsening ecological security of particular areas and the region in general. The price of the wrong policies of Milosevic has risen dramatically in the last two months for the Serbian people and state, but also for the neighbouring countries.

Three types of strategic obstacles, risks and challenges need to be overcome at one and the same time before reaching the objective of recuperating Kosovo, stabilising and integrating the region of Southeastern Europe in the Union and in the Alliance:

First, bringing back in a non-anarchic way the refugees into a de-mined environment; providing food for all Kosovo people for the next year and preparing for planting the next year's crops; solving the logistic problems for KFOR itself.

Second, putting under control the eventual paramilitary activities of Serbs and Albanians in Kosovo; rebuilding the towns and the villages, the fuel dumps, power stations, communication and transport facilities and infrastructure; coming to terms on the political future of Kosovo within the borders of Yugoslavia.

Third, the implementation of the Stability Pact for Southeastern Europe, adopted on 10 June 1999 in Cologne (the Stability Pact was adopted by the EU, EC, CE, OSCE, USA, Russia, Canada, Japan, all Southeastern European countries but FRY, though Montenegro is included in cooperation plans, UN, UNHCR, NATO, OECD, WEU, IMF, WB, EIB, EBRD, Representatives of the Royaumont process, BSEC, CEI, SECI and SEECP); preserving a clear differentiated approach of integration of those countries of Southeastern Europe that are ready to join the EU and NATO (Bulgaria, Romania, Slovenia) while applying more vigorous schemes of help for their integration in the Union and the Alliance.

The next main Balkan conflicting issue of this period remained the 'Ocalan case'. The trial against Abdullah Ocalan, the leader of the outlawed in Turkey Kurdish PKK, began on 31 May 1999 on Imraly island in the Marble Sea. On 29 June 1999 death penalty was pronounced by the jury. The defendant has warned that his physical execution will lead to rise of tensions and more bloodshed in Turkey. Four significant issues are at stake in connection with this legal case: a) the internal stability of a major inter-regional power like Turkey; b) the prospects of the security environment of a huge economic project as the Baku-Ceyhan oil pipeline that may be influenced by acts of revenge of Kurdish rebels; c) the prospects of the Greek-Turkish relations that deteriorated after the arrest of the Kurdish leader. The Governments of both Greece and Turkey did much in an effort to side-step the issue during the Kosovo crisis, including through a Greek proposal for a multilateral agreement to combat terrorism in the Balkans; d) the Turkish application for closer relations with the EU and Turkey's membership in the CE. The death penalty is abolished by all EU members and the death sentence would not help relations between Turkey and Europe.

The conflict would escalate even more if Turkey implements a new criterion the Government has decided to apply to foreign policy in connection with the parameters of foreigners' expression of their reaction to this case: the relations of Turkey with foreign countries or international organisations should be conditioned primarily by their aversion to separatist terrorism in this country. This criterion may easily lead to the formation of an "enemy image" if a criticism or an attitude is not to the liking of Turkish authorities. Such a development would be counterproductive to Turkey's longer-term interests.

A third evolving conflicting issue for the passed period has been the Bulgarian-Romanian dispute about the place of constructing a second bridge over the common sector of the Danube river. The Romanian Government was expected to confirm in a written form the agreement of the President of Romania to launch the construction of the second bridge over the Danube at Vidin-Kalafat presented to the Bulgarian President in Lviv, Ukraine during the regional meeting of Presidents. There are about 500 bridges in the upper and middle parts of the river. The bridge at Vidin-Kalafat is determined by the Transport Euro-corridor No 4 and Bulgaria has engaged unilaterally to finance the project with EU and EBRD support. The silence of the Romanian Government is perceived painfully by the Bulgarian society in a period when the missing bridge at Vidin-Kalafat worsens dramatically the country's economic security during and after the end of the Kosovo crisis. A continuing negative interrelationship on this most important for the Bulgarians issue is counterproductive for the future relations of the two countries and for the regional stability. The Bulgarian President urged the Bulgarian Prime-Minister to send his Minister of Transport to Bucharest for further clarifications. Unfortunately, during the visit of the Bulgarian Minister of Transport he was received neither by the Prime-Minister of Romania nor by his counterpart, the Minister of Transport of Romania. No practical steps by Bulgaria are possible without a Romanian cooperation. Insisting on the priority of the Romanian infrastructure strategy, favouring the horizontal transport links relative to the vertical ones, such as the Vidin-Kalafat bridge, has the potential to worsen the bilateral relations. This bridge has a national security priority in the Bulgarian infrastructure strategy. It is the only ground transport connection with Central and Western Europe after the destruction of the Yugoslav bridges during the war.

Fourth, the post-war rehabilitation of Bosnia and Herzegovina. Most importantly, Republika Srpska could not be used as a Trojan Horse against NATO during the "Allied Force" operation. The Dayton Agreement about Bosnia survived a most dangerous test. On 7 June 1999 SFOR apprehended Dragan Kulundzija who has been indicted on 21 July 1995 by the ICTY for crimes against humanity, violations of the laws and customs of war and grave breaches of the Geneva Conventions. Later he has been transferred to The Hague. On 20 May 1999 in Brussels was convened a donors' conference for Bosnia and Herzegovina. The lessons of repairing the ravages of the war and the gradual development of functioning institutions learnt in Bosnia and Herzegovina will be extremely important for the similar tasks in Kosovo. For the insiders of the Bosnia rehabilitation process it is no surprise that the scale of the task has been under-estimated while the willingness of the local parties to work together to achieve the task has been wrongly over-estimated. The donors are ready to respond to the urgent need of massive direct foreign investment in Bosnia but the government of this fragile state has not instituted the necessary reforms to make investors feel welcome. Bosnia and Herzegovina is divided into two largely autonomous units: Republika Srpska, dominated by Serbs, and a federation dominated by Croats and Muslims developing a rather uneasy partnership. The relations between the donor and power-imposing agencies has come to be the narrowest aspect of the government of this country. The result till now is stagnation of the Bosnia state and payment of $5,1 billion of first-aid for its slow reconstruction by the European and North American tax-payers. The latter pay the costs also for SFOR. Though there are many differences between Bosnia and Kosovo the lessons drive the thinking towards an arrangement of a protectorate-type of management in the latter.


III The National Perspectives of the Balkan Countries: Specific Issues

1. Albania

The Kosovo crisis diverted the internal social and political tensions in Albania to more constructive attitudes that allowed the reception of almost half a million Kosovar brethren. Many of the deportees were housed in private homes. This act of humanity changed significantly the image of the Albanians to the positive after the chaos of 1997 and the political clashes of September 1998. Albania, however, faces a lot of problems ahead. The pressure on its backward economy by the refugee inflow makes much harder the tasks of improving law and order, rebuilding schools, courts and public institutions, constructing basic infrastructure that will open the country to the world. NATO through its "Allied Force" and "Joint Guardian" operations partly cared of basic elements of the Albanian transport infrastructure. A lot more in the economic field is needed to make feasible the country's ambition to join the Alliance. The political division of the Albanian society was intensified by the internal disunity of the Kosovar political factions during the crisis: the opposition Democratic Party favours the League of Democratic Kosovo (LDK) of Ibrahim Rugova while the ruling Socialist Party backs the Kosovo Liberation Army (KLA). Efficient participation in re-building Kosovo by the Albanians seems even more challenging than sheltering the refugees because it would require reconciliation internally and uniting the different political trends and groupings in Kosovo.

2. Bulgaria

The Bulgarian Parliament confirmed on 4 May 1999 the agreement of the Government with NATO for providing airspace corridor to the Allied aviation for the "Allied Force" operation and on 25 June 1999 - for operation "Joint Guardian". The Bulgarian public opinion (about 70%) opposed the bombing of the Alliance against FRY and equally accused the ethnic policy of Milosevic against the Albanians in Kosovo. The 'Alliance' loyalty of Bulgaria in all stages of the development of the crisis, including in May-June 1999 improved significantly the political case of the country's application for membership in NATO. Most significantly, the complex attitude of the public opinion showed that the Bulgarian democracy remained vibrant and working. Even during the war the Bulgarian armed forces continued their reform in adaptation to the standards of the Alliance. Bulgaria also joined the Common European Defence preparations of the WEU for the EU Summit in Cologne. With the end of the hostilities in Kosovo Bulgaria has negotiated sending an engineer company and police units to enforce and maintain order in Kosovo. The consistent and principled policy of Bulgaria on the Kosovo crisis led to the reconsideration by the EU of the country's role in the restoration of peace, rebuilding the region and guaranteeing stability and security in Southeastern Europe. The EU has issued signals Bulgaria may start accession negotiations with the Union at the beginning of 2000. At the same time Bulgaria successfully managed its relations with Russia and the balance relative to all major regional debates.

The visit of the Prime-Minister of the United Kingdom, Tony Blair on 17 May 1999 was the diplomatic highlight of the last two months - a first visit after more than seventy years by a British Prime-Minister. The meeting of the Bulgarian Prime-Minister with the Prime-Minister of Italy and with the German Chancellor added importantly to the evolution of the country's increased international role.

3. FYRO Macedonia

The economic losses, the social tensions created by the large number of refugees, by Serbian provocations, by the extraordinary situation for the political leadership destabilised the reform process in the republic. The establishment of full diplomatic relations with Taiwan and the visit of the Prime-Minister in the beginning of June 1999 to Taipei was a pragmatic effort to involve a fresh funding source in the backward economy and infrastructure of the country. At the same time FYROMacedonia sent very promising signals to the international community: it displayed the kind of ethnic tolerance between Macedonians and Albanians (Christians and Muslims) demonstrated in the last ten years in Bulgaria between Bulgarians and Turks (Christians and Moslems); it produced an example of successful management of an extremely dangerous for the country's stability crisis; it showed an example of how democracy can function even in harshest social conditions, preserving a high level of tolerance towards the political opposition that favoured the regime of Milosevic during the war. An important part of the success is the clear and huge demonstration of support by all major NATO allies, including the visit of the President of the USA to Skopje as well as the firm political, military and some modest economic help provided by neighbouring Bulgaria.

4. Greece

Yugoslavia of Milosevic lost its fourth war in the last decade - in Kosovo. The country is in rubble, the people are frustrated, the Serbs in Kosovo - in panic, Milosevic is in power, the opposition is not yet the strong actor to challenge the dictator. The only meaningful factor of the survival, democratisation and prosperity of Yugoslavia today is the tiny mountain republic of Montenegro - Serbia's junior partner in the federation. It insists on more autonomy and opened a representative office in Slovenia in the end of May 1999. The President of Montenegro, Milo Djukanovic visited London, Warsaw and Sofia in the last two months. In case Yugoslavia is not democratised Podgorica will go its own sovereign way, told the Bulgarian press Milo Djukanovic. The role of the Yugoslav military is still to be clarified: it reflects in its ranks all tendencies of the Yugoslav society - pro-Milosevic, democratic opposition, but ultra-nationalist opposition too. The anti-Milosevic stance of the Serbian Orthodox church arouses doubts about the motivation and the capability of this institution to induce ethnic tolerance in Kosovo and in FRY in general after decades of chauvinistic policy.

5. FRY

Greece's port of Thessaloniki was the main gate for passage of NATO personnel and equipment for operations "Allied Force" and "Joint Guardian". In May and June 1999 Greece explored diplomatic options to the military campaign. It also provided a certain relief for the refugees. Thessaloniki was elected to be the seat of the EU Agency for the Reconstruction of Kosovo on 29 June 1999. In mid-May Greece announced officially its demand to purchase a $200 million anti-ballistic missile system "Patriot" from the US. According to Pentagon sources this deal would not violate the military balance in the region. Greece is completing an agreement of buying 15 advanced French fighter-jets "Mirage 2000-5" in the next 2-3 months. France was also asked to upgrade 10 "Mirage 2000" of the Greek Air Force.

6. Romania

Romania joined fully the two NATO operations in Kosovo. The economic problems of the country were further worsened by the war in the area. Romania is trying to utilise its good relationship with Belgrade in the past to participate actively in the reconstruction efforts in FRY.

7. Turkey

The death penalty against the Kurdish PKK leader A. Ocalan of 29 June 1999, if not reversed by following procedures would increase the tensions in the country and in Europe. The newly elected Government of Bulent Ecevit, apart from the issue of terrorism faces the complicated issue of balancing secularism and Islam on the edge of democracy. Pluralist democracy is a challenging doctrine and practice for Turkey in light of the magnitude of the religious issue and the high standards of being an EU and a CE member. In the third week of June 1999 Turkey received 5 Sikorsky combat helicopters from the USA as part of 50 purchased in a $632 million deal. 20 helicopters will be received by September 1999 and the rest - till March 2000. In June 1999 Turkey received the approval of $155 million loan from the WB designed to upgrade the technological capabilities of Turkish companies. This is expected to lead to matching the standards of the European Customs Union.

IV The Bilateral and the Multilateral Relations in the Balkans . The State of the Regional Initiatives

1. Bilateral Relations

The network of bilateral relations in the Balkans in May-June 1999 was directed mostly to bring to an end the Kosovo conflict and to prepare the ground for the reconstruction of the province and of FRY. It also bears the tendency of a more active region-building relationship once the post-war rehabilitation evolves.

The visit of Montenegrin President to Sofia on 14 June 1999 has the potential to stimulate the relations of Bulgaria and FRY. On 17 June 1999 the Bulgarian Government lifted the oil embargo against Belgrade - a few days before the EU considered the issue. Providing transport facilities to FYROMacedonia for the return of the refugees by Bulgaria and the agreement construction companies of the two countries to apply for joint projects raised the spirit of building-up in the region.

However, Greek-Turkish relations remain of utmost importance for the future stability of the Balkan region. The Foreign Minister of Greece Papandreou declared on 22-23 May 1999 that the two countries will not be dragged into fighting each other and that the cooperation of Greece and Turkey on the refugee problem helped them contain some recent incidents on Aegean islands. According to Papandreou Greece was unwillingly involved in the Ocalan issue and the Kurdish problems are questions for Turkey and have nothing to do with Greece. Yet, the two countries have an open problem - of trust, and this needs to be improved. The cooperation of Turkish and Greek military within the new NATO command structures in Izmir (Turkey) and Larissa (Greece) may help. In a similar way the cooperation in the multilateral context of the multinational peacekeeping force of Southeastern Europe or the Southeast European brigade, stationed in Plovdiv, Bulgaria may add to improved communications and mutual confidence. Both Greece and Turkey have the interest of stabilising the Balkans and eliminating international terrorism which has the potential to influence the domestic terror environment. The post-Kosovo period that begins with a current positive momentum in the bilateral links can strengthen a more dialogue-oriented approach in the Greek-Turkish relations.

2. Multilateral Relations

a) Meeting of the Presidents of the Parliaments of Albania, Bulgaria, FYROMacedonia and Italy about Transport Corridor 8

The major point of discussion on 2 May 1999 in Skopje was the war in Kosovo. The declaration that was adopted displayed the readiness of the Parliaments of the 4 countries to coordinate their efforts on the construction of the transport corridor.

b) Meeting of the Foreign Ministers of Bulgaria, Greece and Romania

On 14-15 May 1999 in Sofia was convened the fifth trilateral meeting of the Foreign Ministers of these countries. The previous meetings were in Yanina, Varna, Sinaya and Santorini. The Balkan initiatives of solving the Kosovo crisis and the infrastructure projects were the topics of the discussions in Sofia.

3. Regional Initiatives

The following regional initiatives influenced the region in May-June 1999:

a) Multinational Peacekeeping Force of Southeastern Europe (MPFSEE)

(1) The Bulgarian Parliament ratified on 13 May 1999 the multilateral agreement of 26 September 1998 for the creation of the regional rapid reaction contingent of 2,000 representatives of 7 countries - Albania, Bulgaria, FYROM, Greece, Italy, Romania and Turkey with headquarters for the initial 4 years starting from December 1999 in Plovdiv. The MPFSEE will participate in operations under the UN, OSCE, NATO and WEU mandate. (2) On 25 May 1999 in Sofia was convened the second meeting of the Deputy Ministers of Defence of the MPFSEE countries. The USA and Slovenia were also represented as observers at the Sofia meeting.

b) Southeast European Co-operative Initiative (SECI)

(1) On 28 April 1999 in Athens 9 out of the 11 SECI countries signed a Memorandum of Understanding (MoU) on the Facilitation of International Road Transport of Goods. (2) On 26 May 1999 in Bucharest was convened a meeting of 9 countries from Southeastern Europe in the context of SECI. The participating countries signed an agreement of cooperation in combating trans-border crime and approved a "Charter of Organisation and Operation of the SECI Regional Centre for the Combating of Trans-Border Crime". They will exchange information and their police and customs officers will work together in the Bucharest placed Centre of cooperation. SECI supporting states - Austria, Italy, Switzerland and the USA, as well as the UK, the EC and Interpol strongly encouraged these efforts.

V The Economic Situation of the Balkan Countries and the Region

1. Inflation (background information)

The structure character of the inflation in the countries of Southeastern Europe determines its persistence and the partial effectiveness of the measures for coping with it. In the transitional countries to market economy inflation is not just a currency phenomenon but rather reflects the general macroeconomic imbalance of the economies and the difficulties in achieving macroeconomic stabilisation. The restrictive monetary policy in the absence of restructuring of the real sector leads to a drastic increase of the inflation in Romania and the devaluation of its currency. The annual rate of inflation in FRY continues to rise despite of the control of the conditions of the military economy. The inflation during 1998 in FYROMacedonia and Croatia increased. Thanks to the currency board arrangement in Bulgaria the inflation decreased to a 22% annual rate and this allowed financial stabilisation of this country and permanently getting out of the cycle of hyperinflation.

The preservation of an inflation rise of the prices, though a moderate one remains to be a characteristic feature of the model of economic development of the more ripe market economies of Greece and Turkey. In Turkey a mid-term programme of diminishing inflation is carried out with the support of the IMF. The goal is to reach 20% in the end of 1999 from 90% in the end of 1997. The forecast for 2000 is less than 10% inflation if fiscal and structure measures are taken for disinflation.

The inflation in Greece is relatively on a higher level compared to other EU countries. The problem of the Greek economy is lowering inflation for reaching a reference value of 2,7% annual rate according to the Maastricht criteria. Disinflation would require purposeful programmes of fiscal stabilisation and improvement of the instruments of the monetary policy that would help the preparation of the integration in the EMU.

2. Unemployment (background information)

The high level of unemployment and its structure character reflect major problems of the general depressive condition of the economies of most of the Southeast European countries. Since the reviving of the investment activity remains an open issue there exist risks the social problems to be further deepened by the continuing unemployment. Poverty, social exclusion and criminality are the main features of the social problems in the transitional economies. The expected difficulties of getting foreign funding and the deficit of resources for reviving the investment activity will create risks of increasing social differentiation due to the unemployment. The highest unemployment levels are in FRY and in FYROMacedonia ( in 1998 - 32% and 27% respectively). The unemployment in Croatia reached 18% in 1998, in Slovenia - 14,5%, in Bulgaria - 12% (the expectations for 2000 are 15%) and in Romania - 10,3%.

The general depressive condition of the economies of most of the countries in the region will very probably not allow the realisation of the more radical steps towards employment by stimulating the investment activity and the growth in 1999. The fundamental reason for that is the decapitalisation of the real economy in the transitional countries and the common deficit of foreign funding and supporting international crediting sources.

3. Economic Losses from the Kosovo Crisis

According to Raiffeisen Zentralbank, Vienna, Austria the losses from the war in Kosovo for Croatia are $1,2 bil., Romania - $700 mil., Bulgaria - $600 mil., Hungary - $500 mil. The structure reforms in Romania and Croatia are slowed down. The losses for Croatia are mainly in tourism and transport.

VI The Influence of the External Factors on the Region: National Great Powers and International Institutions

The influential attitude, mainly by NATO was decisive to reverse the ethnic cleansing in Kosovo and bring to a diplomatic close the war in FRY. The success of KFOR as well as of SFOR will determine decisively if the end of this decade is to be the turning point in the history of the Balkans. Even more important is the success of the Pact for Stability of Southeastern Europe, coordinated by the EU.

During May and June 1999 the USA tried its new doctrine of 'humanitarian intervention' - when human rights are violated on a massive scale (ethnic conflict is escalating to ethnic cleansing), strategic interests of the USA are at stake and if the solution of the issue does not lead to loss of American life. In support of the region the US President visited on 22 June FYROMacedonia and met also with the Albanian President in Skopje that day. On 22 June 1999 the Secretary of State of the USA visited Sofia, Bulgaria and Bucharest, Romania. She confirmed the US support for the integration of both countries in the Alliance. On 19 June 1999 the ATDA provided a grant of $588,000 to Bulgaria for studying the route of the oil pipe-line from the Bulgarian port Bourgas through Skopje to Vlora, Albania - one of the segments of the Transport corridor 8 for Caspian oil.

On 20 June 1999 the G-8 countries in Cologne called on Turkey to resume talks on Cyprus with no preconditions in the autumn. They hinted that the November summit of the OSCE in Istanbul should be a deadline for reaching a settlement.

The main concern of Russia in the last two months in the Balkans was the way it will organise its military presence in the KFOR.

Officials from the CE and from the EU appealed to the Turkish authorities to change the death sentence of the Kurdish PKK leader Ocalan. The CE adopted on its 104th Session in Budapest, 6-7 May, 1999 a Stability Programme for SEE.

VII The Security Situation and the Region-Building Evolution: Conclusions

1. The end of the Kosovo crisis marked the end of a long period of Balkan conflicts and the beginning of a new chapter of geopolitical formation of this area. The core of the effort will be the integration of the countries of the region in EU and NATO.

2. The post-conflict rehabilitation of the region is in the international focus. A differentiated approach to the applicant countries of Southeastern Europe has become a practical approach of the EU and NATO member-states and authorities.

3. After the death sentence of Ocalan the Kurdish conflict escalated. At the same time this renewed tense situation bears a huge constructive political potential for turning the tides of terrorism in Turkey - if skilfully managed by the Turkish authorities and carefully encouraged by leading external powers and institutions.


EDITORIAL STAFF: CONTACT AND REFERENCE
Dr. Plamen Pantev, Editor-in-Chief ISSN 1311 - 3240
Dr. Tatiana Houbenova-Delissivkova Address:
Mr. Valeri Rachev, M. A. ISIS, 161 8 Sofia, P. O. Box 231, Bulgaria
Dr. Sc. Venelin Tsachevsky Phone/Fax: ++(359 - 2-) 551 828
Mr. Ivan Tsvetkov, M. A. E-Mail Address: isis@cserv.mgu.bg
Dr. Dinko Dinkov
Dr. Todor Tagarev



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