BALKAN REGIONAL PROFILE:

I. INTRODUCTION

The geostrategic shifts in US-Russian and NATO-Russian relations in the last several weeks were reflected directly and indirectly in the security, political, and economic situation in Southeastern Europe.

First, NATO enlargement in the region is generally perceived as an inevitable course for interested actors on the peninsula and beyond, with no Russian opposition expected. In this environment, pro-Atlantic tendencies are gaining political ground in Serbian society.

Second, the new climate of strategic partnership between Moscow and Washington has had a positive effect on the chances of transporting oil and gas from the Caspian Sea region via the Black Sea or through Turkey, Romania, and Bulgaria to Greece and Western Europe. These new opportunities have influenced the cooperation between Greece and Turkey regarding transit of natural gas through their transport infrastructures.

Third, the general climate of solidarity and cooperation in the fight against terrorism was also positively influenced by the evolution of US-Russian and NATO-Russian relations. The sense of having to join to counter the elements of terror in Southeastern Europe and outside the region became stronger after the main security actors left aside historic differences and joined forces against the common threat.

Apart from these tendencies, an older trend saw the diminishing danger of a major outbreak of violence in the Balkans – a development that allowed NATO to cut its SFOR and KFOR forces by 20 per cent. The EU’s policy in Southeastern Europe is also inducing stability and offers incentives for domestic progress in countries like Serbia, Albania, and Bosnia and Herzegovina. The chance of reaching Stabilization and Association Agreements with the EU is an incentive for domestic reforms and for giving priority to security and stability.

The countries of Southeastern Europe have increased their contribution in the fight against terrorism. Bulgaria pledged to increase the number of its troops in the International Security Assistance Force (ISAF) in Afghanistan, as did Romania. The fight against terrorism is a priority issue on Bulgaria’s agenda as a temporary member of the UN Security Council. During the reported period, Croatia also decided to send troops in support of ISAF, while Turkey took over command of the peacekeeping force from Great Britain. Greece is also strongly supporting the anti-terrorist coalition in various ways. Turkey and Bulgaria agreed to broaden their cooperation in the joint fight against terrorism.

The post-conflict situation in the Former Yugoslav Republic of Macedonia (FYROM) remains complex, and preserving stability is difficult. Fifteen laws have been adopted by Skopje as part of the implementation of the Ohrid Framework Agreement, and two more remain to be enacted. The next parliamentary elections have been scheduled for 15 September. The presence of NATO forces remains indispensable.

In Kosovo, significant steps were taken towards reconciliation, and there are hopes that the province will improve its economy.

Due to the opposition of the Republika Srpska, there are obstacles remaining to a joint military command in Bosnia and Herzegovina.

Domestic developments in Serbia and Montenegro have shown both constructive signs and areas of concern. The Yugoslav parliament has adopted an amnesty law for Albanian rebels in southern Serbia. It has also decided to establish a loose federation between Serbia and Montenegro and has begun the drafting of the new constitution. At the same time, Belgrade continues to obstruct the work of the ICTY in The Hague. The ruling coalition collapsed, and the existing differences between the president of Yugoslavia and the prime minister of Serbia became more tense. The dismissal of Chief of the General Staff Neboisa Pavkovic, a relic from the times of Milosevic, is portrayed by President Kostunica as a victory of civilian control over the armed forces. However, many doubts remain as to the ability to institute democratic civil control over the armed forces and the security sector in general in Serbia.

During the period reported on, Albanians overcame their political deadlock and agreed on a consensus president of the country.

Bilateral and regional relations moved in the direction of cooperation, and towards overcoming the problems facing individual countries and the region as a whole. Regional cooperation in the fight against terrorism in the framework of the Southeastern European Cooperation Process is a new dimension of the peninsula’s emancipation as a reliable European region. The launch of the Danube Cooperation Process in Vienna, Austria, during the last days of May is another positive regional development. It is expected that it will facilitate removal of the debris from the 1999 war near Novi Sad and restore free navigation on the river.

In June, both Romania and Bulgaria confirmed their countries' positive economic growth.

Bulgaria marked a significant step toward EU accession after Sofia closed three more negotiation chapters. The Bulgarian government has named a new ambitious target date for completing the accession process and joining the EU – 31 December 2006.

In June NATO confirmed its intention to keep its troops in Southeastern Europe to fight terrorism. The largest PfP exercise ever seen in the region, Cooperative Partner 2002, was organized in Romania. Bulgaria proceeded with its preparations for joining NATO in November by fixing the details of dismantling its operational-ranged missiles. Serbia and Montenegro were granted observer status at the NATO Parliamentary Assembly this month. However, Belgrade’s ambition to join the PfP program will largely depend on the success of reforms in the defense establishment and the institutionalization of democratic civilian control over the security sector.

The US government decided last month to provide special financial support for NATO applicant countries, including those from Southeastern Europe.

Russia and Bulgaria made a significant effort to revitalize their relationship after many years of dubiousness, lack of clarity concerning mutual intentions, and a poor economic relationship. The inability of the Russian Federation, as a great power, to find the adequate approach and measure of dealing with a former trustworthy Warsaw Pact ally led to a degradation of the bilateral relations in a completely different political and strategic situation. This was at the expense of the economies and societies of both countries. With a pragmatic president like Putin at Russia's helm, Russian and Bulgarian leaders tried to formulate the minimum prerequisites for rebuilding the bilateral relations during a visit of the Bulgarian prime minister to Moscow in June.

II. SECURITY THREATS, CONFLICTS AND POST-CONFLICT DEVELOPMENTS IN THE BALKANS

1. Security Threats: Terrorism

The contributions of some Balkan countries to the campaign against terrorism have been helpful for the global coalition worldwide.

a) Albania. Albania granted overflight rights to all NATO aircraft in support of Operation Enduring Freedom. Tirana also opened its seaports for refueling and maintenance support for the campaign against terrorism.

b) Bulgaria. Bulgaria is providing basing and overflight rights upon request, following standard clearance authority for overflights. It already provided bases for six KC-135 aircraft to support humanitarian flights into Afghanistan during November and December 2001. Sofia provided an NBC (nuclear, biological and chemical) decontamination unit of 40 soldiers to support ISAF in Kabul. The government of Bulgaria, reaffirming its commitment, decided to offer another contingent of 21 troops. Bulgaria also offered the following equipment in support of the global campaign against terrorism: 2 TMM Heavy Mechanized Bridges; 2 BAT bulldozers; 2 E-305 BV excavators; 50 generator sets (1KW); 50 generator sets (1-45 KW); 6 Zil-131 trucks. Bulgaria is a nonpermanent member of the UN Security Council and has made fighting terrorism one of its priorities during its term on the Security Council. An international regional forum on fighting terrorism was convened on 27 June in Sofia. It was attended by representatives of ten regional countries and of the US State Department, the Pact of Stability for Southeastern Europe, the Council of Europe, and the UN Security Council's Counter-Terrorism Committee .

c) Greece. The Greek frigate Psara was deployed in the CENTCOM theatre of operations since 15 March, conducting operations under the operational control of the Coalition Forces Maritime Component Commander (CFMCC). This frigate is one of the most sophisticated Greek vessels, manned with a crew of 210, and carries one S-70 BA Aegean Hawk helicopter and one special forces team. In June, the frigate Spetsai of the same type replaced the Psara. The Greek naval base and airbase at Souda, Crete, are used as forward logistic sites to support ships and aircraft moving in the area, as are other bases across the country. One air force officer was assigned as an operations officer to theRegional Air Movement Control Center (RAMCC), and one Navy liaison officer was deployed to Bahrain. Greece actively participates in the ISAF operations: one Greek engineer company of 123 men and 64 vehicles has been operating in Kabul; two C-130 transport aircraft with a support security team of 56 personnel have deployed to Karachi, Pakistan, for tactical airlift in support of ISAF operations; Greek staff officers have been assigned to Permanent Joint Headquarters (PJHQ) in Great Britain and to ISAF HQ in Kabul. Greece is supporting NATO operations in the Mediterranean Sea: one Greek frigate and a minesweeper have been conducting surveillance and minesweeping operations respectively in the eastern Mediterranean; Greece has offered two more vessels and a number of air force sorties in support of Operation Active Endeavor against international terrorism.

d) Romania. The Romanian parliament has approved basing and overflight permission for all US and coalition partners. There have been three liaison officers at CENTCOM since 10 December 2001, and one of them is working in the Coalition Intelligence Center. Romania will soon deploy one infantry battalion into Afghanistan. Additionally, one mountain infantry company, one NBC company, four MiG 21 Lancer aircraft, and medical personnel have been offered. Romania has deployed one military police platoon and one C-130 aircraft to serve with ISAF. The Romanian government has delivered a large quantity of training equipment for the Afghan National Guard as well. The Romanian parliament recently approved the deployment of a 405-person motorized infantry battalion, a 70-person NBC company, and 10 staff officers. Romania has donated the following items in support of the Afghan National Army (ANA): 1'000 AK-47 assault rifles, 300'000 rounds of ammunition, magazines, and cleaning sets.

e) Turkey. Representatives from Turkey arrived at CENTCOM on 10 October 2001, where three still remain, one of them a brigadier-general. Ankara has provided basing and overflight permission for all US and coalition forces. Turkey is providing one officer to the Permanent Joint Headquarters (PJHQ), three officers and one non-commissioned officer (NCO) to ISAF headquarters, and two officers to the KMNB (Kabul Multinational Brigade) headquarters. One Turkish officer is scheduled to work as a planning officer at the RAMCC. Turkish Special Forces are working with the Combined Joint Special Operations Task Force Afghanistan. Turkey continues to provide KC-135 aerial refueling support for Operation Enduring Freedom (OEF) and Operation Northern Watch (ONW). Turkey has five ships operating in NATO counter-terrorism measures in the Mediterranean Sea out of Aksaz Naval Base and Antalya Port. Turkey assumed the lead of the 4,650 troops for the second phase of ISAF operations in Afghanistan on 20 June. One infantry unit, along with one EOD team amounting to 269 personnel, is operating in Kabul as part of ISAF. Turkish personnel are directly involved in the training and equipping of one battalion of the Afghan national guard. Air force personnel conducted site surveys for possible airfields in Tajikistan, Kazakhstan, and Kyrgyzstan to be used in humanitarian assistance (HA), close air support (CAS), and airborne operations flights.

2. Post-Conflict Issues in YROM, Kosovo,Bosnia and Herzegovina

a) FYROM. (1) On 26 June, Dutch troops took command of NATO's Amber Fox mission in Macedonia. Germany drastically cut its peacekeeping contingent. Preserving stability remains an uneasy job in Macedonia and the international presence of troops, along with strong political pressure from NATO and the EU, remain indispensable. (2) Parliamentary elections will be held in Macedonia on 15 September. The Macedonian political elite is expected to move the country into the European mainstream in the coming years after losing momentum in 2001-2002. (3) The parliament of FYROM passed 15 laws in June that were required under the Ohrid Framework Agreement. Two other significant laws remain to be enacted.

b) Kosovo. (1) On 12 June, Kosovar Serb leaders formally ended a boycott of Kosovo’s government and took an oath of office alongside their ethnic Albanian colleagues. At the insistence of UNMIK Governor Michael Steiner, two new government posts were created for Serbs: an inter-ministerial coordinator for refugee returns, and a senior adviser to the governor’s office. (2) The US Overseas Private Investment Corporation (OPIC) has concluded an agreement with UNMIK to make OPIC products and services available in Kosovo. Making investment in Kosovo an attractive option is one of Michael Steiner’s ambitions as governor of the province.

III. THE NATIONAL PERSPECTIVES OF THE BALKAN COUNTRIES: SPECIFIC ISSUES

1. Serbia and Montenegro

(1) Late on 4 June, the Yugoslav parliament adopted a law granting amnesty to the Albanian extremists who were involved in fighting in Southern Serbia during the period 2000-2001. The passage of the law is part of a package agreement with the rebels that allowed Serbian forces to enter the province peacefully and take control over it. (2) In the last days of May, Montenegrin President Milo Djukanovic denied allegations of smuggling activity that had been made by the Italian public prosecution service. (3) The Yugoslav parliament on 31 May overwhelmingly voted in favor of a plan to abolish the federation and replace it with a looser union between Serbia and Montenegro. The experts have started to work on the blueprint of a new constitution, pushed through by the EU in March. These steps consign the Yugoslav federation to history after eight decades of existence in various forms. However, Serbs and Montenegrins are still far from an agreement on how to proceed with the new union. (4) The ruling coalition collapsed on 12 June as the party of President Kostunica accused the supporters of Serbian Prime Minister Djindjic of behaving like Milosevic. The governing DOS faction of the parliament had earlier sacked 21 deputies of Kostunica’s DSS for absenteeism and for delaying reforms. The Serbian presidential elections will be held by the end of the year, and President Kostunica of Yugoslavia wants early parliamentary elections as well. (5) On 19 June, UN war crimes prosecutor Carla del Ponte accused Belgrade of failing to cooperate fully in bringing suspects to justice. Up to now, Belgrade has provided “the bare minimum” in terms of cooperation and can hardly avoid international condemnation. The objective of the ICTY is to complete its investigations by the end of 2004, to wrap up the last trials by the end of 2008, and to deal with appeals after that date. (6) Yugoslav President Vojislav Kostunica on 25 June dismissed the chief of staff of the armed forces, General Nebojsa Pavkovic, who is an ally of former president Milosevic and had an active part in his ousting from power in October 2000. President Kostunica appointed Pavkovic's deputy, General Branko Krga, as chief of the general staff of the armed forces. On 24 June, the Supreme Defense Council rejected Kostunica's proposal to fire Pavkovic. Afterwards, the president decided on his own that Pavkovic had put himself and the armed forces above the state. Pavkovic answered that he had been treated like scum, but would use only political means to challenge the president's decision.

2. Albania

The parliament of Albania on 25 June chose a consensus president after the leaders of the two main parties agreed on a compromise to avoid early elections and end months of political tension. Alfred Moisiu, a retired army general will replace incumbent Rexhep Meidani, whose five-year term has expired. After political stability is restored, the EU will be ready to resume talks on concluding a Stabilization and Association Agreement.

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

1. Bilateral Relations

a) Turkey-Greece. In the beginning of June, Turkey decided to cancel a military exercise due to take place later this year in the Aegean Sea as a gesture of goodwill towards neighboring Greece, a NATO ally and traditional rival. The “Ephesus” exercise in international waters will not be carried out this year in the light of international developments, according to a statement by the Turkish General Staff.

2. Regional Initiatives

a) Southeastern Europe Cooperation Process (SEECP). A meeting of leading foreign ministry officials from Southeastern Europe was convened on 19 June in Belgrade. They discussed measures to fight terrorism, strengthen border control, and cooperate with the Pact of Stability for Southeastern Europe.

b) Danube Cooperation Process. A ministerial meeting of the countries of the Danube basin, together with the EC and the Stability Pact, for launching the Danube Cooperation Process was convened at the end of May in Vienna, Austria. Progress was reported on cleaning the debris caused by the war in 1999 from the river near Novi Sad. Thanks to the support of the EC, individual EU members, and Austria as holder of the presidency of the Danube Commission, free navigation will be restored on the Danube by September this year.

c) Central European Initiative (CEI). A meeting of the leaders of the CEI was convened from 26-27 June in Ohrid, FYROM. The participants agreed to cooperate in the fight against terrorism and organized crime. The future integration of CEI members into the EU was assessed as a good chance to raise the quality of cooperation within the CEI.

V. THE ECONOMIC SITUATION OF THE BALKAN COUNTRIES AND THE REGION

1. Romania

Fitch Ratings has upgraded Romania’s long-term foreign and local currency ratings to B+ and BB- from B and B+ respectively, with the long-term rating outlook revised from positive to stable. The positive rating is unlikely to be sustainable, however, without strong and sustained progress in structural reform, and without signs that a more robust current account position will be reached over the medium term, Fitch Ratings concludes.

2. Russia-Bulgaria-Italy

The Russian giant Gazprom on 6 June announced its plans to extend the present gas pipeline infrastructure in Bulgaria to FYROM, Albania, and Southern Italy. According to Oleg Sienko, the director-general of Gasexport (Gazprom's foreign trade section), Bulgaria is very important for the transportation of Russian gas via the Balkans. The shortest route of Russian natural gas to Southern Italy passes through Bulgaria. The gas pipeline to Italy would make better use of the present pipeline in Bulgaria, which is only being used at 11 per cent of its capacity at present. Italian Prime Minister Silvio Berlusconi and his Bulgarian counterpart, Simeon Coburgotski, discussed the question of a new natural gas corridor during the Italian leader's visit to Bulgaria last May at Berlusconi's initiative.

VI. THE PROCESS OF DIFFERENTIATED INTEGRATION OF SOUTHEASTERN EUROPE IN EU AND IN NATO

1. EU

a) EU-Bulgaria. (1) Bulgaria closed three more accession negotiations chapters on 10 June. The number of closed chapters is already 20 out of 29, which places Sofia near the status of the 10 candidates that are expected to join the EU in the first wave of enlargement in 2004. Bulgaria is ready to close its last chapter of negotiations with the EU in 2003. (2) At a meeting on 22 June in Seville, Spain, Coburgotski disclosed Bulgaria’s target date for joining the EU. His administration is aiming to join on 31 December 2006 – one year earlier than previously planned. Bulgaria requires an up-dated roadmap to join the EU as well as additional funds for the pre-accession preparations.

2. NATO

a) NATO-Bulgaria. (1) Sofia signed an agreement with the US on 4 June to destroy its stocks of short- and medium-range ballistic missiles. The US will provide help Bulgaria destroy over 100 Soviet-designed FROG, SS-1, SCUD and SS-23 Spider missiles. This agreement is an important step in qualifying for NATO membership. (2) The Bulgarian armed forces were reduced by some 7'000 soldiers on 14 June as part of the effort to modernize and prepare for the country’s NATO entry. This has been the biggest cut since the reforms were launched in 1999. (3) British Defence Secretary, Geoffrey Hoon, said in Sofia on 19 June that London wants to see an invitation extended to Bulgaria to join NATO at the Alliance’s summit in November in Prague.

b) NATO-Slovenia. (1) According to the Slovene Press Agency, Slovenia's secretary of state for defense, Janko Dezelak, said that whether Slovenia joined NATO or not, its defense budget would be the same in 2005, totaling around two per cent of the country’s GDP. (2) The Commission for Justice and Peace at the Slovene Bishops’ Conference issued a statement on 12 June saying that Slovenia's decision to join the EU and NATO is the only sensible choice for the country’s future. The bishops write that in this way, Slovenia will become a member of the free, democratic part of the global community, but it will also take on its share of responsibility.

c) NATO-Romania. (1) Romanian Foreign Minister Mircea Geoana presented a paper regarding Romania's progress in the past few months in preparation of its admission in the Alliance to NATO Secretary-General Lord George Robertson on 12 June in Lisbon. (2) On 18 June, Romanian President Ion Iliescu asked the parliament to allocate additional troops for the Romanian KFOR and SFOR peacekeeping contingents in Kosovo and Bosnia. (3) The largest NATO/PfP exercise ever on Romanian territory, “Cooperative Partner 2002”, was held on 18 June in Romania’s port of Constanta. It will last till 7 July and 4'200 troops and 47 ships are participating in the exercise. France, Greece, Poland, Turkey, the US, Ukraine, Romania, Bulgaria, Georgia, and Azerbaijan have joined this disaster relief and rescue exercise together with NATO operational structures.

d) NATO-Serbia and Montenegro. (1) Following a statement issued by the NATO Parliamentary Assembly after its Sofia session from 25-28 May, Serbia and Montenegro obtained observer status that gives Belgrade the right to participate in the Assembly’s discussions as well as in NATO committee activities. After Serbia and Montenegro join the PfP, the country will acquire associate status. In an interview with the Belgrade press on 31 May, Robertson said that accession to the PfP program would depend on the success of reforms in that country. Some of the reforms NATO expects include cooperation with the ICTY in The Hague, democratic reforms, establishing democratic control over the armed forces, full observance of the Dayton Agreement, and substantial personnel changes in the upper echelons of the army.

VII. THE INFLUENCE OF OTHER EXTERNAL FACTORS ON THE REGION: NATIONAL GREAT POWERS AND INTERNATIONAL INSTITUTIONS

1. US

a) US-Southeastern Europe. The US State Department on 5 June issued a report evaluating 89 nations in their efforts to control human trafficking, naming Albania, Macedonia, Romania, and Yugoslavia as countries that have progressed in their anti-trafficking efforts over the last year.

b) US-Croatia. US President George Bush met with Croatian Prime Minister Ivica Racan in Washington on 6 June. He thanked the prime minister for his country’s support in the war against terrorism and praised Zagreb’s bid to join the EU and NATO.

c) US-Bulgaria. A Memorandum of Understanding was signed on 7 June in Sofia between the US government and the Bulgarian National Audit Office for Technical Assistance. The document marked the launch of the Open Government Initiative, which will be funded by the US with US$6.8 million in the next three years. The project is an immediate result of the Framework Agreement for Cooperation between the US and Bulgarian governments, which Prime Minister Simeon Coburgotski signed during his official visit to Washington in April 2002.

2. Russia: Russia-Bulgaria

Bulgarian Prime Minister Simeon Coburgotski visited Russia from 3-5 June and met with Prime Minister Mikhail Kasyanov, State Duma Speaker Genadiy Seleznev, and Foreign Minister Igor Ivanov. He was also received by President Vladimir Putin. The Russian president called the visit of the Bulgarian leader “a turning point” in the bilateral relations. Bulgaria needs Russia’s market and energy resources. Moscow needs better political relations with Southeastern Europe, to which Sofia is a key. If pragmatism can rein in imperial inclinations in Russia’s policy, the two young capitalist states may profit from each other. Bulgaria has clearly opted for EU and NATO membership and is ready to cooperate with Russia in the fight against terrorism.

3. China: China-Greece

During the visit of Greek Prime Minister Costas Simitis to China at the beginning of June, the business leaders in the two delegations expressed their wish to increase their economic and commercial contacts.

VIII. CONCLUSIONS

The security situation in Southeastern Europe continued to improve in June. The Balkan states' contribution to the anti-terror coalition also increased. Better conditions for economic interaction with the Caspian Sea region evolved. The upcoming enlargement of NATO to include Bulgaria, Romania, and Slovenia, as well as EU enlargement to include Slovenia, will raise the importance of the Balkans as a European region.