BALKAN REGIONAL PROFILE:

I. INTRODUCTION

Both negative and positive events were seen this month that are likely to have an effect on the individual countries of the region of Southeastern Europe. A 'country snapshot' would show that:

1) By participating in the ISAF mission in Afghanistan, Albania joined an out-of-area peacekeeping mission for the first time. The country is still experiencing a political period of calm after the historic national consensus decision to elect a common candidate for president of the country. Some tensions with the neighboring Former Yugoslav Republic of Macedonia (FYROM) surfaced in connection with the efforts of the Macedonian interior minister to exacerbate ethnic pressure in the two countries' border region. As noted previously by ISIS, the traditional Serbian state and ethnic model adopted by the leaders of the young Macedonian nation may cause trouble.

2) Bosnia and Herzegovina continues to tolerate the fact that war criminal Radovan Karadzic remains at large. The special protection he enjoys in the Republika Srpska unnecessarily extends the processes of national reconciliation and central state-building. However, the international stabilization forces continue in their attempts to implement the orders of the ICTY in The Hague by arresting Karadzic.

3) Bulgaria has privatized the national tobacco company. The deal has added to existing tensions in other social and economic sectors. The political autumn is expected to be controversial, though no major shifts can be expected in the country's political landscapedue to the importance of accelerated EU accession negotiations and NATO's Prague summit. In the meantime, major blows were dealt against organized crime during the summer, especially against a well-organized group of professional killers.

4) Croatia has emerged from a long political crisis and is now heading towards a decisive period in its preparation for NATO membership.

5) The run-up to the general election in Macedonia began this month with incidents and ethnic tensions. The country faces major problems, including the open issue of the national identity and roots. In the midst of preparation for national parliamentary elections, the Macedonian press is again raising the issue of 'expansionist Greek behavior' and of its claims that Alexander the Great was of ancient Greek origin and not the ancestor of the present Macedonian nation and state. Referring to more recent history, when the Comintern, backed by Serbian nationalists, created the 'Macedonian nation', may shed more light on the historical mindset of the present propaganda masters in Skopje and Belgrade. As a counter-project to Greek plans for a monument to Alexander, Skopje is planning to erect a huge monument in the downtown of the capital. In the meantime, the outlawed Albanian National Army (ANA) resumed its terrorist activity against Macedonian citizens on the eve of the September general elections.

6) Greece continued its investigation of the 17 November terrorist group and preparations for peaceful and secure Olympic Games in 2004. The only EU and NATO country in the Balkans continues to be a real provider of long-term stability in the region.

7) Romania pressed its case for NATO membership by concluding a bilateral agreement with the US that excludes US soldiers from the jurisdiction of the International Criminal Court (ICC). However, this step caused political problems between Bucharest and the EU.

8) Serbia and Montenegro continued to be one of the most unstable political actors in the Balkans: the ruling coalition is divided on the eve of the presidential elections in Serbia, there is no clear agreement about the constitutional future of the federation, and Kosovo is a constant source of incidents and problems.

9) Slovenia is the region's 'safe haven', focused on its preparation for EU and NATO membership and on improving the living standards of the small nation. In geopolitical terms, however, the resulting stability affects mainly what is already the most stable periphery of the region, namely the northwest.

10) Preparations continue for early elections in November in Turkey. The position of Chief of the General Staff of the powerful Turkish armed forces changed as per regular procedure.however, the changeover took place during a time of strategic uncertainty concerning Ankara's volatile neighbor, Iraq. A bomb blast in the headquarters of Turkey's second-largest political party bade ill for the upcoming November elections and tainted Turkey's image on its road to EU membership.
Regionally, preparations for joining NATO and the EU as well as the fight against terrorism are the main factorsleading to integration in the region of Southeastern Europe. The historic decision of the Turkish parliament to adopt a package of laws to bring this country closer to EU membership marks a significant step. The conflict between Washington and Brussels over the ICC has a negative impact, however, on the candidates' efforts to integrate into NATO and the EU. No candidate is in a position to successfully contest the position of either the EU or the US. This divergence between Washington and Brussels may very easily preclude the required political dynamism in the transforming candidate states. For the Balkan region, this divergence has another meaning - it diminishes the effectiveness of the 'benign pressure' both the EU and the US exercise towards stabilizing the regional situation.

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

1. Security Threats: Terrorism

1) Greece
(1) On 31 July, the 17 November urban guerrilla group announced through the press it would continue to fight, despite the arrest of some of its key members. Greek authorities have declared their intent to root out the whole organization before the 2004 Olympic Games in Athens. The 17 November statement called for an exchange of prisoners. Analysts believe the 17 November group is far removed from its stated leftist ideological ideals, objectives and methods. (2) On 2 August, 17 November members tunneled their way into an armory on the Greek island of Kos. Three semi-automatic revolvers, three submachine guns, and 17 revolvers were found to be missing.

2) Albania
Albania on 5 August contributed 30 soldiers to ISAF in Afghanistan to help keep the peace. This was the first peacekeeping mission of Albanian soldiers outside the Balkans. Albanian soldiers are also participating in SFOR. The Albanian troops will patrol the Afghan capital Kabul. Albania is the twentieth country to participate in the 5'000-strong ISAF, which is led by Turkey.

3) Bulgaria
(1) Bulgarian Defense Minister Nikolay Svinarov visited Bulgarian troops serving in ISAF in the past month. On 22 August, he attended the changeover of the Bulgarian contingent and delivered a donation of technical equipment. The donation from Sofia included eight PKM machine guns, 12 SPG-7 launchers, eight 82mm mortars, 400 AK-47 rifles, 30 radio sets, 900 grenades, 300 mortar rounds, and over 120'000 rounds of 7.62mm ammunition. Minister Svinarov met with Afghan President Hamid Karzai. (2) Bulgaria decided on 23 August to send US$320'000 worth of humanitarian help for Afghanistan. The aid package will include underwear, gloves, stoves, tents, sheets, and overcoats.

2. Post-Conflict Issues in FYROM, Kosovo, and Bosnia and Herzegovin

a) FYROM
(1) On 13 August, Macedonians marked the one-year anniversary of the Ohrid Peace Agreement. It is considered to have laid down a firm foundation for Macedonia's future and its peaceful development on the path of Euro-Atlantic integration. The implementation of the agreement is well advanced, and the groundwork for the upcoming parliamentary elections has been accomplished. Still, Macedonia's unemployment level is massive at 50 per cent. Some Macedonian citizens are seeking Bulgarian citizenship, while others emigrate to the US, Canada, and Australia. A third group with nostalgic feelings towards the Yugoslavia that once was, sees the future in a second integration with Serbia. This prospect is even more likely if the elections in September are won by the pro-Serbian Social-Democratic Union. A real problem is the non-implementation of a fundamental provision of the Ohrid agreement: ending the 15-year residence requirement for the right to vote, which mostly affected Albanians. This provision was considered a centerpiece of the reform program in August 2001. (2) The International Crisis Group (ICG) said on 14 August that endemic corruption is endangering the fragile peace in Macedonia. Corruption works powerfully against the fundamental objectives of the international community in Macedonia. The issue of corruption is worse in comparison to other post-Communist countries due to the country's security situation. The Ohrid Agreement between ethnic Slavs and Albanians may survive only if a truly democratic society and a market economy are created. This is currently prevented by large-scale corruption. The only way the problem may be solved seems to be by linking financial aid to anti-corruption reforms, appointing foreign anti-graft advisers to the government in Skopje, and international monitoring. (3) Two violent incidents on 16 August left three people injured after the first night of the campaign for the 15 September election. Suspected ethnic Albanians fired shots and threw a hand grenade, wounding Macedonian soldiers. The same night, one ethnic Albanian was wounded in a shooting on the outskirts of Skopje. Members of rivaling Albanian parties are blamed for the shooting. More tensions among Albanian factions are expected in the election campaign process. (4) Two Macedonian police officers were shot on 26 August near Skopje in one of the worst incidents since the signing of the Ohrid Agreements in August 2001. The killing coincides with efforts by a moderate leader and former commander of Albanian Liberation Army, Ali Ahmeti, to participate in the political process of the country, including the election campaign. The outlawed Albanian National Army (ANA) claimed responsibility for the killing. More clashes between Albanian factions are expected in the next weeks in Macedonia.

b) Kosovo
(1) Two US soldiers serving with KFOR were injured on 31 July in an explosion in the Kosovo village of Klokot while on patrol. (2) KFOR detained 19 suspects on 8 August in an operation to hunt down armed extremists. All of the detained individuals posed an immediate threat to a safe and secure environment. The detention was carried out by KFOR soldiers in a coordinated operation in 12 Kosovo communities backed by police and a special KFOR unit. The population of those communities is mostly Albanian. KFOR found some weapons and ammunitions, including two grenade launchers. (3) UN police arrested a well-known former Kosovar Albanian guerrilla commander, Rustem "Remi" Mustafa (a regional commander of the now disbanded KLA) on 11 August in Pristina. A long investigation will be needed before deciding on an indictment, KFOR authorities said. In June, UN police investigating ex-rebels for crimes committed after the war arrested four Kosovo Albanians. Two others surrendered to the police. UNMIK and KFOR are expected to crack down on ex-guerrillas guilty of crimes in upholding law and order in the province. The arrests sparked protests among the local population.

c) Bosnia and Herzegovina
On 15 August SFOR troops blocked roads and mountain paths while using helicopters to search for war crimes suspect Radovan Karadzic. SFOR had information that he was hiding in the border area of Montenegro and Serbia. Karadzic was indicted by the ICTY on charges of genocide and other war crimes in the 1992-95 war in Bosnia. SFOR accuses Bosnian Serb leaders of shielding Karadzic, who has been in hiding since 1996. The SFOR operation was concluded after two days of unsuccessful searches. Nevertheless, the operation improved the information picture concerning the war criminal.

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

1. Turkey
(1) Turkish political parties and their leaders are considering political coalitions on the eve of the early parliamentary elections in November, 18 months before the regular term expires. No dominating configuration of political forces has emerged two months before the elections. Two influential leaders and former ministers of the government, Kemal Dervis and Ismail Cem, will be part of opposing parties. (2) The Chief of General Staff of the Turkish armed forces, Hüseyin Kivrikoglu, retired on 30 August. He was succeeded by General Hilmi Ozkok.

2. Bulgaria
The privatization process continues, and hot debates on the future of the country's tobacco company characterized the social and political climate of Bulgaria in August. The London-based financial association Tobacco Capital Partners, backed by Deutsche Bank, won the bid on 23 August. Political and trade union actors linked to the winner's competitors promised the issue would remain on the political agenda this autumn and vowed to contest the results at the High Administrative Court.

3. Serbia and Montenegro
(1) The power struggle between Yugoslav President Vojislav Kostunica, a nationalist constitutional lawyer, and the reform forces of Serbian Prime Minister Zoran Djindjic increased on 1 August after a Serbian Parliamentary Committee expelled 45 MPs of Kostunica's party for repeatedly boycotting votes on reform bills and for preventing the formation of a quorum. They were replaced by representatives of the remaining 17 ruling coalition parties. The DOS ruling coalition has 131 deputies in the 250-member Serbian parliament. (2) Belgrade could not settle its constitutional disputes with Podgorica, endangering the launch of the loose federation of Serbia and Montenegro. (3) The most likely candidates for the presidency of Serbia in the 29 September elections will be Yugoslav Deputy Prime Minister Miroljub Labos, a representative of the ruling Serbian DOS coalition, and Yugoslav President Vojislav Kostunica. The latter promises constitutional changes and early general elections if he wins. (4) The trial against the former Yugoslav leader Slobodan Milosevic by the ICTY continued in The Hague on 26 August. He was indicted for war crimes during the war in Kosovo in 1999 as well as for other crimes against humanity. The former leader persists in trying to get involved in domestic affairs, though, obviously, with diminishing success.

4. Croatia
Zelka Antunovic is the first female defense minister in the history of Croatia. This decision of the parliament in Zagreb helped end the political crisis after approving the new government of Prime Minster Ivica Racan. The Croatian Ministry of Defense is expected to dismiss 13'000 soldiers in a defense reform that would open the way to future NATO membership.

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

1. Bilateral Relations

a) Serbia and Montenegro-Croatia
A group of Croatian officials on a formal visit to Serbia came under fire from the Yugoslav army last month and their boat was seized. Belgrade expressed its regret, but also played down the incident, which highlighted tensions between the old foes. Four boats carrying several Croatian mayors, a district governor, and civilians, including children, were headed for Serengradsk island in the Danube. At least one of the boats came under fire and was forced to dock as it approached the island, which Croatia claims, but which is held by the Yugoslav army. The fire was a clear blunder on the Yugoslav side, because this visit was included in a mutually agreed program, but was badly coordinated among different Yugoslav institutions.

b) Macedonia-Bulgaria
In the last week of August, the Macedonian press is reviewing the personal behavior of the Minister of Defense of Skopje on particular deals of his institution with an accent on Bulgarian partners. On the Bulgarian side the deals of the Ministry of Defense with the Macedonian counterpart have been transparent and under executive, parliamentary and public control. Obviously the upcoming elections bear the potential of worsening not only the profile of the political opponent, but also the bilateral relations with certain countries - an effect the political actors in Skopje should better prevent from happening.
c) Albania-Macedonia. The Albanian government on 26 August declared the Minister of the Interior of Macedonia, Ljube Boskovski, a persona non grata in Albania. The reason was the granting of Macedonian citizenship to Albanian citizens in the bordering region of Prespa by the Ministry of Interior in Skopje, an act that was interpreted in Tirana as an effort to induce ethnic tensions. Boskovski was planning a visit to the same region in the last days of August.

d) Bulgaria-Greece
High-ranking Greek Foreign Ministry officials visited Bulgaria from 27-28 August and met with Bulgarian Foreign Minister Solomon Passy. The two sides discussed routine bilateral issues of cooperation. Greek Deputy Foreign Minister Andreas Loverdas signed an agreement on 28 August on donating  54.29 million to Bulgaria as part of the Greek plan of reconstructing the Balkans. The total funding provided by Greece to its neighbors in the Balkan region is  550 million.

e) Greece-Turkey
On 26 August, the Greek Foreign Ministry announced that Greece would insist on fixing a date of opening accession negotiations between the EU and Turkey. This was confirmed by Greek Foreign Minister George Papandreou. The issue will be raised at the Copenhagen EU summit in December this year. Athens hopes to induce warmer relations with Turkey and give an impulse to the resolution of the difficult Cyprus issue.

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

1. Greece-Bulgaria-Russia
Prospects for the construction of the Bourgas-Alexandroupolis oil pipeline became dimmer this month after Kazakhstan - a potential oil supplier for the trilateral project - claimed an equal share of the profits. This project has been on the agenda for long, but with no practical success yet. Both Greece and Bulgaria rely on the development of this project.

2. US-Serbia
The US Trade and Development Agency (USTDA) signed a US$500'000 grant on 31 July with the Roads Directorate of the Republic of Serbia to provide technical assistance in developing a national road system. Once the Roads Management and Recovery plan has been completed, the European Bank for Reconstruction and Development (EBRD) will release the rehabilitation portion of the US$76 million road sector loan that will start the construction phase of the project.

3. US-Turkey
The Ex-Im Bank of the US announced on 16 August that it is providing loan guarantees to several US manufacturers, supplying furniture and an electric generator to Asyafin Turizm, the Istanbul company developing a resort complex in Turkey's Kizilcehaman region.

4. Bulgaria
Bulgaria's revenue from tourism is expected to reach US$1.5 billion by the end of the year 2002. Last year, tourism generated US$1.3 billion in revenue. The number of foreign tourists this year has risen by 13-15 per cent over 2001. Tourism from Germany rose by 39 per cent over last year, while the number of Russian tourists dropped by 15 per cent.

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

1. EU

a) EU-Turkey
The Turkish parliament abolished the death penalty in session from 2-3 August in a bid to increase the chances of EU accession. The parliament decided to grant the Kurds in Turkey the right to broadcast and teach in Kurdish language. The death penalty remains in effect only during times of war or threat of war. For peacetime, the death penalty was replaced with life imprisonment with no possibility of parole. The package of bills adopted by the Turkish parliament lifts restrictions on people's rights to associate and form civic organizations. It imposes stricter penalties for human trafficking. It also allows non-Muslim minorities (Greek Orthodox, Armenian Christians, and others) greater rights to religious property. Turkish lawmakers set general elections for 3 November - 18 months earlier than scheduled. These parliamentary decisions were rightly assessed as a giant step on the road to joining the EU. The reform package tightened regulations governing the police, who are frequently accused of human rights abuses. After these difficult decisions had been passed, Turkish officials insisted on launching EU membership negotiations. The Copenhagen summit at the end of this year is expected to fix a date for the start of these talks. EU officials, on the other hand, expect more progress on the Cyprus issue before launching a negotiating process with Turkey.

b) EU-Romania
The EU expressed its dismay on 8 August that Romania, aspiring for EU and NATO membership, had struck a deal with Washington to prevent US citizens from being turned over to the new International Criminal Court (ICC). EU officials said they are concerned that other, mostly Central/Eastern European candidates for both EU and NATO membership, were under pressure from Washington to follow suit. The EU and Washington remain divided over the ICC, which the US opposes out of fears that hostile nations may abuse the court to bring politically motivated cases against US citizens. The European Council regrets the fact that no coordination talks were arranged by Romanian officials on such an important issue. Washington has instructed its embassies to approach countries to negotiate bilateral agreements to avoid US personnel being prosecuted in the jurisdiction of the ICC. Israel, Romania, and East Timor were the first three countries to sign such agreements with the US. The UN Security Council in July agreed to give US peacekeepers immunity from prosecution by the ICC for one year. The US seeks blanket immunity from the court and has threatened to veto UN peacekeeping missions.

c) EU-Bulgaria
In the beginning of August, Bulgarian Deputy Foreign Minister Petko Draganov visited EU officials for discussions concerning the delicate issue of the position adopted by the EU and NATO candidate countries towards US insistence on changing the legal basis of the new ICC. According to ISIS analysts, this is a classic case of major powers' interests clashing, with the price paid by small countries. No one can deny that Romania, Bulgaria, or other EU and NATO candidates have an existential interest in joining these important European institutions. Any opposition between the two institutions would be counterproductive to the larger interest of all actors (major or minor) in coping with global issues in a cooperative climate and framework. Bulgaria, for example, needs the goodwill of all influential global and regional actors to reach its national goals and interests. All smaller EU and NATO candidates are in a similar position. This is why it is in their interest to see an end to the debate between the EU and Washington over the question of the ICC. Any official declarations to the effect that Washington will deny NATO membership to those who do not conclude a bilateral agreement on the ICC is counter-productive to the interests of NATO in the candidate states.

2. NATO: NATO-Bulgaria
Bulgarian Air Force and British Royal Air Force units held the "Lonely Cat" exercise from 22-29 August. It simulated joint air defense suppression strikes at low to medium altitudes.. While UK pilots have 220 flight hours per year, their Bulgarian counterparts have only 20 flight hours of training.

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

1. US: US-Russia
Bulgaria began destroying more than one hundred Cold War-era ballistic missiles on 14 August. Experts from Controlled Demolition, a US contractor hired by the Bulgarian government, are documenting the process and are scheduled to complete the work by 30 October. The SS-23, Scud, and Frog missiles are destroyed by incineration and disposed of separately. Bulgarian military technical facilities will take on most of the mechanical destruction tasks. The experience of Czech and Slovak counterparts was studied before starting the destruction process. Ecological and political groups initiated protests that led to a complex environmental study of the possible effects of the planned destruction. The study's results led to a change in the initially planned method of destruction and helped to calm the anxieties of the population living near the destruction sites.

2. US/UN/Russia: US/UN/Russia - Serbia and Montenegro
On 26 August, Russia and the US together with military support from Yugoslavia, quickly evacuated one hundred pounds of weapons-grade uranium from a Yugoslav nuclear reactor. Nearly 1'200 troops and several combat helicopters escorted Russian, UN, and US officials as they transported the 6'000 ingots of highly enriched uranium out of Belgrade's Vinca Institute of Nuclear Sciences, the site of a secret Yugoslav atomic weapons program. Weapons experts consider the Vinca Institute to be one of the most dangerous and vulnerable nuclear storage facilities. A Yugoslav government official said that after the disposal of the hazardous material, which could be used to make nuclear weapons, Vinca is no longer a potential target for possible terrorist attempts to get hold of this fuel. The operation to remove the uranium, enough to make three bombs, had been secretly planned for over a year.

VIII. CONCLUSIONS
Events during the month of August seemed to be leading up to a rather hot political autumn: general elections in Macedonia under the pressure of ethnic tension, shootings, and killings; presidential elections in Serbia within a divided democratic political spectrum of parties; early general elections in the regional power Turkey, marred by intense political infighting and bomb attacks against headquarters of leading parties; rising nervousness in Bulgaria and Romania on the eve of the Prague NATO summit - a nervousness caused by the dubious pressure coming from Washington and EU headquarters in Brussels as well as from dissatisfied social groups, trade unions (in Bulgaria), and political actors; Greece continues to be on the lookout for remaining members of the urban terrorist group 17 November ahead of the 2004 Olympic Games. With the exception of minor tensions between Albania and Macedonia, as well as Greece and Macedonia, the bilateral relationships in the region indicate a predominantly stable situation in the coming weeks. The resolution of US-EU differences on the ICC may have a positive influence on the general stability in the region. The US-Russian cooperative effort with Yugoslav authorities this month eliminated a potentially threatening opportunity for terrorists to lay hands on enriched uranium suitable for producing nuclear weapons.