BALKAN REGIONAL PROFILE:

I INTRODUCTION

II CONFLICTS AND POST-CONFLICT DEVELOPMENTS IN THE BALKANS

1. The Kosovo post-conflict developments
2.Post-war rehabilitation of Bosnia and Herzegovina

III THE NATIONAL PERSPECTIVES OF THE BALKAN COUNTRIES: SPECIFIC ISSUES

1. Bulgaria
2. Croatia
3. FRY 
4. Greece

IV THE BILATERAL AND THE MULTILATERAL RELATIONS IN THE BALKANS

1. Bilateral Relations
2. Multilateral Relations

V THE ECONOMIC SITUATION OF THE BALKAN COUNTRIES AND THE REGION

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

1. The USA
2. Russia
3. G-8

VII THE SECURITY SITUATION AND THE REGION BUILDING EVOLUTION: CONCLUSIONS

I Introduction

Getting rid of Slobodan Milosevic in FRY is slowly but progressively turning into the explanatory paradigm for the Yugoslav people of the way to normalisation of this Balkan nation and state. The social forces behind this concept are not yet united enough: some chose to continue waiting, others could not prove with deeds their declarations and a third part decided to oppose to Milosevic a respectful person – the economist Avramovic, the would-be interim Prime Minister. Hyperinflation, energy shortages, hunger and a depressed socially population will be the allies of the opposition parties alongside with the traditionally cold Balkan winter in the coming months.

At the same time it was made clear that NATO will stay in Kosovo as long as it takes to get the job done – despite the costs of this military presence. There is full clarity in the Alliance, especially in the USA that Kosovo will take a long time to come out of the carnage and damage of the war. One significant instrument of accelerating this process is the change of government in Belgrade. Another one – the start of abiding by the rules of a democratic multiethnic entity by the dominant ethnic community in Kosovo. The third one is the launch of the concrete projects within the Pact of Stability for Southeastern Europe. This last leverage bears the potential of a long-term guarantee for success of the West’s engagement with the Balkan region.

II Conflicts and Post-Conflict Developments in the Balkans

1. The Kosovo post-conflict developments were central for this period.

The disarmament of the KLA by KFOR was formally completed with 48 hours prolongation of the deadline of 19 September 1999. Declarations by Russian participants in KFOR that this issue is not completed and not totally under KFOR control adds to positive but careful declarations of KFOR, US and other Alliance officials about compliance with the agreement with UCK of June 1999 thus producing a perception of an unfinished task. Reports of ‘death squads’ by Albanians for killing and ousting Serbs under cover from Kosovo correspond to the practice of ‘ethnic cleansing’ of Serbians by revengeful Albanians. The behaviour of Hashim Taci, the KLA leader logically can be linked to these otherwise verbally denounced by him practices: claiming representation in the UNO; portraying the activity of the UNMIK chief, Dr. Kouchner as that of a "Tzar" (from the position of a mentor and supervisor of a situation whose complication was not without Taci’s participation), etc. The hard issue of the status of Kosovo has been clearly characterised by the UN Secretary General on 20 September 1999: Kosovo continues to be an inseparable part of Serbia and the rebellious province cannot be given a status of an UN member. However, it should, obviously, be made much clearer to former KLA leaders that the ultimate status of Kosovo is not just a question for the future but also contingent on the way democratic self-government is brought in Kosovo according to the UNSC resolutions. The warning of the US Secretary of State of 14 September 1999 that "Albanians must combat the temptations of revenge, corruption and criminality" should be further interpreted to the Kosovar leaders in the process of their cooperation with UNMIK within the various institutional formats in the province. The Kosovo Transitional Council, the Kosovo Protection Corpse as supportive institutions of UNMIK should insist on preserving a pluralistic composition beyond the KLA. Only the practical recruitment and involvement of members of all communities may lead to the effectiveness of these local institutions, which are not the practices in the last weeks.

The priority issue in Kosovo continues to be the return of the refugees, especially in the minority areas. The activity of KFOR is going on reasonably well from a military point of view. Previous arguments about the coordination with the Russian forces are over and NATO appreciates the role they play in KFOR. The number of the KFOR troops reached 50,000 in September 1999 and of the UN international police force – more than 1,000.

The preparation for the winter season is central for both KFOR and UNMIK. Some 50,000 homes in Kosovo are beyond repair and a similar number of houses are damaged. While 380,000 people can be housed this winter for 300,000 people whose homes were completely destroyed temporary accommodations need to be provided. One method is staying with host families; housing capacity for some 90,000 people through temporary shelters and distribution of all-season tents is the other one. Longer-term reconstruction starting from the spring of the next year, a higher activity of the donor community and an eventual recruitment of a construction corpse (there are ideas in Bulgaria of a permanent region-based multinational construction unit), reconnecting the electricity and other utilities, keeping the Kosovo schools functioning are also on the agenda of the civilian administration.

A certain level of scepticism evolved in the last month about the practical implementation of the Pact of Stability for SEE both in governmental circles of the Balkan states and in the societies of the countries from the region. It is true that the Pact for Stability does not offer many short-term solutions for the aftermath of the Kosovo conflict. But making the Pact functional requires a higher level of preparedness of the countries from the region to get it started. Despite the criticisms to the Pact’s vitality coming from the governments of Bulgaria, Romania, Albania, FYROMacedonia, etc. , especially after a certain postponement of a pledged start by EU and international financial institutions in September 1999 of concrete projects, it should be admitted that banking institutions that were engaged in the Pact did a hard preparatory work to define the various needs and potential responses. Furthermore, the Chancellor of Germany, Gerhardt Schröder visited Albania, Bulgaria and Romania on 23-25 September 1999 with clear messages about the reality of the Pact’s implementation. On 10 September 1999 in Rome the Secretary General of NATO, J. Solana reminded NATO is going to play an important role in support of the Pact in the security field through various instruments of the Southeastern European Initiative of the Alliance at the Washington Summit: the Consultative Forum on Security Issues, the EAPC, the Alliance’s Membership Action Plan and maintaining the long-term goal of membership in the EAPC and PfP for Bosnia and Herzegovina, Croatia, and ultimately, for a democratic Yugoslavia.

2. The post-war rehabilitation of Bosnia and Herzegovina.

The Bosnian government announced it has picked 21 November, the anniversary of the Dayton agreement as the National Day of the young state. Though this act is symbolic and is reflecting a changing internal mood in this country a lot of work is still ahead to reach a real rehabilitation. The acceleration of the pace of minority refugee return and of the economic reform continue to be fundamental to the stability of Bosnia and Herzegovina. The return of the refugees to the minority areas of the country will be a priority issue for the parties responsible for the implementation of the Dayton agreement. The analysis of the security aspects of the situation in Bosnia and Herzegovina show that there are reasons to consider a reduction of the SFOR contingent. The magnitude of this reduction has not yet been defined by the Alliance authorities. However, over-optimism of the internal stabilisation is still premature and any major drawdown in troops may be counterproductive.

The Bosnian government and the international and foreign aiding institutions continue to face the issue of corruption, obscured transparency and uninformed public. Rooting out corrupt practices in Bosnia and Herzegovina is crucial for accelerating the economic reform of the country.

III The National Perspectives of the Balkan Countries: Specific Issues

1. Bulgaria

A municipal pre-election campaign is continuing in Bulgaria. The results of the mid-October 1999 elections will be considered important indicators of the judgement of the people of the ongoing economic and social reform by the present Government as well as to how the up-coming parliamentary elections would result.

In a letter from the UN Secretary General to the Bulgarian Government disclosed in the first days of September 1999 he highly assesses the role of the present group of 20 Bulgarian policemen in Kosovo and asks for an additional contingent of 30.

2. Croatia

The extradition of an indicted Croatian war criminal to The Hague after an initial incarceration for local crimes in accordance with Croatian law and after a sentence of a Croatian court on 2 September 1999 is another step in getting rid with the past of this country. More is expected to be done to provide a safe return of the refugees to their own places, a free and independent media in the democratic process and full compliance with the IWCT in The Hague.

3. FRY

The last two weeks of September 1999 was a period of an intensifying protest against the regime of Slobodan Milosevic. The intensity of the opposition protests was far from the initial designs, but there is a growing realisation among the general public that the change of the leader and of his regime are crucial for the survival of the nation and the state. The opposition leaders are not yet as united as the magnitude of their claims against a solid regime of Milosevic requires. Toppling down a politician like Milosevic who pretends to be fighting wholeheartedly for the preservation of the statehood of Serbia and Yugoslavia needs an organised social and political counter-force. Presently Messrs. Jinjic, Drascovic and Avramovic are not yet this powerful mixture of leaders that can assure the Serbs to go in the streets in millions and oust the hated dictator (if perceived that way by all Serbs at all).

There are serious factors that will eventually strengthen the appeal of the three opposition leaders. About three million Serbs will be on the edge of hunger in the coming winter. One million are the unemployed and one million are just formally employed with no or with an insignificant payment. Even today, in the first days of the Autumn only one third of the Serbs say they have a normal diet. The production of electricity is expected to be 30-50% of the normal level for FRY in the winter.

In other words, a cold winter and hunger are approaching FRY and the government is not ready to meet them. Though understanding the gravity of the situation, the opposition can hardly change the course of the deppressing development. Its hopes are that once in these desperate conditions, people will give their support more decisively. But if Milosevic succeeds to warm and feed up the Serbs this winter changes may be postponed for a longer period.

4. Greece

On 7 September 1999 at 2:56 p. m. local time an earthquake of 5.9 on the Richter scale hit Athens, followed in the next days by many aftershocks. Hundreds were killed and tens of thousands – left homeless. The Greek government succeeded to organise the needed help and to attract international support for the country – from the EU, from the neighbouring countries, including from Turkey. The initial losses are estimated at $ 330-500 million. A devastating earthquake on 17 August in Turkey caused heavier losses of life, some 600,000 were left homeless and the economy suffered $ 20-25 billion.

IV The Bilateral and the Multilateral Relations in the Balkans

1. Bilateral Relations

a) Bulgaria-Bosnia and Herzegovina

Bulgaria will construct portable houses for refugees in Republika Srpska of Bosnia and Herzegovina agreed on 7 September 1999 in Sofia the Bulgarian Government and the Vice-Prime Minister of the Republika Srpska, Tihomir Gligorovic. Food supply for Bosnia and Herzegovina was also agreed by the two sides.

b) Romania-Bulgaria

A Romanian secondary school was opened in Sofia on 16 September 1999 by the Bulgarian Minister of Education. The education of the graduates will be co-sponsored by the Bulgarian and the Romanian governments.

A Bulgarian secondary school is already functioning in Bucharest.

c) Greece-Turkey

"Thank you, brother Greeks!" is a slogan that can be still read in various places in Turkey after the help provided by Greece for the victims of the earthquake that hit neighbouring Turkey on 17 August 1999. Ismaihl Cem, the Foreign Minister of Turkey said on 24 September 1999 in New York to the Session of the UN General Assembly that the solidarity that was demonstrated by the people of Turkey and Greece after the devastating earthquakes in the two countries will help the governments of the two states undertake a constructive dialogue.

For months the Balkan Regional Profile has been following the improvement of the relations between the two countries and we don’t see a spectacular and unexpected suddenness in this declaration of the Turkish Foreign Minister.

In the last days of August 1999 the Commander of the Greek Navy visited Turkey and toured devastated towns by the earthquake. At a retirement ceremony of the Turkish Navy Commander his Greek counterpart called for peace. A Greek naval vessel called a Turkish port after more than 25 years. Soon after that Greek and Turkish business leaders agreed to revive a bilateral cooperation council. Greek and Turkish news commentators agreed to begin publishing their columns in each other’s newspapers. At the September meeting of the EU Foreign Ministers in Helsinki Greece declared it would not block Turkey’s application for membership in the Union. On 12 September diplomats from the two countries met in Athens and agreed to cooperate in tourism, cultural exchanges, environmental protection, trade and other areas. This year’s commemoration of the Turkish military triumph over Greece in 1922 was very restrained, unlike ever before. On 13 September the Greek President hosted a reception in honour of Turkish earthquake relief workers. He told them that Greeks will always remember their profound feelings of friendship.

The tensions between the two countries are far from over. The military expenditures of both states have continued to enlarge. Both Foreign Ministers, Cem and Papandreou, who initiated the diplomatic rapprochement several months ago are not without political enemies inside their own countries relative to the bilateral relations. Yet, they continue to speak by phone every few days as reported by the media. They both have a clear internal and external, especially US and EU support too. But the publics of many Balkan countries, including the Greek one, need to hear solemn pledges on the side of Turkey about non-aggression intentions of this most powerful in military terms state in the Balkan region. There is no doubt the response to such Turkish declarations will be most positive. The need for hearing such statements stems from the historical past when Turkey was occupier and the memories of that are alive. Greece and Turkey are close to entering a new phase of real alliance and partnership relationship of which will profit the security of the whole Balkan region.

d) FYROMacedonia-Greece

The Foreign Ministers of the two countries met on 21 September 1999 in New York at the UN General Assembly session and agreed to work together for stabilising the Balkan situation. The Greek Foreign Minister shared with his counterpart from Skopje that FRY should be democratised but not by isolating it from the other countries.

e) Bulgaria-FRY

The Mayor of Belgrade, Voislav Mihailovic from the opposition party of Vuk Drascovic visited Sofia on 14-15 September 1999. He met with the Sofia Mayor and discussed cooperation between the two municipalities. In August 1999 the Sofia Mayor visited Belgrade with humanitarian aid for its citizens, especially aimed to reach the children of the Yugoslav capital.

f) Bulgaria-FYROMacedonia

On 21 September 1999 the Prime-Ministers of Bulgaria and FYROMacedonia, Ivan Kostov and Liubcho Georgievsky held a meeting in Blagoevgrad, South-Western Bulgaria and discussed various bilateral and regional issues. Meantime the Trade Ministers of the two countries negotiated and signed an agreement for a free trade area on 13 October 1999 and to launch it on 1 January 2000.

Earlier, on 11-14 September 1999 the Chief of the General Staff of the Bulgarian armed forces, Gen. Miho Mihov hosted a visit of his counterpart from Skopje, Gen. Traiche Krastevsky. Bulgaria is ready to donate aircraft, air-defence missile complexes and equipment for other branches of the armed forces of FYROMacedonia. If Skopje demonstrates readiness to accept this donation, the Bulgarian Government will take a respective decision.

2. Multilateral Relations

The Multinational Peace Force Southeastern Europe (MPFSEE).

A military parade of the units of 7 countries – Albania, Bulgaria, FYROMacedonia, Greece, Italy, Romania and Turkey marked on 11 September 1999 in Plovdiv the opening of the Headquarters and the official activation ceremony of the MPFSEE. The President of Bulgaria attended the event.

The MPFSEE is an attempt for a regional implementation of the CJTF concept. On 26 September 1998 in Skopje the Third Southeastern Defence Ministerial of the seven countries ended with an Agreement on the Multinational Peace Force South-Eastern Europe. The MPFSEE has a 5-year exercise programme.

V The Economic Situation of the Balkan Countries and the Region

The main factors that contribute to the deteriorated economic situation in the Balkans and scaling down of earlier growth expectations are related to the consequences of the Kosovo crisis and the war in Yugoslavia. Because of them the region has been cut off from the routine of the economic and capital exchange with the rest of the world and its credit rating has been again hit substantially. The increased risks for both domestic and foreign investors seem to influence strongly the expectations for a prolonged and slow outcome of the economic depression.

Further instability has been incurred by the huge losses and damages sustained by the Turkish economy as a result of the earthquake on 17 August 1999. The coincidence of the earthquake in Greece on 7 September 1999 has also laid pressure and worsened the growth expectations. Until now only Greece and Turkey have been in a better position of providing an export-led GDP growth and having good opportunities after a reduction of the inflationary trends. The deterioration of the economic indicators in both countries may have an additional unfavourable impact upon the economic climate in the Balkans.

Both the war in FRY and the worsening of the overall regional situation will bear adverse consequences for all Balkan countries and may create difficulties in overcoming the recession, the current export slump, trade and capital flows’ disruptions. It became obvious in the last 2-3 months the Balkan countries are badly in need of stabilisation measures and financial support from foreign sources. Given the rising needs of the region as a whole there seems to become less certain what kind of support measures could be the adequate and timely response to help the region out of the worsening economic situation. Both the economic depression and the social problems prove that the Balkan countries have a long way to go to get out of the rapidly widening gap from the developed countries.

Under the present circumstances the expectations of some positive change based on the Pact of Stability for SEE become even more demanding as the economic situation threatens with a higher political instability. A political uncertainty and an eventual delay of any radical changes of the domestic policies may be expected in a short term perspective as follows:

1) in FRY – due to the ongoing political crisis, the continuously worsening of the war and crisis hit economy and the economic isolation.

2) in Romania – the preparation for the elections next year do not make possible any persistent change of the economic policy set. Higher inflationary expectations are logically considered in this situation. In general, the economic results by the end of September 1999 are contributing to a further decline of the gross industrial production in real terms. It is expected this decline will reach minus 6% in 1999.

3) in Albania – the achievement of the goals of the 1998-99 programme for limiting the decline of the real GDP has been badly hit by the war in Kosovo; there are political engagements of expanding the social safety net. All that requires an increase of the foreign aid.

4) in Bulgaria – due to the delayed change to economic upsurge and the politicisation of the economic problems in the course of the municipal elections campaign in October 1999 and the expected early start of the parliamentary elections campaign to be held in the end of the next year. There are varying assessments about this year’s economic growth of Bulgaria in and out of the country. The figures vary from a magnitude of minus 3% to plus 4%. The macroeconomic liquidity is insufficient and unevenly distributed. A trend was shaped in the last few weeks of an increased inflation to the end of 1999 due to the rise of the energy and transport prices. An improved government budget deficit may not contribute to further disinflation and growth.

The withdrawal of the state budget from any subsidising practices and the ongoing privatisation diminish the investment and the entrepreneurial role of the state. The falling volumes of industrial sales and exports, the worsening of the current account and the losses sustained by the country’s economy from the war in FRY make quite uncertain expectations for economic revival by December 1999.

5) in FYROMacedonia – the ongoing campaign for the presidential elections is to influence strongly the political constellation as well as the prospects of economic stabilisation in the immediate future. All this is taking place in a situation of a rising need of an external financing of the ongoing transition and macroeconomic stabilisation, of a downturn of the private domestic demand and a growth of the rate of unemployment.

6) in Turkey – the Government is under a pressure for not being adequately responsive to the needs of overcoming the devastating consequences of the August earthquake and the multitude of powerful aftershocks.

7) in Greece – as a member of the EU this country relies on the support of the Union’s funds.

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

1. The USA.

(1) On 3 September 1999 the White House announced the appointment of Ambassador Alfred H. Moses as Special Presidential Emissary for Cyprus. Moses succeeds Richard C. Holbrooke. On 10 September 1999 President Clinton sent to Congress a periodic progress report on efforts toward a negotiated settlement of the Cyprus question covering the period 1 June-31 July 1999. Two important developments during the reported period deserve highlighting: a) the G-8 statement in Cologne, Germany of June 1999 urging UN Secretary General Kofi Annan to invite the leaders of the two parties to negotiate in the autumn of 1999; b) the visit of Secretary of Defence W. Cohen to Greece and Turkey and his emphasising the US commitment to reach a Cyprus solution.

(2) A diverse group of US Congressmen made a third consecutive visit in less than two months to Sofia, Bulgaria in the first week of September 1999 in preparation of a special Congressional Resolution "USA-Bulgaria".

(3) The US Trade and Development Agency (TDA) announced on 1 September 1999 it will provide the US businesses with news about multilateral funding available to help them participate in redevelopment projects in Southeastern Europe. For this purpose three special information sessions will take place in Washington, Chicago and San Francisco on 1-5 October 1999. Many of the details for project finance are still in the early development stages and this tour will provide American businesses with a status report on the latest plans of the WB, the EBRD, the EIB and the EU to assist with redevelopment Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYROMacedonia and Romania.

2. Russia.

The First Deputy Foreign Minister of Russia, Alexander Avdeev visited Belgrade on 6-7 September 1999 and met President Slobodan Milosevic and the opposition leader Drascovic. This was the first meeting of a high-level foreign representative by the Yugoslav leader since the end of the Kosovo war.

While Russia is against isolating FRY Moscow does not clearly support the present leadership. There is no doubt the Russian Foreign Ministry is studying the options of eventual follow-up political and personal configurations of Milosevic. Who is Russia’s choice is not yet clear. But this Russian visit to Belgrade underlines a continuing geopolitical interest in the Balkans.

3. G-8.

The Finance Ministers of the G-7 plus Russia discussed in the last days of September 1999 the ways of attracting and investing $ 6 billion for the reconstruction of the Balkans. The meeting was initiated by the European Investment Bank (EIB) and supported by the WB, the EBRD and the Coordinator for the Pact of Stability for SEE, Bodo Hombach. Mobilising $ 6 billion for the Balkans will become the most significant financial operation of the international community since 1991. While the EU has invested in SEE $ 4,5 billion for the last 8 years only for 1999 they are $ 1 billion of this sum. The G-7 Ministers are cautiously optimistic about the development of the region of SEE for the next years.

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

1. The mounting tensions inside FRY developing with the continuation of the opposition’s protests may lead to a general regional destabilisation with the approaching winter and to incentives in official Belgrade to exploit to the maximum interest of the regime the ethnic cleansing practices of the heirs of the KLA against Serbs and polarise nationalistic attitudes. A simple truth, yet undiscovered by everybody in the Balkans remains the culture of living in a multiethnic community. This is the most effective antidote to revengeful Albanian and Serbian behavioural practices in Kosovo. The return of the refugees to the minority areas remains an unfulfilled task yet both in Bosnia and in Kosovo. The most promising aspect of the regional security situation is the improving political relations and psychological climate in the bilateral Greek-Turkish relations. Another positive indicator, in this case – of an evolving regional security approach, was the activation of the Multinational Peace Force South-East Europe on 11 September 1999 in Plovdiv, Bulgaria.

2. The economic potential for region-building from the bottom-up was drastically reduced in the last months as a consequence of the war in Kosovo and every country (including Greece and Turkey, due to the devastating earthquakes) experiences different kinds of economic pressures. There is an increasing concern that the economic difficulties coincide temporally with important political tests as the election campaigns in some of the Balkan countries.

At the same time there is an increasing awareness of the need to raise the region-building potential of Southeastern Europe from the top-down, through external economic and financial programmes. The last two months were important for the international financial institutions to study in detail the needs and the ways of responding to them in the different countries of SEE.

The Pact of Stability for SEE is gathering momentum and despite certain scepticism and even demonstrated disappointment by many Balkan governmental leaders is starting to fix the practical ways of doing the planned job. NATO as a major provider of the security in the region has already concrete working instruments. The international financial institutions also stepped in the field. Germany, the EU and the USA have given also clear signals they will stick to what they have pledged. More is needed to produce on the local national levels in terms of appropriate and adaptable organisation to meet the external aid and economic activity. The interaction of the external and the internal levels must produce stability and the basis for self-sustained development of the Balkans as a pacified part of Europe.