Press Release
ECE/GEN/00/22
Geneva, 4 May 2000
55th
Annual Session of the Economic Commission for Europe
"The Economic Regeneration of South-East Europe"
Remarks on the Seminar Discussions by the Chairman of the Commission
Ambassador Harald Kreid
The first day of the fifty-fifth
Annual Session of the ECE was dedicated to a discussion of "The Economic Regeneration
of South-East Europe". Invited guest speakers included representatives of
organizations such as the EC, EBRD & OSCE as well as former government members and
prominent economists and political scientists of both Western and Eastern countries. Since
panellists spoke in their own capacity their presentations were candid, outspoken and, at
times, highly critical. The overall picture emerging from the debate was one of concern
and commitment, concern because it was felt that the crisis situation in the region had
not been mastered despite all efforts made, commitment because there was agreement that
renewed and sustained support was required in order to bring the situation under control.
Some panellists expressed the view that
the persisting political instability, the unsolved questions of sovereignty, national
borders, lack of state power and weakness of institutions stood in the way of an economic
recovery. Unless the international community decided to deal with those questions on a
priority basis the lingering danger of further conflict would impede meaningful results in
the area of economic reconstruction and growth. Experience showed that economic incentives
alone were insufficient to induce political stability.
While there was general agreement that the
region needed foreign assistance, panellists were rather divided as to how it should be
designed. It was stated that technical assistance, if not properly applied, can leave
recipient countries worse off than before. The repayment of loans could become a heavy
additional burden because the percentage of failures in loan financed projects tended to
be high. At the same time there was the risk that recipients become aid addicted, i.e. aid
could have the pernicious side effects of preventing the mobilization of indigenous
resources.
Shouldered with the double burden of
reconstruction and transition to a market economy governments in the region were
overtaxed. The result was frequently a criminalization of society, crony capitalism,
wide-spread corruption which - according to one speaker - served to
finance the investment in security which
had become necessary in view of the breakdown of state authority and, finally, a
regression to ethnic networks as the only functioning form of social organization. While
multiculturalism prevailed in Western Europe after the traumatic experience of two world
wars, the Balkans were moving towards ethnically cleansed entities, based on clans and
family units, the opposite of an open and modern society.
The question of how to remedy these
multiple difficulties was addressed from various perspectives. It was thought that
regional cooperation, while unable to solve all problems, played an important role in
normalising the relation among the numerous new actors. Regional cooperation had to
precede a more ambitious integration into Western European structures. It needed to
address security concerns, liberalization of trade and policy coordination. The entrenched
attitudes of closed borders had to be overcome. The situation was aggravated by the
application of sanctions against one of the key states of the region without which a
meaningful and coherent regional approach was not possible.
The prevailing view was that the prospects
for successful regional cooperation were slim for the time being and that the region
needed the exertion of outside influence to be induced to take the proper initiatives. The
EU constituted the decisive anchor as a complement or substitute for regional integration.
It provided the focus for regional development, yet had itself contributed to regional
fragmentation by maintaining special relations with the countries of the region, reaching
from sanctions (Serbia) and trade preferences (Croatia) to cooperative agreements
(Albania, The former Yugoslav Republic of Macedonia) and Europe Agreements (Bulgaria,
Romania).
The Stability Pact was predominately
viewed in a positive light. It had created political momentum, yet a comparison with the
Marshall Plan was not applicable because of the different conditions prevailing in Western
Europe after the world war and in the Balkans of today. The pact was based on the
recognition that in order to get economic growth you needed to create adequate political
conditions, but the question remained unanswered how you arrive at political stability
without the emergence of a middle class which in itself could only be the result of
economic growth.
The panellists had divided views on where
the priorities for international assistance lay. To address the catastrophic employment
situation which had led to a de-industrialization was considered a top priority. To remedy
it entrepreneurship needed to be promoted, especially with regard to SMEs. That would have
the additional advantage of diluting the existing concentration of economic power. Small
enterprises had turned out to be the most dynamic economic factor in other transition
countries and their development could help to break up vested interests. The EU had drawn
its lessons from past experience. While reconstruction efforts were at the forefront,
assistance needed to be designed in a manner which would permit the countries of the
region to embark on the road to Europe. This criterion was applied when addressing the
task of institution building with an anti-corruption bias. This was a long-term yet vital
and inevitable process which, in turn, needed to be accompanied by increasing investment
flows which needed to be carefully targeted so as to really stimulate growth.
There was concurrence among participants
that the main key to a solution of the problems of the region was the attainment of
sustainable growth. Without that, no long-term recovery was possible. The basic bench mark
for evaluating the usefulness or adequacy of policies and assistance programmes was
therefore the extent to which they contributed to the growth of the economies and thus to
an improvement in the living conditions and well-being of the people.
In order to provide you with a better service, we would appreciate it if you
would send a copy of your article to: Information Unit, United
Nations Economic Commission for Europe (UN/ECE), Palais des Nations, Room 356, CH - 1211
Geneva 10, Switzerland,
Tel: +(41 22) 917 44 44, Fax: +(41 22) 917
05 05, E-mail: [email protected],
Thank you. |