Prime Minister Milo Djukanovic spoke on the 5. North South Europe Economic Forum in Vilnius

MILO DJUKANOVIĆ, Prime Minister of the Republic of Montenegro

5. North South Europe Economic Forum

''Developments in Eastern/South Eastern Europe''

Mr. Chairman,

Ladies and Gentlemen,

I would like to thank the organisers of this eminent conference for giving me an opportunity to speak here as a representative of a small Balkan state with big European objectives and hopes of the situation and challenges that Montenegro and South Eastern Europe are facing on the road towards full integration into the European Union and Euro-Atlantic structures.

The future of the countries of South Eastern Europe is, undoubtedly in their Europeanization and meaningful unification with the European Union. We cannot speak of a united Europe if we ignore what is happening beyond the EU borders. The experience has taught us that instability in one part is quickly reflected on another part. As European integrations are, primarily, about peace, stability and prosperity for all the citizens, the vision of a united Europe implies a common responsibility to work for its realisation, regardless of whether the country is small or big, rich or poor, a member or a candidate state. On this basis the EU has over the past few years developed and strengthened a proactive strategy for democratisation of the countries of South Eastern Europe and their full integration into the EU. The EU has pursued this strategic priority through accession processes and the stabilisation and association process, as the European roadmap for all the countries of the region.

The South Eastern Europe as a whole is today in a better shape than ever in its recent history. A lot has been done, but there is still a long way to go.

Bulgaria and Romania are expected to become full EU members in 2007. The results that they are achieving are significant, and not only for their peoples, but also for us their neighbours. Croatia is also making progress towards Europe, as confirmed by the recently granted status of a candidate state. Other Western Balkan countries are in different phases in terms of their progress towards the EU. In Macedonia the implementation of the Stabilisation and Association Agreement is well under way, whereas Albania is negotiating this Agreement. It is expected that Bosnia and Herzegovina could soon begin SAA negotiations.

Serbia and Montenegro, in terms of contractual relations with European structures, are, unfortunately, lagging behind. I would like to briefly refer to the main reasons for such a situation. The state union Serbia and Montenegro has been established, under a strong influence of and, indeed, with guarantees by the European Union, with a view to facilitating the process of European integration. What do the concrete results and our experience with the state union show? Absence of full cooperation with the Hague Tribunal and lack of functionality of the state union are the main reasons why the process of association with the EU has been blocked since the state union came to exist. While the first precondition has to do exclusively with Serbia, the second is also linked to Montenegro. This from the outset highlights the key issue: Which is the framework that allows an unhindered process of reforms and a European road for both Serbia and Montenegro? Evidently, it is not the state union. It can be a democratic Serbia and a democratic Montenegro, making progress towards the EU according to their respective capacities and reaffirming and strengthening, on the basis of European values and standards, broad links and cooperation established over history.

It is with great encouragement and hope that we are looking forward to the forthcoming concrete implementation of the so-called twin track approach, which has recently been supported by the EU foreign ministers at the Maastricht meeting. We expect that this will allow us to avoid that either Montenegro or Serbia, because of their different systems, capacities or interests, be held hostage to one another on their European road. At any rate the history of European integrations shows that Europe has always succeeded in coping with similar situations by resorting to sensible arrangements and models that make possible a compromise that does not weaken its essential principles. This ability characterised the Community Methods, which form the basis for the present European Union. Such a value, reaffirmed by time, has allowed the process of European integration to overcome many a crisis. Consequently, different forms of deeper integration have a long tradition in the EU evolution, especially in monetary and social welfare policies, as well as in field of the judiciary and in home affairs. On balance, this form of differentiating has not brought about a division of Europe, but on the contrary it has contributed to development and to constructive overcoming of problems in the interest of all member states. This concept has particularly gained in importance in the light of the latest EU expansion and recognition that different groups of countries will make progress at different speeds. This is the result of realisation that one can hardly expect each individual country to achieve the same results in all EU areas at the same pace.

In principle, Montenegro should not have particular difficulties in meeting the conditions for EU membership. Having said so, we are conscious that there are a lot of tasks we need to accomplish before we can qualify for full EU membership. We believe that we are already actively engaged in tackling them. We have put in place the new outlines of political and economic system, conscious that its full transformation and integration into the EU and Euro-Atlantic structures is a complex process that takes time. In this context I would like to draw your attention to some of the results achieved. We have achieved big progress in curbing inflation, reducing unemployment and strengthening political and macroeconomic stability. We are fully committed to opening our market to our neighbours and to the EU. Also we are working hard to promote investment climate for all investors local and foreign. As when we look at the economies that have managed to attract high level and good quality of direct foreign investments, we note that they did not do this through any special incentives for foreign investors, but by building a system that inspires confidence through an efficient and reliable legal system, a reliable, transparent and capable public administration, public and private partnership, development of key infrastructure, etc. Our objective is to build a system that can function well within the current regional, European and global integrations and cope with an ever stronger international competition.

In terms of integration of countries of the region into the NATO structures, Serbia and Montenegro are again at the far end of this process. This example shows even more drastically the weaknesses of the state union. Montenegro was ready for the Partnership for Peace at the Istanbul Summit. It was not admitted into it because of Serbias non-cooperation with the Hague Tribunal. This problem is absolutely not attributable to Montenegro. It best illustrates the consequences of an arrangement under which, in this specific case, one of the member states is being held hostage. It is clear to us that, having accepted the three-year interim arrangement for the state union, we have to show solidarity and shoulder part of the responsibility. However, the question arises whether what matters to the international community is the state union (an interim and uneconomical structure) or that each part of Europe therefore Montenegro, too, should enter integrations when it has fulfilled the requirements.

All this indicates that resolving the outstanding issues in the region is the prerequisite for its lasting stability. First, there is the Kosovo issue. I do not share some views that insist on interdependence of resolving the Kosovo problem and the issue of Montenegro-Serbia relationship. I am, however, convinced that postponing their solution will considerably slow down, if not block the reform processes and European perspective, individually and regionally.



The latest wave of the EU expansion is rightly considered a landmark and success. The process of unification of Europe is, however, still not complete. A major strategic decision in this direction has already been taken. The vision of a united Europe has also been reaffirmed at the Thessalonica Summit. The key issue that now arises is the need to develop a coherent strategy that will shape the next phase of expansion, combining openness of the EU with a meaningful neighbourhood policy. In this regard further development of cooperation within the framework of the EU neighbourhood policy should take into account the particularities of specific regions. It is therefore important that this policy should develop in close cooperation with the partner states and that it be accompanied by appropriate financial support. The more so as we need to overcome some additional handicaps, especially in the economic sphere, which in the case of our region go beyond what is customarily termed as historic factors beyond our control. Consequently, the historic conditions, the legacy of communism, conflicts and deep economic lagging behind are in themselves constraints to individual and common capacity of the region and highlight the importance of support, far bigger that the one that was needed by the states that have become EU members. Since only when we can give to the citizens convincing and palpable proof of European perspective can we count on their full support and active participation.

Therefore when we speak of the European perspective of this region, without an intention to minimise the burden of responsibility that primarily lies on national authorities, we are also counting on a stronger social cohesion and economic dynamism of the EU towards this region.

The current process of creation of a free trade zone in the region of South Eastern Europe, together with the planned liberalisation in the services sector will allow a market of over 55 million consumers to become a region of real potential and economic growth. The removal of various restrictions and an increasing harmonisation within the region will lead to greater specialization, better use of available resources, reduced operating costs and optimisation of the economies of scale. An integrated region opens up space for attracting large direct investments and a multiple increase of intra-regional and inter-regional trade, which is proven to be an essential element of economic development.

Creation of a free trade zone also underlines, however, the importance of larger international support needed to ensure that the main prerequisites are in place for capitalizing on these opportunities. This support is particularly needed to reduce the unacceptably high unemployment rates and low investments in the region. We are witnessing the results that the EU has achieved in development of lesser developed regions and countries, making use among others of the mechanism of direct assistance within the so-called EU cohesion and structural funds. These also include improving, modernising and developing transport, energy and telecommunication infrastructure. In this context I would particularly stress the importance of international support for building the Adriatic-Ionian Highway. Besides, development of a full capacity mutual trade, investments and cooperation, both intra-regionally and with the EU, underlines the importance of effective management of external borders in order to avoid that problems related to the physical infrastructure, migrations, customs procedures or border controls block or slow down a free flow of people or goods.

Introduction of Schengen visas is mostly seen as a new division line in Europe. In this regard there is a full awareness that we have to work to fulfil the key conditions so that we can have a more flexible EU visa policy.

Finally, the institutional cooperation of the region with the EU could also be deepened through models of partial membership in specific segments of European integration. Such an example has just been launched by proposing a Treaty on establishment of a common energy market in South Eastern Europe.

In an expectation that this meeting will contribute to enriching a common strategy for accelerating the association of the countries of this region into the European and Euro-Atlantic structures, I thank you for your attention.

Vilnius, September 13, 2004