GMF - The German Marshall Fund of the United States - Strengthening Transatlantic Cooperation

Testimony of Ivan Vejvoda, GMF Vice President for Programs, before the United States Congress House of Representatives Committee on Foreign Affairs Subcommittee on Europe and Eurasia

 Hearing: The State of Affairs in the Balkans

Mr. Chairman, thank you for the invitation to come and testify before you today at this important moment in the Balkans' path toward a stable and peaceful future in the Euro-Atlantic community. It is a true honor to be here before this Subcommittee of the House of Representatives of the U.S. Congress. I am here to offer my personal views on the current issues regarding the region as well as the opportunities and challenges that present themselves for the region in the future.

Introduction: A Balkans region moving forward in an adverse environment

The State of Affairs in the Balkans cannot be examined without regards for the state in which Europe and the world are today in both political and economic terms.

The global economic crisis that came upon us all in 2008 caught the Balkan region at a moment of steady and forceful economic growth with significant growth rates and increasing foreign direct investments. A post-conflict region that the Balkans was, was clearly emerging towards forms of consolidated democratic and market economy practices. Foreign direct investments were steadily increasing every year.

The challenges were many but the promise of a Europe whole, free and at peace, the attraction of joining a European Union of half a billion people and 27 member states helped motivate states and societies to push forward. Joining one of the most successful political peace projects that the European Union represents in post-World War II history was for a war-torn region that emerged from the catastrophe of the 1990s, a proposition that not only could not be refused, but one that harbored the possibility of once and for all settling the contentious issues within a democratic framework based on the rule of law and human rights: plurality, legality, publicity (an free and open public space). Post-conflict reconciliation and confronting the wrong-doings of the past was an integral part of this democratic effort.

The economic crisis as elsewhere has created levels of unemployment and diminishing standards of living that have in turn created public discontent and a sense of loss of certainty. The key interest of public opinion is about job certainty or lack thereof: the question of whether citizens will be able to fend for themselves in a dignified manner with a job and a salary.

Governmental majorities are struggling to keep their coalitions together in the face of ever more demanding needs in all social and economic areas. The social question is at the forefront of public policies. But also as the countries that have emerged from the breakdown of former Yugoslavia and Albania struggle to keep their publics capable of meeting the daily challenges, so must they also focus on job creation and on key infrastructural projects which will allow further investment and growth.

Beyond the economic crisis and closely linked to it is the situation in the European Union itself which is suffering many of the same symptoms: pressured by a crisis of its currency the Euro which threatens to undermine the EU itself, rising unemployment and flagging growth rates, with serious lacunae in leadership, the EU has a challenge in keeping the beacon of enlargement in a prominent way. Chancellor Angela Merkel just yesterday proclaimed that the EU is probably facing its most difficult challenge since World War II.

Enlargement has been one of the greatest success stories of the European Union since its inception in 1957. In June 2003 a solemn promise was made in Thessaloniki, Greece, at the EU Summit that the countries of the Western Balkans (as they were denominated) would become member states when they met the required Copenhagen criteria of the EU (“without ifs and buts” in the inimitable words of Romano Prodi, the then the President of the EU Commission).

Although the EU has at every juncture since June 2003 repeated its commitment to further enlargement to the Western Balkans as defined at the Thessaloniki Summit, the word “fatigue” has crept into the unofficial EU jargon to describe a sense of reluctance to take on new members by naysayers who think that there is the need for a pause, but also because these naysayers believe that countries such as Romania and Bulgaria were prematurely given full membership in 2007 without fully meeting all the prerequisite criteria. There have been and are now reasserting themselves voices that say for example that Greece should not have been admitted in 1981 or into the Eurozone in 1999.

This is an adverse circumstance given that the Presidents and Prime Ministers who on 9 December, in three weeks, will decide on the next steps of the enlargement path will have at the back of their minds these circumstances: their economically suffering publics and reactions of public opinion to further enlargement.

Notwithstanding, Angela Merkel, Chancellor of Germany during her official visit to Belgrade three months ago, in August this year, emphatically reiterated that enlargement was on course, and that there should be no doubt about it, provided that the criteria were duly fulfilled. This was an important statement from one of the most prominent European leaders of the day. This indicated a commitment from the ruling heights of the EU that was important to hear in the region, and distinguished itself from a number of individuals vociferous about the need for the EU to halt this process.

It is also true that although the rules for entry have remained the same (Copenhagen criteria and approximation of national legal systems to the acquis communautaire) they are being applied with the utmost rigor, unlike in some of the previous enlargements.

It is of crucial importance that, enlargement, this joint endeavor of the countries of the Western Balkans and the European Union backed wholeheartedly by successive United States administrations continue to be conducted in fairness and with mutual trust in the workings of the process, while realizing the complexities of the domestic politics in all countries concerned, both aspiring and existing member states.

The State of Affairs: Commitment of governments and publics

At the outset it is key to underline that the commitment of the governments of the region and of the publics to join the Euro-Atlantic community is still present: both for the EU and for NATO (with the exception of Serbia).

In spite of the significant economic and social challenges, and a certain decline in the numbers of support for enlargement, from previous very high numbers, there are still clear majorities in each country whose desire to join the EU and NATO (again with the exception of Serbia for NATO) is overarching. One has to look beyond the individual polls and observe the longer term trends as well as similar dynamics in countries that have already undergone this process. In particular it has been seen that the closer a country gets to the entry point the greater the decline in public support for entry into the EU. Croatia is a case in point.

The picture is surely bleak when observing the travails of the EU on a daily basis, but the polities of the Western Balkans know that whatever may happen with the Euro or with an EU going into two or multiple speeds – it is simply a Union in which there is more certainty, security and prosperity than outside of it. It is a Union that has built itself up (under the US security umbrella) over the past more than 50 years and established a rule of law and democratic practices, seemingly cumbersome at times, that have attracted 27 countries into its midst.

That power of attraction, the soft power of the EU still works efficiently in the region of the Western Balkans. Undoubtedly, chips in its armor have appeared, but publics still see a safer haven there than remaining outside the Union and thus outside of the enlargement process.

It is for this reason that the EU, in difficult times of tightened budgets and painful austerity measures, must find it in itself to pursue the commitment given at the Thessaloniki summit in 2003 to bring these countries into full membership as soon as they accomplish what is required of them in terms political, economic, social reforms. The Progress Report of the EU Commission is an encouraging step in this regard.

That is why keeping the process open and fair, in the face of those who wish to close the door to further enlargement, helps those others who are pursuing the herculean task of deep-seated democratic state and societal transformation, modernization and democratization. There is a bond of mutual responsibility in finishing the construction and unification of Europe. However adverse the circumstances may be, whatever the huge challenges that the EU is facing, there is a larger framework that has not dissipated and the gaze must be lifted from the navel to broader horizons.

The main burden of responsibility lies with aspiring member states

The European Union, the United States, individual countries, public and private donors have contributed and are contributing substantive amounts of financial and other resources in helping these countries rebuild themselves, strengthen their institutions and governance and their economies. The fact of the matter is that in these countries of the region there are no internal similar financial or other resources to kick start and help pursue economic growth. The countries are dependent on foreign direct investments, loans from international financial institutions, donations from the above-mentioned actors. This reinforces the bond of mutual responsibility and obligation.

It thus behooves the countries of the region to carry the main burden of responsibility for democratic and market reforms, for strengthening rule of law, deepening judicial reforms, combating corruption and organized crime, creating favorable investment climates so as to attract the necessary resources from abroad. No one can do this hard work of change in their stead. This Sisyphean task is all the more difficult when standards of living are stagnant or falling, or unemployment is rising. This is additionally painful because it is amongst the youth of these countries as elsewhere in Europe and the world, that unemployment is much higher. This in turn leads to a dangerous real and potentially disastrous brain-drain of those who are supposed to be the future human capital that should contribute most of all to the growth of these economies and to moving these societies forward.

So as these countries and their governments, parliaments, judiciaries, societies and economies struggle to change, they are helped enormously by friendly hands and resources from outside – and maybe in the most relevant way by keeping the promise of enlargement tangibly present.

The fact that Croatia has completed its road to membership and will become a full member state in July 2013 is of historical relevance for the region and for all of its countries. This is a success for Croatia and for the region and each individual country. This is tangible proof that the process works, that those who fulfill to their best capacity all the 33 “chapters” for membership will be given an open door and join the one half billion other citizens of the EU.

Keeping the train of Euro-Atlantic enlargement moving

Croatia becoming the 28th member-state of the EU gives motivation to all those working in the engine-rooms of democratization and modernization of their countries. That is why the opinion emitted in the Progress Report that the EU Commission gave last month, in October, is so fundamentally important for the transparency of the process and the oversight of the path travelled by each country.

By all counts it gave a fair assessment of the achievements and the shortfalls in the process of transformation. All still have a long road to travel in a number of spheres of reform and transformation.

None of these countries following Croatia is yet ready to join. Thus there will be a gap (apart from Iceland possibly joining in the mean time) of at least 6-8 years before the next Western Balkan country joins. But this gap is not because of fatigue or the EU refusing further entry, but simply because of lack of preparedness of the future candidates for membership in the most immediate future.

Turkey, that in 1963 got Associate membership with the then European Community, and has been a full candidate country since December 1999, and negotiating entry since October 2005, is in a category of its own compared to the Western Balkans. In some respects, geographically partly a Balkan country itself, it is the one that provokes the most heated debates in some EU countries with regards to its prospects for membership. Often in fact when enlargement is talked about in a loose fashion in the EU public opinion, it is Turkey that is understood as the key country in this process, less so the Western Balkan countries.

Looking through in a most summary and highly incomplete manner: the EU Commission Progress Report of October recommends granting Serbia Candidate Status at the 9 December Council on the understanding that Belgrade re-engages in the dialogue with Kosovo and is moving swiftly to the implementation in good faith of agreements reached to; it is also proposed that Serbia open negotiations with the EU as soon as it achieves further progress in meeting the one key priority identified as: further steps to normalize relations with Kosovo in line with the conditions of the Stabilization and Association Process. Serbia is also heralded for the capture of Ratko Mladic and Goran Hadzic the last two outstanding indictees of the International Criminal Tribunal for former Yugoslavia, thus fulfilling of its most stringent and difficult obligations over the past years. The dialogue between Belgrade and Pristina has been highlighted as an important step in the soothing of tensions and the search for viable solutions between the two which has already yielded certain results.

Montenegro, already in the status of candidate country, was suggested to get a date to begin negotiations for membership in 2011 and was positively assessed for pushing through an important electoral reform.

Macedonia that has been a candidate to the EU for the past six years cannot budge because of the unresolved issue with Greece over its name. This is a highly detrimental situation not only for Macedonia but also for the whole region and for the enlargement process. Greece’s enormous economic problems unfortunately do not bode well for a resolution of this now 19 year-old stand-off, in spite of the fact that Macedonia was ready to join NATO as full member at the same time as Croatia and Albania did in April 2008 at the Strasbourg-Kehl Summit, and in spite of the fact that the EU Commission is recommending since last year that it begin negotiations.

Albania has been stalled in its path due to outstanding challenges in its electoral processes and their contentious nature for both governing and opposition parties and the resulting difficulties in seeing an efficient legislative and governance process move forward. Albania on the other hand has become a full NATO member and has thus strengthened the security pillar which adds an important dimension of stability to the region.

The scrutiny of the EU Commission on Bosnia and Herzegovina has not revealed any optimistic views due to the fact that since the parliamentary elections in October 2010 the political parties who participated in the elections have not found it in themselves to overcome differences allowing them to form a central government that would lead the process of continuing on the path of integration. The EU is diminishing its EUFOR military mission and its police mission, but has sent in the first EU Special representative (EUSR now decoupled from the OHR, Office of the High Representative and its Chief Valentin Inzko) who is at the same time the Chief of Mission of the European Union, a most able Danish diplomat Peter Sorensen.

Finally of Kosovo in Progress report it is said:”Kosovo has made progress as regards the political criteria in a number of important areas. Following the general and presidential elections, a government was formed and started to address challenges Kosovo is facing. The Belgrade/Pristina dialogue was conducted in a generally constructive spirit, until September. The coordination of the European agenda in Kosovo has significantly improved. The Ministry of European Integration has strengthened its role and successfully managed a cycle of the Stabilization and Association Process dialogue. People in the north also need to benefit from the European perspective. It is important that Kosovo launches a comprehensive agenda for the north. Judicial reform has continued satisfactorily and important judicial institutions are in place”. On the economic reform toward a market economy the Progress report assesses that no progress was made toward a market economy and that budgetary issues were a particular challenge.

It is important that the most advanced country, the “locomotive”, Croatia be followed by all the other coaches of the train, i.e. that all countries also advance, understandably solely on their merit. This is the most forceful incentive to all those in these countries who are painstakingly endeavoring to make their states and societies better, more efficient, more transparent polities, for the public good and common interest of their citizens. One cannot overstate the case for this motivating force that the EU gives when it advances countries that are part of the process of enlargement. This is where EU leadership is strongly felt.

Those who are the domestic actors of modernization and democratization in each country are often confronted with tenacious odds, not only in the form of the domestic effects of the global economic crisis, but in the form of all those retrograde, entrenched and forces of special interests who are trying to maintain their privileged positions, their capacity for cronyism and clientelism, desperately trying to curtail the winds of change and transparency. This is of course not specific to these countries: see Greece, or see the fact that the former Prime Minister of Croatia Ivo Sanader is in jail under a number of charges of corruption and abuse of power. This illustrates both that the challenges are great, but also that headway is being made.

The lessons of the enlargement of the EU to Bulgaria and Romania have been learned. For example in Serbia this incumbent government decided to embark on what is probably the most difficult of all reforms in a democratic transition: that of the judiciary. Frontloading such an encompassing reform testifies to the awareness that all key reforms must be accomplished before entry and secondly that they take time to implement; i.e. it is difficult to get them right from the outset, and that they need to be fine-tuned for a lengthier period of time so as to yield efficient results.

Also the lesson, as it is defined in the EU, that “a new Cyprus shall not be repeated”, in other words that an aspiring member state shall not be allowed to bring into the EU an unresolved territorial and constitutional issue. This pertains in particular to Serbia, regarding the unresolved issues surrounding Kosovo

Regional Cooperation: An unsung story

All the countries of this “micro-region” of approximately 20 million people (4% of the half a billion citizens of the EU) have realized that only by cooperating can they weather many difficulties, achieve economies of scale in trade, production, infrastructure and combat the plague of organized crime.

Just in the past two months just to mention one example in the domain of security cooperation the ministers of defense and the chiefs of military intelligence have had their regular regional conference.

Regional cooperation has shown that a spirit of European partnership is pervasive. The renewed and intensified relationship between Croatia and Serbia since January 2010 when President Ivo Josipovic of Croatia was elected has been a clear demonstration of the awareness that the countries of the region only together will they be able to forge a way forward. They are very dependent on each other in multiple ways and in particular in commercial terms. The economic crisis has shown this patently. In fact cooperation in matters of fighting organized crime in the past two years has shown dramatic successes. The police forces, the ministries of interior have developed very intense levels of cooperation in particular over the past several years. These efforts are conducted in close cooperation with the US agency Drug Enforcement Administration (DEA) and the British Serious Organized Crimes Agency (SOCA). Regional and international criminal networks have been followed and exposed and curtailed.

Regional cooperation in a multiplicity of fields has been the unheralded story of the past decade. A “Yugosphere” has been talked about to indicate the versatility of the numerous links, exchanges, joint ventures and mutual investments that have materialized over these years. This is expression is not to everyone’s liking for many reasons but it indicates the capacity to rebuild links among the newly independent countries that are driven by common interest and sheer necessity.

This regional cooperation has been compounded by the significant efforts aimed at confronting the wrongdoings of the past. Addressing the issue of the crimes committed during the conflict of the 1990s during the breakdown of former Yugoslavia has been an important part post-conflict development in the whole region and thus in Serbia as well. The mutual apologies for the crimes done in the name of the countries have contributed to overcoming tensions furthering peace. Furthermore, the presence of leaders at memorial sites, for example of the President of Serbia but of other regional leaders as well, at the commemoration of the genocide committed in Srebrenica is just one testimony to these endeavors.

Civil society has had a major role in much of these efforts toward reconciliation and overcoming the past. Over all civil society has been a key ally in all the democratic transformational work. More still needs to be done and again it behooves the leaders to continue setting the tone to this process.

Kosovo

There is a clear awareness of the realities of the Kosovo situation, not least amongst the current leadership in Serbia that is determined to pursue a solution to the ongoing challenge for the benefit of all citizens. With the engaging of the dialogue in March this year between Belgrade and Pristina, facilitated by the EU there has been a step by step approach that could lead to a resolution of the situation in Kosovo. This peaceful, prudent and realistic approach is conducive to stability and peace. Kosovo is quintessentially a European type of challenge and these have needed time to be resolved in a satisfactory manner. Such is this European challenge.

One need only mention as a comparison the issue of Northern Ireland. It took nearly a decade to get from the Good Friday agreement in April 1998 to the joint Northern Ireland Assembly Government in May 2007, a power sharing executive government in which Martin McGuiness and Ian Paisley, as leaders of the two communities, found an acceptable solution to all parties. It is humbling to understand that such challenges require time, and trust-building that can in turn lead to lasting, peaceful and stable solutions. Kosovo albeit different is a similar challenge.

Serbia lost a war with NATO in 1999. All of its state institutions had to depart Kosovo, and yet as is known the situation is unresolved in particular with regards to the North. Serbia’s maneuvering space for negotiations was and remains as a result of the defeat very limited and yet the dialogue between Belgrade and Pristina began in March and has already yielded its first results to mutual benefit. A second round of results and compromises were supposed to materialize in July but did not, which led to a flare up, caused by a unilateral move by Pristina to assert its control on the North of Kosovo, that was then promptly calmed down by all sides involved – domestic and international. The dialogue was successfully reengaged in September and is expected to be continued, literally in the coming week. This is of the utmost importance for both Belgrade and Pristina, for the region and for Europe which can thus demonstrate its capacity for leadership and facilitation in resolving issues on its continent.

The two sides remain firm on their principled positions: Serbia is clear that it will not recognize Kosovo’s independence, while Pristina maintains the fact of its independence and sovereignty. It has been clearly stated though, that these principled positions have not impeded the way toward finding solutions to numerous existential questions.

Serbia has repeatedly stated that it will only seek a peaceful negotiated solution to the challenge it confronts. Kosovo has asserted its independence and has also been pursuing a path to EU integration. There is cause to seek compromise for the common good of peace and a secure livelihood of all citizens living there whether Albanian or Serb. European values are here being implemented to find a durable foundation to stability and peace.

Although partition of the North of Kosovo was contemplated by Serbia in the past as a possibility for a rapid solution with a concomitant recognition of the independence of Kosovo – that scenario is clearly off the table. A form of autonomy for the North with complex arrangements of power-sharing between Belgrade and Pristina seems to be a realistic option at the moment along with the defining of the status of the Serbian Orthodox Christian monasteries, the guaranteeing of rights of the Serbian community and of property issues. What will eventually transpire can only be the result of a process in which the two sides will feel least uncomfortable with. There are no ideal solutions in such and similar cases, only versions of the least bad solutions – and it seems that both sides have arrived at that degree of awareness that can be conducive to finding a solution in the not too distant future.

Given these realities, there is still much can be done in establishing a framework allowing for a normalization of multiple relations without recognition of one by the other. That is why, whatever the very significant historical and factual differences, the example of the “two Germany’s” during the Cold war is quoted, or the relations between China and Taiwan (between which there are billions of dollars of trade, and eight daily flight between Beijing and Taipei)

Realities are also that all major trading and other partners of Serbia in the EU and the US have recognized the independence of Kosovo. All in all to date 85 states have recognized Kosovo’s independence. Yet also, five states of the EU (Cyprus, Greece, Romania, Slovakia, and Spain) have not recognized Kosovo’s independence.

Time has allowed for a maturing of the awareness that resolving the challenge rather sooner than later is in everyone’s interest – of the citizens in particular. The need to move more rapidly in the existing dialogue between Belgrade and Pristina in a challenging global environment can help the region establish itself as an example. But there is nothing easy or simple or that can been done without the respect for both sides’ interests. One is looking at least bad solutions as always in similar historical distant and recent cases.

A vibrant public debate on both sides also underscores the realism of the challenge without neglecting or diminishing its difficulties, nor the emotional and historical sensitivities.

CONCLUSION

The region of the Balkans has a number of challenges ahead. Among them corruption, or systemic corruption, is among its foremost domestic challenges. It is corrosive for the trust that citizens have in the system of governance, it is nefarious for expected foreign investments. Investors seek an enabling environment in which they shall not be exposed to a variety of opaque practices and obstacles that may lead them to abandon intentions of investing. That is why judicial reform and the constant focus on the rule of law are of the essence.

The global economic crisis has not been helpful to say the least to any country. All are confronted with fears and threats of a double dip. The small countries that they are have gone through a tumultuous 1990s decade that has been so costly in social and economic terms that it has created a repository of resilience which means that full scale social upheaval is less likely although discontent is palpable. People have experienced suffering and even the extremes of suffering in the very recent past so that an economic downturn in comparison however dramatic is less so than what was experienced previously. This gives the government a political and economic maneuvering space that is not insignificant, but it should be in any way overestimated.

This social situation though does not exonerate from clear leadership and the courage of leadership, meaning the need to make difficult decisions, to pursue painful yet necessary reforms so that the path toward greater public good and common interest, the rule of law, the enforcement and implementation of laws moves steadily forward. This in turn moves the countries closer to the European Union.

Citizens as others are craving for more certainty and predictability in their daily lives. Governments must endeavor to resolve outstanding issues that lie in the path to being fully embraced and accepted by those who can help it and support it in every regard. Political parties and the elected leaders ultimately gauge the speed at which they can conduct reforms. Here again the interaction with the EU as an ally in this process is of the essence.

The region has advanced significantly since the Dayton Peace accords in 1995 and since the fall of the Milosevic regime in 2000. If one were to compare the two states of affairs in the Balkans in 2000 and today one could shy away from the realization that much has been accomplished and that this trend must be upheld and supported. Yes, this has happened by fits and starts, often by meandering, muddling through and sometimes with backward steps. But were one to plot a chart of these 11 years the trajectory is clear, as a political will and determination to resolve the issues outstanding.

The processes of democratic reform in post-totalitarian and post-authoritarian countries are progressive and often fragile. Young democracies need to strengthen institutions very rapidly and yet the “habits of the heart” of a democratic political culture do not appear over night. It is the practice of democracy, the practice of the market, the level playing field, competitiveness, debate and dialogue that instill norms and behaviors that dispel fragility of institutions.

Countries of the region in that respect are no different than other post-communist countries that have trodden the path of building democratic institutions, conducting wholesale reform of all of the countries institutions.

The region has nonetheless come a long way. It chose the future in Europe when rejecting the past. The forces of the old regime have been strong and have found ways to severely slow down reform processes. The states must now reinforce efforts at democratic transformation; they must diminish bureaucratic obstacles to investments and make the climate for investors much friendlier. In pre-electoral periods such as occur regularly it is to be expected that the focus will be on fulfilling the necessary requirements put in front of them by the European Union. The rest will wait until after the elections.

Competitiveness is too slow to appear which also means that investments are less forthcoming. The state monopolies in the field of production and distribution of energy are here also an impediment to new actors and investors.

Finally, needless to say, the support of the US administration to the EU integration process of the region and to the overall process of reform is most important. The visits over these past couple of years of Vice President Joseph Biden and of Secretary of State Hillary Clinton have in that regard been of great importance. The finishing of the “unfinished business” – support to the creation of a “Europe whole, free and at peace” is a key tenet of US foreign policy in the Balkans.

Even with these very slow changes and openings there have been important foreign investments over the years. One can see that there would have been much more had there been a consistent effort on the part of governments to simplify the rules of economic engagement thus promoting a level playing field for all those interested in investing. The region has for some outside actors been a cause of frustration in terms of its slow pace of change. Yet many present indicators and past experience show capacities and potential that is promising if unleashed and sheparded in a responsible manner.

Thank you Mr. Chairman

Ivan Vejvoda is Vice President for Programs at the German Marshall Fund in Washington.

Image by Ikuru Kuwajima, lightstalkers.org