European Affairs

Greece's Aid and Investment Boost Balkan Economy and Stability     Print Email
Alexandros P.Mallias

Alexandros P.MalliasIn the Balkans, two issues – security and economy – are key for the region’s present and future. On security, the collapse of the bi-polar system fundamentally altered the overall security perception in Europe and in the Balkans. Now the challenges are mainly organized crime and illicit trafficking, as well as the gray economy. A combination of the gray economy and organized crime has proved to be a serious impediment to foreign direct-investment in the region.

Economically, the Balkan states are relatively small entities. The new states that emerged from the disintegration of Yugoslavia were not attractive to largescale foreign investment. Now the perspective of the abolition of economic borders, in the context of potential membership in the European Union, has opened new opportunities for the Balkans: first, through the establishment of a free-trade zone and, second, through the phased inclusion of the countries of the region into the EU. An emerging marketplace of 50-million consumers has the potential to attract big cross-border investments, and I would advise our American partners to invest there.

European integration and the prospect of EU membership constitute the strongest single soft-power mechanism for engaging reforms, consolidating democracy and making institutions more compatible with European standards. It also benefits the economy: market reforms are necessary, not just within individual countries but also for the region as a whole.

There is a fundamental change in the region since the 2002 EU summit meeting in Thessaloniki: Greece’s presidency of the EU gave an unprecedented boost to the western Balkans’ legitimate aspirations on the European stage. For the first time, the Balkans are at the forefront of European integration. This is a qualitative change from the lack of EU cohesion during the region’s crises in 1990s. Right now, all Balkan states without exception are eligible for EU membership. This is an historic moment.

In Thessaloniki, all the leaders of EU member states, including the newcomers from the “big bang” enlargement together with their counterparts from Western Europe, sat at the same table. Kosovo was also present, represented by the United Nations Interim Administration in Kosovo (UNMIK). The UNMIK delegation included leaders of both the Kosovo Albanians and the Kosovo Serbs. So that constituted a positive message that the page is turning in this conflict and a painful chapter is closed.

Greece’s overall strategy also includes Turkey. This is why Athens took the lead in helping to engage Ankara in important reforms via the EU integration process. It is up to Ankara to display the necessary political will. For Athens there is no ambiguity: full implementation of EU standards, commitments and criteria will lead to full EU membership for Turkey. There is no room for less-than-full performance either way. Greece’s strategy is clear: we support Turkey’s European aspirations and Turkey has to do more to back up its European bid. In the economic field, Greece has been investing and will continue to do so.Most recently, the National Bank of Greece acquired 46 percent of the shares in one of the largest Turkish banks, Finansbank.

Now we have a marketplace of 120 million people; Greece ranks among the top investors in the Balkan countries, where Greek investment amounts to roughly ten billion dollars and has generated 200,000 new jobs. The trade volume between Greece and its Balkan neighbors is about four billion dollars.

Improving the hard and soft infrastructures in the Balkans is a key for attracting fresh investment. Transportation and energy networks are an urgent priority. During the 1990s, choices about cross-border highways and railways were politicized. The regional energy treaty signed in Athens on October 25, 2005 (also known as the Energy Community Treaty or the Southeast European Energy Treaty) constitutes a strong incentive for investments in this sector in the Balkans – an energy marketplace that we estimate will attract over $20 billion in

 

Greek Investment in Southeastern Europe

Trade (2005) in Millions of US$

investment in the next five to ten years. Beyond the treaty and the potential of Kosovo’s coal reserves, it is important for the Balkans to diversify their energy supply sources. Since the early 1990s when we were cutoff from the Central European Energy Network during the Balkan conflicts, Greece has undertaken a series of measures to expand its sources of supply.

Greece has a growing role as a regional energy hub. The only functioning crude-oil pipeline in the Balkans is the one that links the Thessaloniki port with Skopje. We hope for recognition on a business level that this pipeline should be extended to Pristina. A natural-gas pipeline linking Turkey to Greece could interconnect on Greek territory with a pipeline to Italy and bring Caspian gas to Western markets.

Athens, Sofia and Moscow have signed a political agreement to build a pipeline that will carry Russian gas and crude oil from the refinery in Bourgas (Bulgaria) to the Aegean port of Alexandroupolis. Greece has also signed an agreement with Italy to construct an undersea pipeline to import Algerian gas. Greece is one of the few EU countries that disposes of LNG facilities (just off the Port of Piraeus) and already imports LNG from Algeria. Greece also has a global strategic oil asset in the form of the world’s biggest fleet of tankers, which are the most flexible and secure method of shipping gas and crude oil.

We would like to see our region prosperous, developed and stable.We in Greece believe our security – economic security as well as protection against asymmetric threats – is linked to the well-being of our neighbors. Greece, a safe and secure country, has a sophisticated and modern infrastructure, inherited from the 2004 Olympic Games. Recently, the Greek government has implemented important measures to encourage foreign investors by cutting bureaucratic red-tape and creating a series of new incentives for business investment. Greece has a dynamic, outward-looking economy and good knowledge of southeastern Europe and the eastern Mediterranean, including its human geography.

Since immigration policies are at the top of U.S. and European domestic agendas, it should be noted that ten percent of Greece’s population consists of foreign immigrants. The last census shows that Greece’s population amounts to 11 million, one million of which are foreign workers. Ten percent of the students in Greece, at all levels of education, are foreigners. Greek society has displayed a good degree of maturity, inclusiveness and openness in smoothly integrating these foreign groups who came to Greece to seek a better future. Significantly, most of these people came from neighboring Albania and Bulgaria.

Like our EU partners, Greece was caught by surprise by the collapse of the Soviet Union and the disintegration of Yugoslavia. Clearly, the EU was not prepared, and in the early 1990s national concerns prevailed in policy options, especially up until 1994. Fragmented European policy, particularly in the Balkans, sowed a crop of problems and added to major differences between Europe and the United States.

Greece soon recognized that its interests were better served not by hoisting the national flag but by hoisting the EU flag. We did not always sound very convincing in the mid 1990s when we were advocating this in EU bodies. In those days, few Bulgarians and Romanians believed that ten years later they could join the EU. Now, I hope that success for Bulgaria and Romania will transplant the “faith” to the other countries still waiting. Croatia has a lead in the western Balkans. The Croatian application for membership was skillfully managed during the Greek EU presidency in 2003. The European Commission has voiced a positive opinion on opening accession talks with the Former Yugoslav Republic of Macedonia, and Greece has lent its support, while stressing the need to reach a mutually acceptable solution on the issue of the country’s name.

 

"We cannot expect to achieve stability in Europe if a black hole remains in the Balkans"

The strength of our Balkan region lies in our diversity and in the fact that one day we are all going to become partners in the European family – sooner rather than later. From a Greek perspective, it is important that Bulgaria and Romania be admitted to the EU on January 1, 2007. This would send an optimistic signal to the western Balkan countries knocking at the door.

We cannot expect to achieve stability in Europe if a black hole remains in the Balkans. Serbia and Montenegro have a rightful place in the European Union, and security and stability in Europe will not be complete without them. But a fast-track approach will be impeded as long as the major fugitives indicted by the international court in The Hague remain at large. Greece attaches great importance to Albania’s rapprochement with the EU. Last but not least, from Athens’ perspective, the future of Bosnia- Herzegovina also lies within the EU.

Regarding Kosovo, we know what we do not want to see. The stakes are more important than just the destiny of Kosovo and the destiny of Serbia: they go to the maturity, wisdom and destiny of Europe. We cannot afford to see a stabilized Kosovo and a destabilized Serbia – which would cause trouble for its neighbors. We need to devise a win/win or at least a win/no-lose solution. Only that outcome can provide a lasting and sustainable solution that has the support not just of the governments in Belgrade and in Pristina but also of public opinion both in Serbia and in Kosovo.

The international community, Greece included, opposes the partition of Kosovo

In 20th century European history, we witnessed treaties and agreements that were imposed and contained the seeds of their revision the day after their signing.We do not want to see a similar situation arise from an imposed outcome in Kosovo. So it is worthwhile to exhaust all of our diplomatic creativity to devise a solution that will also address Belgrade’s concerns. The chances of stability are linked to Belgrade’s consent.

It is clear that the international community, Greece included, opposes to the partition of Kosovo. We cannot afford to have Kosovo divided along ethnic lines. This would be dissonant in the sense that our region cannot be integrating into the European Union while at the same time it is promoting a Kosovo solution cementing division. The Ibar river and the Mitrovica Bridge should not become a new “Checkpoint Charlie” separating Kosovar Serbs from Kosovar Albanians.We want a solution for Kosovo that is based on the fundamental principle of respect for the differences between communities.

If a democratic Kosovo is to emerge, it has to become a society that will tolerate and protect the rights of the non- Albanian ethnic communities. Democracy is not simply holding elections. Kosovo will be respected by its neighbors only if it respects its own citizens. The protection of religious sites and monuments is of great importance in the framework of Kosovo’s final status. On this point, a well-known Greek thinktank, ELIAMEP, has developed a comprehensive plan for the protection of the Serbian Orthodox heritage in Kosovo.

The settlement of the Kosovo issue should be well-calibrated and implemented in phases. The steps to be taken should be secured in advance and should not be based on artificial timetables and deadlines.

Kosovo’s ethnic mosaic is not comprised just of Albanians and Serbs. There is also the question of the Romas. Out of the 130,000 Romas who used to live in Kosovo, there remain fewer than 30,000. A large community of Romas was destroyed in Mitrovica. In retrospect, imagine how different the situation might have been if the Roma settlements at both ends of the bridge had still been there to play a unifying role.

There is international consensus that no one wants to see Kosovo or any part of Kosovo united with, or annexed by, any neighboring country ("Greater Albania" or "Greater Kosovo"). Under Secretary of State Nicholas Burns expressed U.S. policy clearly on this point in his statements to Congress in November 2005. This option is simply not on the table for the EU, the United States or Russia as members of the Contact Group.

Beyond Kosovo, the region is moving fast. I am not saying that all the problems have been solved or that there will be only fine pages in future histories of our period.What would be helpful for the future generations is to try to eradicate from textbooks the notion of the “bad neighbor” and replace it with the prospects of regional cooperation and bilateral agreements. Approaches that project to children and students the concept that “history was unfair to our country” or, even worse, that “our country should be bigger than its borders geographically define it”, foster irredentist mentalities and agendas that are incompatible with EU values and standards.

Alexandros P. Mallias is the ambassador of the Hellenic Republic to the United States. He previously directed the Southeastern Europe department at the Ministry of foreign affairs and was a national coordinator in the Stability Pact for Southeastern Europe. This article is based on remarks at a conference of The European Institute in April 2006.

 




Development Assistance – Hellenic Plan for the Economic Reconstruction of the Balkans

As an EU member and a member of the OECD’s Development Assistance Council, Greece is strongly committed to help in the reconstruction efforts of neighboring Balkan countries. In this context, Greece launched a five-year development- aid initiative in 2002 called the Hellenic Plan for the Economic Reconstruction of the Balkans (HIPERB) worth $670 million. The plan was recently expanded to run an additional five years.

 

 

This article was published in European Affairs: Volume number 7, Issue number 1-2 in the Spring/Summer of 2006.