SECI Southeast European

Seventeenth Meeting of the Business Advisory Council to SECI May 24, 2001 Sarajevo

Chairman: Mr. Costa Carras Co-Chair: Mr. Rahmi M. Koç

SECI: Dr. Erhard Busek Ms. Vera M. Budway Mr. Alex Dupont

BAC Members: Mr. Çelik Arsel Mr. Ferenc Bartha Mr. Bosko Kostic Mr. Christian Luger Mr. Florin Pogonaru Mr. Nermin Salman Mr. John Scherer Mr. Vassili Takas Mr. Matthew Trilling

Participants: Mr. Metin Canci, TTFSE (Koç University) Mr. Elmir Delic, BSO Vienna Rep. Ambassador Nedzad Hadzimusic, BiH SECI National Coordinator Ms. Tatiana Hadjiemannuel, HELLASPRO/BICC Mr. Michael H. Hryshchyshyn, OHR Sarajevo Mr. Yalcin Ipbuken, TTFSE (Koç University) Ms.Bernice Powell, SECI/US Department of State Mr. Keith Sangway, European Commission Mr. Heinz Schatzmann, UN/ECE Mr. Yannis Tsorbatzoglou, TTFSE Mr.Michel Zarnowiecki, World Bank – TTFSE

1. Opening

The 17th meeting of the Business Advisory Council to SECI was opened and chaired by Mr. Costa Carras. He thanked Mr. Nermin Salman and Mr. Michael Hryshchyshyn for the excellent organization and hospitality. He welcomed BiH SECI National Coordinator Nedzad Hadzimusic, as well as other special guests and participants. Ambassador Hadzimusic also welcomed the BAC to Sarajevo.

Apologies were received from Cristina Busi, Giorgio Dominese, Nikos Efthymiadis, Samo Ivanchich, Svetozar Janevski, Roland Jurecka, Muhtar Kent, Anto Krvavac, Günther Mittl, Michael Mix, Misu Negritoiu, Ivan Stancioff, Piet Steel, Vebi Velija and Gianfranco Zoppas. 2. Adoption of the Agenda

The Agenda was adopted.

3. Adoption of the Minutes from the Sixteenth Meeting in Belgrade

The Minutes from the Sixteenth meeting of the BAC on 22 March 2001 in Belgrade were adopted. Mr. Sangway asked that the wording of the fourth paragraph under item #4 read, “the Stability Pact would now start working on the ground” and that the last sentence under that point read, “all projects add up to 2.4 million.”

Mr. Carras said that the issue of the BSO mission statement (last page of minutes) would be discussed later on in the meeting.

4. Developments in the Relationship with the Stability Pact

SECI Coordinator Dr. Erhard Busek reported on the relationship with the Stability Pact and stressed that SECI cooperates at best with the Stability Pact Organized Crime Initiative (SPOC) and the Stability Pact Task Force on Trafficking of Human Beings. He said that the recent conference of the ministers of interior from the region, which was held in Bucharest, put the SECI Center on the map.

Dr. Busek used this opportunity to briefly report from his recent trip to Washington, DC where he met with the new Undersecretary of State for Global Affairs Paula Dobriansky, who will ultimately be responsible for SECI. He also met with officials from US customs, the FBI, the World Bank, as well as Senators Sarbanes (Democrat-Maryland) and Voinovich (Republican- Ohio), both of who were very supportive to SECI’s efforts.

Returning to the issue of the Stability Pact, Dr. Busek proposed that this should no longer be a focal topic of discussion at our meetings. Mr. Koç and Mr. Carras agreed and felt that it is more productive for the SECI BAC to focus on its own business.

Dr. Busek mentioned that he would visit Catherine Day (EC, External Relations) in Brussels in order to discuss how SECI can contribute to the Stabilization and Association Process. Mr. Sangway reminded that the SAA process is the core activity for the EU in the region. One SAA agreement was already signed, with FYRMacedonia, and another was initialed, with Croatia. The CARDS Program will support this process financially and the Stability Pact should support and complement it as well.

Mr. Takas expressed concern over a possible overlap between the SECI group on trade facilitation and the Stability Pact group on trade liberalization. Mr. Sangway mentioned that there needs to be more coordination among the national coordinators and pointed to the example of Slovenia and Croatia where SECI and Stability Pact national coordinators are one and the same.

Ambassador Hadzimusic was concerned that there are too many initiatives in the region dealing with the same issues and that there should be a division of labor among these initiatives. Mr. Koç also expressed frustration that we have wasted too much time and effort trying to reach out to the Stability Pact when it is quite evident that the Pact is not really interested in cooperation with SECI.

The discussion showed that, in contrast to the Stability Pact, SECI should be seen as an initiative where decisions are made by the countries of the region and implemented on the ground.

2 Furthermore, as the main source of financial assistance to the region, the EU’s SAA process is the principle priority for the EC, therefore issues concerning the Stability Pact cannot be completely omitted from the agenda.

5. Status Report on SECI Projects

Dr. Busek reported that the SECI-World Bank Trade and Transport Facilitation in Southeast Europe (TTFSE) Project is moving forward and that it will soon include the FRY. He reiterated the importance that the recent Bucharest conference of the region’s interior ministers had for the SECI Crime Center. He then gave a comprehensive report on the activities of the center and its Joint Cooperation Committee. With regard to the financial contribution and personnel from individual countries, he specifically asked Mr Koç, in the instance of Turkey, and Mr Carras and Mr Takas, in the instance of Greece, to see if they can push their governments to expedite fulfilling their commitments to the Center.

Dr. Busek announced that the SECI Center for Arbitration and Mediation in Ljubljana would officially open on 11 June. He thanked BAC members Samo Ivanchich and Günther Mittl for all their work in making this possible.

Concerning energy, the Agenda Committee should make a decision on the RENEUR project (presented at the Belgrade BAC). The SECI Telecommunications project has been put on hold until some issues can be clarified between Turkey, Greece and Slovenia, and the Securities Market project should wrap up its work by the end of the year. Dr. Busek suggested that the project coordinator could make a presentation at the next BAC meeting.

The Agenda Committee will discuss a new project proposed by the FRY on Danube river transport on the following day. Dr. Busek mentioned the ongoing difficulties surrounding the reconstruction of the Novi Sad bridge. Problems between the local, Serbian and Yugoslav governments combined with complicated tendering procedures are hindering progress on this issue.

The costs of building the bridge are estimated to be between 100-150 million DM. The financing could come from an EU aid package for the FRY. It is a question of priority for the Yugoslav government and this issue should be resolved by the donor’s conference for the FRY at the end of June.

6. Report from the meeting of SECIPRO

Mr. Heinz Schatzmann summarized the main conclusions from the 11th SECIPRO meeting, which was held on the previous day.

SECIPRO concluded that the SECI secretariat should encourage the governments of the region to put priority on Trans European Transport Corridor X. Bilateral and trilateral meetings among PRO committees are very useful and a mechanism should be developed to give these meetings a more permanent character. The PRO committees must be directly involved in the TTFSE effort. A document prepared by the Word Bank, which defines the relationship between the PRO committees and TTFSE will be modified and adopted at the next SECIPRO meeting in September. Furthermore, national PRO committees should make a conscious effort to involve all trade facilitation actors, as well as meet regularly with the BAC member and SECI national coordinator from the country in question. SECIPRO also expressed urgency to proceed with the UNECE visa regime review proposal (see below) and, finally, SECIPRO recognized the need for developing a unified corporate identity by adopting a single logo to be used on all SECI documentation.

3 Mr. Yannis Tsorbatzoglou, project manager for the TTFSE Trade Facilitation Component, gave a progress report on concluding cooperation agreements with the PRO committees involved in the TTFSE project. He introduced his colleagues (Mr. Yacin Ipbuken and Mr. Metin Canci) who reported on the progress of developing the curriculum for the training program that will be conducted under the auspices of the Koç University.

Mr. Carras was concerned by the fact that there were difficulties with signing a contract with ALBAPRO given that it is hosted by a Ministry (Economic Cooperation and Trade) instead of a Chamber of Commerce. He suggested that a solution could be found in the framework of an academic institution. This and other issues surrounding ALBAPRO could be solved after the elections in Albania.

7. Recommendations from the results of the SECIPRO visa regime review

Mr. Schatzmann presented UNECE Visa Regime Review Proposal, which had been distributed to the BAC prior to the meeting. SECIPRO feels that this issue is of utmost importance in the trade facilitation effort. Mr. Schatzmann explained that the main objectives of the project are to monitor visa regimes, make the entire process more transparent and compile a compendium of best practices for the visa issuing authorities. He stressed that the project is not meant to duplicate but rather supplement all other initiatives of this type.

Mr. Matthew Trilling agreed that this issue is crucial and gave an example of how his company had to reschedule many meetings because participants could not obtain visa on time. Mr. Sangway reminded that visa regimes are subject to EC law and thus should be dealt with through the national authorities. He suggested that Dr. Busek should bring up this issue during his upcoming visit to Brussels. Dr. Busek said that the problem is not chiefly with EU regulations but rather with how these regulations are implemented in the consulates.

SECI/BAC decided that this initiative should be strongly supported in principle, and if the SECI Agenda Committee also agreed then members of SECI/BAC will be called upon for information on the situation in their country and suggestions as to how to proceed.

8. Reports from the Country Committees of the BAC

Mr. Carras asked Mr. Takas to circulate the FRYMacedonia country report on investment obstacles and said it should serve as a model for other country committee reports. He then referred to the report on Romania prepared by Muhtar Kent and said that, as it was based on a report prepared in 1999, it should be revised and circulated before the September meeting in Bucharest. Mr. Carras then asked that Ms. Budway collect any reports from country committee chairs prior to the BAC meetings.

Mr. Carras raised the issue of the Albania Country Committee and regretted that he himself in particular and the BAC in general had not heeded Mr. Velija’s advice when he had proposed a Chairman at the BAC’s Venice meeting. As a result, the Albania Country Committee has not really accomplished anything. He suggested that we speak with Mr. Velija and ask him to nominate someone to assume responsibility for this committee.

A country committee for BiH should be launched and a businessman not from BiH who can chair that country committee needs to be identified. Mr. Hryshchyshyn said that the Office of the High Representative will support this effort and he will personally help the BAC identify potential members of the committee. Along those same lines, a committee for the FRY should also be

4 established. A suggestion was made that Mr Christian Luger might chair this country committee and he promised to consider this and respond as soon as possible.

Mr. Koç proposed that any country committees, that have not yet been formed, should be by the time of the Bucharest meeting. Mr. Carras suggested that that the two chairmen be authorized to accept suggestions and get feedback on potential candidates, and this was agreed.

9. Report from the SECI Business Support Offices and BICC

Mr. Çelik Arsel reported that the recent economic crises in Turkey slowed down the work of the Istanbul BSO but the situation is now returning to normal. The Istanbul BSO is working closely with Thessaloniki and is trying to launch a common website. It has not been able to establish real contact with Udine and hopes to intensify contact with the Vienna office.

Jadranko Prlic, Deputy Minister of Foreign Trade and Economic Relations and former Minister for Foreign Affairs of BiH, then joined the meeting to briefly address the BAC. Mr. Prlic focused on general economic problems affecting the region. He stressed that regional cooperation is important but that the EU enlargement process presents many challenges through tough requirements. BiH is trying to encourage both FDI and improvements in infrastructure, electricity, transport, and telecommunications. By mid-2002, BiH would like to have bilateral trade liberalization agreements with all countries in the region. There is a need to increase the level of regional competition and an export orientation is even more important than FDI.

He also added that domestic and regional reforms are not enough without prospects of European integration. He mentioned an initiative to establish a confederation of employers in the region, which could help the business environment.

Mr. Carras asked what measures BiH is taking to attract FDI. Mr. Prlic said that there is no real production led investment and that attempts are being made to set up production in new industrial free trade zones. BiH is trying to promote initiatives to make establishing businesses simpler and to eliminate administrative barriers.

In response to Mr. Ferenc Bartha’s question on privatization, Mr. Prlic said that real privatization concerns large enterprises and that it is being carried out under international supervision. The planed privatization of public enterprises, such as telecommunications, can bring in major foreign investment. Dr. Busek then asked Mr. Prlic to encourage the BiH government to expedite its participation in the Bucharest Crime Center. He pointed out that crime and corruption have a great impact on the business climate.

Returning then to the discussion on the BSOs, Mr. Takas reported that the BICC after difficulties due to changes in the leadership of the Chambers of Commerce has finally secured the needed funding and will be operative in September. He reported that following the Udine initiative the Thessaloniki BSO is also considering moving into the private sector, and is in contact with some private consulting companies.

Mr. Elmir Delic, representing the Vienna BSO Director Peter Hasslacher, presented some of the activities organized by the Austrian Chamber of Economy, which focused on trade issues in Southeast Europe.

Mr. Bartha announced that the Hungarian National Association of Entrepreneurs and Employers, together with Hungarian Chamber of Commerce, secured funds to create a regional center/BSO in Szeged which should open its doors in early September. This Szeged office will work to attract Hungarian FDI to the region. This is significant in that Hungary is moving from being a recipient

5 to donor. Dr. Busek also mentioned the example of the Czech Republic as a SECI supporting state and said that the BAC should identify a Czech businessman.

Concerning the Udine BSO, Mr. Carras said that Mr. Passut, although not able to attend the meeting, has sent a report on investment and trade activities and opportunities, many in Croatia, which showed a good level of activity. There were however a number of activities which fell outside the Southeastern European regions.

Mr. Carras read out the Minutes of the Belgrade meeting at which it had been agreed that under no circumstances would the work of any of the BSOs in respect of the SECI region be carried out on a commercial basis. He pointed out that if this was not adhered to, suspicions might arise that would harm SECI’s work.

Mr. Carras then referred to Giorgio Dominese’s proposal to alter the BSO mission statement. Unlike the original mission statement it was long, and he found it very hard to follow. Mr. Arsel intervened to say that he had had the same impression on reading the proposed alterations. Mr. Carras then pointed out that there could certainly be no objection in principle to reviewing the BSO mission statement from time to time, especially now there were BSOs in Vienna and Szeged, but that proper procedure should be followed and all BSOs should have the opportunity to take part in this process, which should involve the submission of specific, fully explained and easily comprehensible proposed amendments, not a free rewriting. He therefore proposed that in a letter sent out with the minutes, all the BSOs be requested to send in any proposed amendments by a set date on the understanding any such suggestion should be specific and explain why a change is proposed to the text currently in force. He would then undertake to collate these suggestions and, with the assistance of Ms. Budway, to make proposals in time for the Bucharest meeting. This was agreed.

Mr. Arsel concluded this discussion by announcing that Mr. Koç had just opened a large hypermarket (Koç – Ramstore) in Sofia. He said that this resulted from meetings he had in the framework of the Sofia BAC meeting in 1998.

10. Improving SECI PR and visibility/SECI monthly bulletin

Ms. Budway presented the proposal for a SECI bulletin, which was prepared by Milko Stimac from G-17. In general, the BAC agreed that SECI needs such a bulletin. The discussion turned to issues of content, readership, frequency, distribution and, most importantly, funding. It was decided that Mr. Stimac/G-17 should produce two trial issues before the Bucharest meeting in September. SECI would cover the costs of one issue and BAC, through the support of companies with members on the Council, should cover the second issue. Mr. Kostic proposed that G-17 could write to BAC members from large companies to contribute to the costs. A final strategy should be developed after the trial issues are reviewed and evaluated in Bucharest.

Concerning the issue of a SECI/BAC logo, Mr. Takas said that he would find the logo, which was produced by the Thessaloniki office, and send it to Ms. Budway. Mr. Koç, Mr. Carras and Dr. Busek will make the final decision on the logo.

11. New Members in the BAC

There were no proposals for new members. The BAC decided that Dr. Busek will speak with Mr. Mittl about his membership and that he will also try to identify another potential German member of the BAC. Due to serious time constraints, Mr. Gianfranco Zoppas in his letter of apologies for not attending the meeting had resigned from the BAC. The Co-Chairs will send him a letter. Mr.Velija will submit a proposal for a new chair of the Albania Country Committee. Ms.

6 Cristina Busi will remain a member of the BAC, but if she cannot come to Bucharest, the BAC would have to find a replacement for her, as this would then have been the third meeting she would have missed.

12. Dates and Preparations for Upcoming Meetings

The autumn meeting will be held in Bucharest on 17-18 September. Mr. Carras suggested that the BAC should go either to Sofia or to Tirana for the fourth and final meeting of 2001. Both countries will have new governments in place by that time. Dr. Busek proposed Tirana and said we have to explore this issue with Mr. Velija. The date proposed for this meeting is 6-7 December but this is subject to further discussion.

13. Other Business

There being no other business, the meeting was adjourned.