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Serbia and Montenegro Is to Reap the Full Benefits of Stabilisation and Association

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Serbia and Montenegro Is to Reap the Full Benefits of Stabilisation and Association COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 26.3.2003 SEC(2003) 343 &200,66,2167$)):25.,1*3$3(5 6HUELDDQG0RQWHQHJUR 6WDELOLVDWLRQDQG$VVRFLDWLRQ5HSRUW >&20 ILQDO@ 6HUELDDQG0RQWHQHJUR 6WDELOLVDWLRQDQG$VVRFLDWLRQ5HSRUW 7$%/(2)&217(176 (;(&87,9(6800$5< 32/,7,&$/6,78$7,21 2.1 Democracy and rule of law......................................................................................................3 2.2. Human rights and protection of minorities............................................................................14 2.3. Regional co-operation............................................................................................................19 2.4. Priority areas needing attention in the next 12 months..........................................................25 (&2120,&6,78$7,21 3.1. Current Economic Situation ..................................................................................................26 3.2. Existence of a Free Market Economy and Structural Reform ...............................................30 3.3. Management of Public Finances............................................................................................32 3.4 Priority areas needing attention in the next 12 months..........................................................34 ,03/(0(17$7,212)7+(67$%,/,6$7,21$1'$662&,$7,21352&(66 4.1. General Evaluation ................................................................................................................34 4.2. Internal market and trade.......................................................................................................36 4.3. Sectoral policies.....................................................................................................................41 4.4. Co-operation in justice and home affairs...............................................................................43 4.5 Priority areas needing attention in the next 12 months..........................................................47 (&),1$1&,$/$66,67$1&( 3(5&(37,2162)7+((8 (;(&87,9(6800$5< Some progress has been made, with much still to be done, and not yet the qualitative leap forward required if the state of Serbia and Montenegro is to reap the full benefits of Stabilisation and Association. The tragic murder of the Serbian Prime Minister, Zoran Djindjic, who courageously worked to build democracy and played a key role in bringing Serbia out of its isolation, has shocked the region and the international community. This crime is a reminder of the difficult legacy of the past and also of the need to continue the Government’s work on stabilisation, democratisation and reform at an unabated pace. Zoran Djindjic was dedicated to keeping Serbia and Montenegro on its path towards the European Union and this report reflects the reforms necessary to best carry forward his vision. The Commission will continue to provide all support possible to the authorities of Serbia and Montenegro in their efforts to fight the forces that tried to attack Serbian democracy. The level of progress in SROLWLFDO UHIRUP has varied: significant success in the areas of human/minority rights and regional co-operation; mixed results in the reform of the judiciary and police; but slower-than-hoped-for progress in the difficult task of state-restructuring and building stable, efficient and credible institutions. The commitment to reform persists, but a number of serious obstacles continue to hamper delivery. The legacy of the past and the continued existence of older structures, the failure to fulfil key international obligations such as co-operation with the ICTY, political disagreements about the interpretation and implementation of the constitutional agreement, and protracted party political disputes – all have contributed to the slow pace of reform in a number of key areas. The assassination of Serbian PM Djindjic is an all too potent reminder of the need, throughout the region, to tackle the forces of organised crime and extremism. The HFRQRPLF VLWXDWLRQ has improved in the context of stability-oriented macroeconomic policies although fiscal and external sustainability remain a challenge. Structural reforms continued, notably in the banking and enterprise sector, but need to be further accelerated. The key to the state fulfilling its full economic potential – and also a prerequisite for contractual relations with the EU – remains the implementation of an internal market and a single trade policy. The European agenda and the 6WDELOLVDWLRQ DQG $VVRFLDWLRQ SURFHVV remain catalysts for reform. But much time has been lost in 2002, and the state must accelerate the pace of reform and improve the implementation of legislation if it is to fulfil its potential. The continued focus on constitutional issues has distracted attention from other fundamental areas – until these are resolved, the state will struggle to achieve the necessary pace of reform. Many of the recommendations made in the 2002 SAp Report, earlier reports, and at the EU-FRY Consultative Task Force have yet to be implemented and thus remain valid – and many are prerequisites for the implementation of any future SAA. The success and speed of any SAA negotiations will depend on the state’s ability to demonstrate its capacity to implement such an Agreement, with much attention focussed on its track record on delivering reform. The Commission will continue to provide support and advice to the state. But EU efforts, even on the scale of recent years, cannot substitute for a lack of political will within the state. Only 1 The state of Serbia and Montenegro is composed of the Republic of Serbia, Kosovo (under international administration under UNSCR 1244 of 10 June 1999) and the Republic of Montenegro. This state is the same international legal entity as the Federal Republic of Yugoslavia. 1 with full commitment and co-operation within the state, and decisive action to pick up the pace of reform, will the state be able to make the necessary progress. The situation in .RVRYRhas its own characteristics, due to the presence of an international civil and military administration, yet many of the issues are the same. Work continues on building democracy and rule of law, as well as other EU-compatible reforms including in the economic sphere. The future challenge is for the provisional institutions to take greater responsibility for reforms and their implementation – working within the powers which have been transferred – and to devote less time and fewer resources to challenging UNMiK and seeking a premature debate on status issues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he Belgrade Agreement, signed on 14 March 2002, created a positive momentum for state reform. The fact that the Constitutional Charter was only adopted on 4 February 2003 not only affected reforms in some crucial sectors, but also negatively influenced the international standing and ambitions of thestate, delaying its stated foreign policy targets of accession to the Council of Europe, Partnership for Peace and making progress within the SAp. The first recommendation of the April 2002 SAp Report - that the constitutional stalemate be clearly resolved through constructive co-operation within a restructured and functional federal state - has therefore unfortunately not yet been implemented. Federal acts and policies continued to be implemented only in Serbia (and even there in a discretionary manner). Despite months of political/party disputes, coupled with the endemic lack of quorum, the Federal Parliament did manage to adopt some important legislation. There is, however, a parallel existence of obsolete legislation from the previous era and newly adopted acts and a lack of harmonisation between laws and policies at different levels. The fragility of state structures was obvious in a series of affairs involving the military (the Perisic affair, sales of weapons to Iraq) that pinpointed the outstanding problem of lack of civilian authority and control. Equally worrying was the disrespect shown towards federal judicial instances (Federal Constitutional Court). Respect for the hierarchy of norms and the rule of law continued to be adversely affected by the constitutional vacuum in which the entities continued to follow their separate, and in some cases separatist, legal and political agendas. The failure of the federal institutions to cope with problems (e.g. excise law) led the Serbian government to unilaterally adopt further measures in areas still under the federal competencies and to take over more state competences. The continued non-recognition by Montenegro of the current federal institutions resulted in non- implementation of important newly adopted federal laws (e.g. Criminal Procedure Code, Law on Minorities) and a continued split of the country into two economic systems. On the positive side, Montenegro agreed to the
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