VZCZCXRO5432
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBM #1808/01 3381343
ZNR UUUUU ZZH
P 041343Z DEC 06 ZDK
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 5663
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0739
RUEHKO/AMEMBASSY TOKYO PRIORITY 0096
RUEHBS/USEU BRUSSELS PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 05 BUCHAREST 001808 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 4232/ITA/MAC/EUR/OEERIS/SSAVICH BRUSSELS PASS TO 
STABILITY 
DEPT FOR EUR/NCE AARON JENSEN 
 
E.O. 12958: N/A 
TAGS: EAID ECON ETRD EUN PREL BK BU GR HR MD MI
MW, SR, YI, RO 
SUBJECT: STABILITY PACT MEETINGS IN BUCHAREST FOCUS ON 
TRANSITION TO REGIONAL OWNERSHIP 
 
REF: A. BELGRADE 900 
 
     ¶B. SECSTATE 177440 NOTAL 
 
SUMMARY 
--------------- 
 
¶1.  (SBU) The November 15-16 meetings in Bucharest of the 
Stability Pact for South East Europe saw continued progress 
toward shifting the Pact's program of regional cooperation 
initiatives to the responsibility of regional governments 
under the umbrella of the South East Europe Cooperation 
Process (SEECP).  The transition of a slimmed-down Pact 
agenda to regional ownership and leadership was supported 
both by the countries of the region and a number of 
potential donors, who signaled a willingness to finance the 
proposed Regional Cooperation Council (RCC), which will 
assume responsibility for the 
regional cooperation program beginning in early 2008. 
Prior to the Bucharest meetings, SEECP governments agreed 
on a financing mechanism to share up to one million Euros 
of the anticipated annual 2.5-3.0 million Euro cost of the 
RCC secretariat, while at the November 16 Regional Table 
meeting indications of support were given by 
representatives of  the European Commission, Austria, 
Switzerland, Germany, Norway, and the U.S.  The Pact's 
three Working Table meetings (on Democracy, Economic 
Development and Security issues) presented plans to reduce 
the number of  Pact-sponsored initiatives and task forces 
to ensure that future RCC activities responded to the 
region,s evolving needs and priorities. 
 
¶2.   (SBU) Topical issues dominating RT discussion included 
CEFTA amendment/enlargement and inclusion of Kosovo in 
regional cooperation activities.  On CEFTA, donor and some 
regional government representatives pressed for an 
inclusive agreement, implicitly pushing Croatia, BiH and 
Serbia to resolve their remaining bilateral issues so that 
BiH and Serbia will be able to join the eight parties that 
initialed the agreement on  November 9 in formally signing 
in Bucharest on December 19.   The host Romanian government 
was not represented at the ministerial level at the 
November 16-17 meetings, due in part to the fact that the 
Romanian President and Prime Minister were traveling 
together with high-level delegations at this time. 
Looking ahead, the next major milestone in the Stability 
Pact's transition to regional ownership and leadership will 
come in late May-early June 2007, when SEECP Prime 
Ministers meet in Croatia to approve formally 
the creation of the RCC, decide its location and Secretary 
General, and receive the endorsement of the Stability 
Pact's final Regional Table meeting.  Final implementation 
of the transition plan should conclude with the formal 
establishment of the new RCC structure in early 2008.  END 
SUMMARY. 
 
----------------------------------- 
Regional Ownership Moving Ahead 
----------------------------------- 
 
¶3.  (U) The Stability Pact held its semi-annual Regional 
Table meeting in Bucharest on November 16, following 
meetings of its three Working Tables on the preceding day. 
The Stability Pact, created in June 1999 with the 
goal of contributing to reconstruction and stabilization of 
the Balkans, currently oversees 25 regional cooperation 
initiatives and task forces.  At the May 2005 Regional 
Table meeting in Sofia, Specal Coordinator Erhard Busek 
launched a discussio on phasing out the Pact while 
ensuring that prioity regional cooperation activities 
continued inkey areas, principally in economic 
development, ustice and home affairs, and reinforcing 
politicl consensus for reform.  The May 2006 meeting inBelgrade endorsed the priorities and timetable, 
establishing the goal of a transition by February 2008 to 
creation of a Regional Cooperation Council under the 
auspices of the Southeast Europe Cooperation Process 
(SEECP) to continue the Pact,s regional cooperation agenda. 
 The key cooperation themes identified by the Pact were 
economic and social development, infrastructure and energy, 
justice and home affairs, defense cooperation, building 
 
BUCHAREST 00001808  002 OF 005 
 
 
human capital, and regional parliamentary cooperation. 
Pact Secretariat staff have subsequently reviewed all 
initiatives and task forces internally and with regional 
government representatives in an effort to set priorities 
and to generate regional government financial support where 
required, particularly with regard to such activities as 
the regional anti-corruption initiative (SPAI) and disaster 
preparedness and prevention initiative (DPPI), both of 
which are based in Sarajevo and have received US financial 
support. 
 
--------------------------------------------- ---- 
Working Tables: Setting Priorities for the Future 
--------------------------------------------- ---- 
 
¶4.  (U) Working Table I (Democratization and Human Rights) 
discussed building human capital (BHC), parliamentary 
cooperation (PC) and gender issues, with a focus on 
streamlining and ownership.  The BHC discussion stressed 
that education and research should remain a long-term 
priority for regional cooperation and recommended that a 
task force be established within the RCC.  WT I welcomed 
the readiness of the regional education initiative (ERI 
SEE) to take over the education component of BHC, and 
stressed the need to strengthen cooperation in research. 
It also solicited proposals for establishment of a regional 
secretariat for parliamentary cooperation, to be 
 
SIPDIS 
in place by mid-2007. Its task would be to coordinate the 
exchange of information among SEE Parliaments, in 
particular at the committee level, and possibly also the 
training of parliamentary staff, working also with 
counterparts outside the region. The Gender Taskforce, with 
a small secretariat based in Zagreb and already 
self-sufficient in terms of management and operations, will 
maintain a formal relationship with and receive political 
support from the RCC in order to encourage mainstreaming of 
gender issues into regional co-operation activities. WT I 
noted that the local democracy/cross-border cooperation 
(LODE/CBC) task force would shift from the SP Brussels 
Secretariat to the SP Thessaloniki office (funded by 
 
SIPDIS 
Greece) by the end of 2006, though its LODE component will 
be transferred to Council of Europe leadership under an 
existing mandate.  As previously agreed, the Media TF will 
close by the end of 2006. WT I recommended that the RCC 
offer political support to an active role for civil society 
in the process of Euro-Atlantic integration. 
 
¶5.  (U) Working Table II (Economic Reconstruction and 
Development) reviewed transition strategies for WT II 
initiatives, many of which will continue under the 
framework of the RCC and will need political, technical and 
financial support from both the SEE parties and 
international donors.  Participants called for the social 
dimension to be addressed as economic reform proceeds.  The 
meeting reviewed the challenges facing key energy and 
transport infrastructure initiatives, which will require 
substantial investment, and underlined the importance of 
the Infrastructure Steering Group.  WTII welcomed the 
recent publication by the OECD-led Investment Compact for 
South East Europe of the Regional Investment Reform Index 
(IRI), highlighting performance across a number of 
dimensions relevant to the business climate.  The role of 
the proposed SEE Investment Committee in maintaining the 
IRI and the use of peer reviews to stimulate progress was 
judged to be an effective way to enhance regional 
ownership. WT II also noted the Greek proposal for 
development of the Thessaloniki office into a center for 
the promotion of regional investment and business activity 
in the framework of the RCC. Finally, WT II welcomed 
progress made toward completing an amended and enlarged 
Central European Free Trade Agreement (CEFTA 2006), though 
the failure of Serbia and Bosnia to join the other eight 
parties in initialing the agreement on November 9 was 
noted.  Participants called on all parties to work to 
ensure that all ten can sign on December 19 in Bucharest. 
 
¶6.  (U) Working Table III (Security Issues) dealt with 
transition strategies for the initiatives dealing with 
defense and security cooperation, as well as justice and 
home affairs cooperation.  The discussion centered on 
 
BUCHAREST 00001808  003 OF 005 
 
 
impediments to the transfer to regional ownership posed by 
inadequate funding, staffing and political support. The 
participants cited the need for stronger political support 
from SEE governments, with the backing of the 
international community, as well as increased financial 
contributions from SEE countries for WT III initiatives. 
WT III also for called stronger support through the 
secondment of qualified staff to work on these 
initiatives.  Strong interest was expressed in enhanced 
regional cooperation on security and defense and JHA issues 
outside the context of the SP.   Special Coordinator Busek 
said that security is a common interest and responsibility, 
and that cooperation in the areas of security/defense and 
justice and home affairs would be two of the five 
priorities of the RCC. Busek urged action on the convention 
on the SECI Regional Center for Combating Trans-border 
Crime, and invited SEE governments to exploit 
the Center's potential as a tool in fighting trans-border 
organized crime and as an interface for cooperation with 
European and international law enforcement authorities. 
 
----------------------------------------- 
Donor Support for the RCC 
----------------------------------------- 
 
¶7.  (U) Donor representatives stressed the importance of 
regional cooperation and voiced support for the Stability 
Pact,s transition to regional ownership.  Responding to the 
agreement on RCC co-financing reached by SEECP members 
in October, Austrian SP national coordinator Sajdik pledged 
150,000 euros to support the RCC, subject to approval by 
the new Austrian government when it is formed.  Other 
statements of support were made by representatives of 
Switzerland, the European Commission, Germany and the US. 
 
-------------------- 
U.S. Participation 
-------------------- 
 
¶8.  (U) Leading the U.S. delegation to the November 16 
regional Table meeting, Coordinator for US Assistance to 
Europe and Eurasia Thomas Adams pledged continuing U.S. 
commitment to the stability and prosperity of Southeastern 
Europe.  He noted that the U.S. would continue to support 
the Stability Pact through its final year before transition 
to regional ownership in early 2008, and signaled US 
support for the RCC provided it is located in the region. 
Mr. Adams also called attention to the political challenge 
posed for the region by the impending decision on Kosovo,s 
status, and underlined the importance of full support by 
all countries in the region for the process led by Special 
Envoy Ahtisaari. 
 
--------------------------------------------- ---- 
Croatian and Bulgarian SEECP leadership through 2008, Role 
of EC 
--------------------------------------------- ---- 
 
¶9.  (U) The SEECP, long a talk shop with little impact, has 
been challenged by the Stability Pact transition process to 
play an active role as a focal point for regional 
cooperation.  Croatian Prime Minister Sanader has indicated 
personal support for a stronger SEECP and named MFA State 
Secretary Hido Biscevic, who attended the Bucharest 
 
SIPDIS 
meetings, as coordinator for Croatia,s 2006-7 SEECP 
chairmanship-in-office.  The Croatian government 
used an informal conference of key regional representatives 
in early September in Zagreb under the auspices of the 
SudostEuropa Gesellschaft and German MFA State Secretary 
Erler, to launch a concerted effort on the Pact,s 
transition, and later co-chaired meetings with the 
Stability Pact of SEECP finance ministry representatives to 
develop a funding key for the SEECP share of the cost of 
the proposed RCC secretariat.  Financial experts agreed 
on October 27 in Vienna to a formula based on four country 
groups:  Turkey, Greece, Romania and Bulgaria will each pay 
14 percent (or $140,000) of the proposed total of up to one 
million euros, Croatia will pay eight percent 
(80,000 euros), Albania, BiH, Macedonia, and Serbia six 
percent (60,000 euros), and Moldova, Montenegro, and 
 
BUCHAREST 00001808  004 OF 005 
 
 
UNMIK/Kosovo four percent (40,000 euros). 
 
¶10.  (SBU) SEECP governments face difficult decisions on 
the location of the RCC secretariat. Sarajevo and Belgrade 
have been proposed, though neither has yet won strong 
support.   SP planners are pushing for an early decision 
on location of the secretariat to facilitate RCC budget 
decisions and legal arrangements.  The SEECP will also have 
to decide on the RCC leadership, looking for an influential 
regional political figure to push the regional 
cooperation agenda at the highest circles of regional 
governments.  This will be no easy task.  The names as 
former foreign ministers Simon Passy of Bulgaria and Goran 
Svilanovic of Serbia (and present WT I Chair) have been 
mooted thus far, though Passy has apparently declined to 
pursue the position. 
 
¶11.  (SBU) A second major issue is the extent to which the 
European Commission will play a leadership role as the SP 
transition proceeds.  (Note:  Currently, the EC funds the 
Stability Pact Secretariat in Brussels at the level of 2 
million euros annually; SP leadership hopes the EC will 
maintain perhaps two-thirds of that level for the RCC.) 
Busek will meet with Enlargement Commissioner Rehn later 
this month and with DG Michael Leigh in early December to 
press for a substantial EC commitment to the RCC.  Busek 
hopes that EU member states will also make commitments to 
provide significant support to the RCC in the weeks ahead. 
 
--------------------------------------------- ---------- 
Comment: Signs of progress, but no time for complacency 
--------------------------------------------- ---------- 
 
¶12.  (SBU) The Stability Pact transition is advancing 
slowly but surely.  The financial down payment by the SEECP 
for the proposed RCC secretariat is a clear indication of a 
more serious approach by regional governments and 
agreement on a location -- most likely Sarajevo -- is 
likely to come in due time.  The regional cooperation 
agenda includes a number of successes which 
are important to the region,s development. These include: 
the Energy Community Treaty, in force since July; the 
prospect of completing the expanded CEFTA 2006, building on 
the existing network of 32 bilateral free trade agreements; 
progress on a regional approach to investment and 
infrastructure; possible integration into the European 
Common Aviation Area; and strengthening of the SECI 
Regional Center for Combating Trans-border Crime in 
Bucharest.   These varied initiatives, taken together, are 
beginning to send a political signal to the outside world, 
including to investors, that the region has moved into the 
21st century and has broken definitively with the strife 
and discord of the previous decade. 
 
¶13.  (SBU) But there are a number of remaining concerns. 
Deciding on a political figure to head the RCC could be a 
daunting task. Horse-trading will probably continue until 
the last minutes before a decision is taken at the SEECP 
summit in spring 2007.  More fundamentally, tensions 
between countries in the region -- reflected, for example, 
in the problems which have arisen between Serbia, Bosnia 
and Croatia in the CEFTA 2006 endgame -- continue to hinder 
regional cooperation.  While settling Kosovo,s status will 
contribute to the long-term stability of Southeastern 
Europe, in the short run the status decision may complicate 
efforts to foster cooperation between some of 
the parties in the region.  However, increasing cooperation 
between EU aspirants in the western Balkans, on one hand, 
and neighboring EU member states, on the other, is 
potentially an important stabilizing factor.  In 
this regard, Bulgaria,s enthusiastic interest in managing 
the final stage of the Stability Pact,s transition during 
its year-long SEECP Chairmanship, which begins in June 
2007, is an encouraging development.  Lastly, the upcoming 
EU Presidencies of Germany and Slovenia (first semester 
2007 and 2008, respectively), promise steady pressure from 
that quarter (on the region and on the European Commission 
itself) to support establishment of the RCC, and should 
help maintain a strong EU focus on stability in 
Southeastern Europe.  End Comment. 
 
BUCHAREST 00001808  005 OF 005 
 
 
TAPLIN