On behalf of the European Commission and the World Bank I would like to welcome you all here today for this important meeting of donors with the Federal Republic of Yugoslavia. I would like to extend a particularly warm welcome to deputy Prime Minister Labus and to Minister Pitic of Serbia and Minister Ivanisevic of Montenegro and their colleagues. We last met in this room in December 2000, just after the momentous changes in Serbia. Then our purpose was to help Serbia get through the winter so we focused on co-ordinating short-term, emergency support. The new government and the people of Serbia faced a difficult time but thanks to their own efforts, and the support of the international community, reasonable living conditions were maintained throughout the winter.

Today, the sun is shining – politically and literally. Our challenge now is to look to the future is to help the governments of FRY, and of the Republics of Serbia and Montenegro, now that they have indicated their determination to put the FRY’s past behind them, to put their economic policies on a sound footing and to help them achieve self-sustaining development as soon as possible. The international community wants to see the FRY return to stability and growth so that the new government can start to meet the aspirations of its people and, from the EU point of view, come closer to the EU. The EU has a close interest in supporting this process because the FRY is part of our Stabilisation and Association Process for the region and because we see the FRY and its neighbours as potential candidates for future EU membership. Therefore we have a common interest in building our future together.

Many people in the FRY – as in the rest of the region - have had a hard time over the last 10 years. We know that further change and adjustment will be necessary in order to begin raising living standards and restoring confidence in the future. But the FRY does not have to face these challenges on its own – now the country can plan its long-term future as part of the European family. We need to help make this prospect a reality, by finding the funds necessary to show international and European solidarity.

Our meeting is not just a financial and technical meeting. It takes place in a political context which relates to what we can offer and what we expect from countries which share certain basic values with the rest of the international community and are ready to work as partners with us. All donors apply some form of conditionality when they give their taxpayers' money to third countries and, particularly when important amounts are at stake, it is necessary to be clear about what is expected from the beneficiaries. The EU has been clear about the conditionality which applies to its assistance. We have been – and remain – very clear that the same conditions apply to all the countries to which we give assistance South East Europe. We expect all participants in the Stabilisation and Association process to demonstrate a credible commitment to democratic reform and progress in compliance with generally recognised standards of human and minority rights. This includes implementation of each country’s international obligations, including co-operation with the ICTY and compliance with their obligations under the Peace Agreements (Dayton/Paris, Erdut as well as with UN Security Resolution 1244).. Furthermore, countries are expected to show a credible commitment to engage in economic reform, willingness to develop regional economic and political relations, and a commitment to good-neighbourly relations.

The authorities in Belgrade have shown their determination to meet these conditions, as part of their agenda for building a democratic market economy which shares the core values of the EU. We have been impressed by the efforts made by Belgrade since last October; and of course we very much welcome the transfer of Mr Milosevic to The Hague last night. No one underestimates the scale of the task that remains for the FRY as it embarks on reforms and as it seeks to honour its international obligations. We recognise the very real efforts being made by the FRY authorities and therefore seek to apply EU conditionality in ways which encourage constructive co-operation, and which enable us to help the authorities to move forward in political and economic terms.

Our aim today is to hear from the Federal, Serbian and Montenegrin authorities about their economic policies and plans for meeting their macro-economic and investment needs. There has been excellent co-operation with the World Bank and Commission teams on preparation of Economic Recovery and Transition programme. There has also been good co-operation between the Federal, Serbian and Montenegrin authorities in the preparation of today's meeting and we hope that the spirit of pragmatic and constructive co-operation will continue to prevail after this Conference. All of those involved have shown their willingness to take difficult decisions, to devise and implement economically sound policies and to work with the international community. For these reasons, I hope that donors will give maximum support to this programme, politically, technically and financially. For our part, we will be supporting this co-operation between the entities which make up the FRY and in our assistance and reform advice will pay particular attention to areas of common interest.

The Economic Recovery and Transition Programme which will be the main focus of our discussions today will require funding of almost $4 bn over the next 3-4 years. For 2001, a figure of $1.25 bn is needed. As you will hear later today, the EU and its Member States are prepared to "put their money where their mouth is" and to give financial as well as political support to this programme. Of course providing substantial financial assistance is only one dimension of our policy towards the FRY. We want to work closely with the authorities at all levels to help them shape their laws and practices to make them compatible with ours in preparation for future integration. The Federal and Republican governments have begun to set up the co-ordinating structures which can work with the EU on the detailed process of long term political and economic integration. We hope soon to be at a stage where we can hold the first meeting of the EU/FRY Consultative Task Force which will help to pave the way for a future Stabilisation and Association Agreement. Economic recovery will play a key role in the overall preparation of the country for closer integration with the EU.

We are glad to see so many of you here today. We look forward to an interesting Conference and to a successful outcome. I would now like to invite the co-chair of this Conference, Mr Johannes Linn, to make an opening statement on behalf of the World Bank.