Intervention by Mrs. Thérèse Sobieski - Head of Unit, Federal Republic of Yugoslavia, External Relations Directorate General, The European Commission

Let me begin by emphasising the importance we attach to Kosovo's development. For its own sake as well as as an integral part of the economy and stability of the Western Balkans region, and as a part of the wider Europe. Whatever Kosovo's future status might be, we can say that it lies with Europe.

We have listened with great interest to Special Representative of the Secretary General Steiner's and Prime Minister Rexhepi's overview of political developments and priorities and to DSRSG Bearpark's report on progress made, in recent years, in reconstruction and recovery. UNMIK and the Provisional Institutions for Self-Government's report for this meeting also sets out the main priorities to bring Kosovo forward in the next crucial phase of its transition. Donor support will continue to be key to the implementation of this strategy, but this needs to be accompanied by own resources, reforms and investment.

The European Union (i.e. the Community and Member States) is by far the biggest donor to Kosovo, providing 65% of overall international assistance in the period 1999-2002. The European Community contribution, to the end of this year, is over €1.4 billion. Most of which is already being implemented thanks to the outstanding performance of the European Agency for Reconstruction. I will not go into the details of the European Community assistance as they are explained in your documentation pack. Despite a perceived reduction in the amount of our assistance for coming years, there is no question that Kosovo has received more per capita than any other part of the world and that it will continue to receive substantially more per capita than the rest of this region.

Since 1999, we have seen three main phases which have evolved, mainly under the successful direction of UNMiK and in particular the EU Pillar. After the immediate humanitarian crisis, the first phase was emergency rehabilitation. The second is reconstruction, both of the damage from the conflict and the more serious underlying problems since the 1980s. The third, today, is development: to develop a sustainable economy in Kosovo, integrated in its region and eventually in Europe.

Together, we have ensured that Kosovo has successfully overcome the emergency post-conflict period. All too often, people forget what has been achieved in three short years. People forget the success stories, they forget what we found in June 1999 when we followed KFOR into Kosovo.

• From the first winter, which many of our people shared with the population of Kosovo, on the ground, there have been complaints about the energy situation. Did anyone stop to think about the miracle that there was electricity? That we simultaneously kept operating plants that hadn't seen investment or maintenance in years or decades while conducting complicated repairs, with parts that took months to tailor-made ? While coping with ever increasing demand and wastage.
• There were complaints that housing wasn't repaired overnight. But we should not forget about the numbers that were repaired in record time, and that food and shelter was almost universal already that first winter so that people could survive the first dramatic winter.
• There are complaints that unresolved issues "complicate things". I would simply remind you of the flexibility that has been shown by many donors and by the EU in finding creative ways to ensure that Kosovo is nonetheless eligible for various schemes including macrofinancial assistance and trade benefits.

Despite these substantial achievements, there is still a lot of work ahead. Kosovo remains the poorest and most aid-dependent economy in the region. Decisive and co-ordinated action is therefore needed to improve living standards and to ensure the completion and sustainability of the investments which have already been made. Our EC assistance is now adjusting from a more expensive reconstruction phase to the equally important institution-building phase. However, we should all work together to be complementary and ensure that all areas in need of assistance are covered.

We will target the bulk of our EC assistance to support the government priorities, to achieve the creation of a European-style, modern, open and multi-ethnic society. We look forward with interest to hearing the UNMIK/ PISG strategy on returns this afternoon and we ask you to swiftly take the necessary government's measures in terms of security, social services, numbers of minorities employed in the administration and community acceptance to ensure the sustainability of this important process. It will be vital that clear co-ordination is established between the municipal administrations and the Office of Returns and Communities so that rapid agreement can be reached between Pristina and Belgrade on workable return projects to be presented to donors. I can assure you that although our EC assistance programmes in Kosovo do not have specific chapters labelled returns, our assistance is flexible enough to respond.

So far, we have spoken of financial support. But our support, now and in the future, goes far beyond, to the question of how Kosovo fits into Europe.

As a part of the Western Balkans, Kosovo is covered by the EU's Stabilisation and Association process, which is the framework for all EU policy towards the region.

I have already mentioned the first of the benefits from this process which is aid.

The second is trade. We have managed to find ways to include Kosovo in our system of autonomous trade preferences. This is an extremely generous system of almost total liberalisation, almost total access to our markets and is even more advantageous than our own candidate countries receive.

The next is dialogue and advice on how to conduct the reform process so as to achieve European standards and integration. After all, Kosovo is part of a region which is trying to come closer to Europe.

It is therefore very important that Kosovo respect the same political and economic standards as us and that ensures, from the outset, that laws and standards are compatible with our own and the rest of the region - indeed, this is written into the Constitutional Framework and it would be a waste of taxpayers' money, time and energy to adopt different standards. This would not only endanger the sustainability of the huge investments already made, but it would drive a wedge between Kosovo and the rest of the region and Europe.

It is also only natural that we offer practical help with that transition. The Commission will therefore establish a technical working group, to advise on EU-compatible reforms as we are doing for other parts of the region. This mechanism will enable us all - UNMiK, PISG and the Commission - to ensure that political, economic and sectoral reforms in Kosovo are on the right track, as well as to focus assistance as needed. A first step will be the specialised seminar which we have organised - for tomorrow - for UNMiK and the PISG about the EU and its policies towards the region. This will deepen Kosovo's involvement in our Stabilisation and Association process.

Let me finish by saying that Kosovo is a success story but the story is not over yet. Much has been done, there is more to do, and there is help available. We have done, and will continue to do, our share by maintaining our commitment and we call on other donors to also work with us to meet the challenges ahead.

¹ Kosovo (Federal Republic of Yugoslavia) - UNSCR 1244