Statement by Minister Plenipotentiary Francesco Bascone, Head of the Italian Delegation

Mr Chairman, Ladies and Gentlemen,

Allow me first of all to thank the European Commission and the World Bank for their excellent work in preparing and organising this Conference.

I would also like to commend the Former Yugoslav Republic of Macedonia for the progress made in the implementation of the Ohrid Agreement. The recent adoption of the Amnesty Law will strengthen the stability of the country and enhance prospects for the return in safety and dignity of refugees and displaced persons to their homes.

Let me use this opportunity to express our great appreciation for the successful endeavours of the EU Special Representative Mr. Alain Leroy.

The reports we heard this morning illustrate clearly that the efforts undertaken by the FYROM authorities - and those which are still to come towards full implementation of the Ohrid Agreement - will need, in order to succeed, a sustained effort by the International Community, to help overcome serious short-term problems and to place on solid foundations the medium and long-term perspectives for economic development. It is equally important that the FYROM authorities do not relent in their commitment to implementing those internal reforms, which will make the establishment of a harmonious, multiethnic society irreversible.

Before presenting Italy's contribution to this international effort, allow me to place it in the appropriate context, by briefly mentioning that the Italian Government has been providing assistance to the FYROM during these last few years both in sectors of great relevance for economic and social development such as health, water infrastructures and SME and in response to emergency humanitarian needs arising from the presence of Kosovo refugees and from the most recent internal conflict.

For this latter purpose an amount of 3.6 mln euro was pledged by our Minister of Foreign Affairs during his visit to Skopje in September 2001. It will be entirely disbursed during the current year.

New pledges which I am authorised to make within the categories contemplated by this conference are 7.2 mln euro in grants and 10 mln euro in soft loans, subdivided as follows:

• a grant of 3 mln euro for reconstruction and rehabilitation in conflict-affected areas; this is in addition to previous Italian contributions in this field;

• a grant of 3.2 mln euro for the implementation of the Framework Agreement, of which 2 mln euro for decentralisation, 1 mln for education and 100.000 euro each for ombudsman and media (channel III);

• under "other development assistance": a soft loan of 10 mln euro for the development of Small and Medium Enterprises and a connected grant of 0.5 mln euro for the Project Management Unit needed to give technical assistance to the counterparts and to monitor the soft loan disbursements; also a grant of 0.5 mln euro, through FAO, for the resumption of agricultural activities in conflict-affected areas.

The decision to allocate 10 mln euro in soft loans to the sector of SME stems from the conviction that this could be the engine for restarting economic growth of a kind best suited to tackle the dramatic problem of unemployment. It was indeed cited at the top of the list of priorities by our co-chairman Mr. Poortman. This project follows and complements the existing soft loan of 12.7 mln euro for the Macedonian SME.

The effective implementation of this loan requires the willingness of the recipient country to carry out their share of obligations, in particular by giving logistic support to the Project Management Unit.

To sum up: if the previously mentioned non-creditable aid in the humanitarian, infrastructure and economic development fields, to be spent in 2002-2004 - though not included in the pledge form - is taken into account, Italy's bilateral effort will be 17.55 mln euro in grants and over 20 mln euro in loans, or a total of about 38 mln euro.

We now look forward to meeting our Macedonian counterparts in order to work out in detail concrete projects and ensure a quick start of their implementation.

Thank you.