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

Mr. Chairman, Ladies and Gentlemen,

Allow me first of all, also as representative of the EU Presidency, to thank the European Commission and the World Bank for their excellent work in preparing and organising this Conference.

The E.U. sees the meeting as a valuable opportunity to take stock of the achievements made by Serbia and Montenegro, supported by the donors' community, in the reform process over the last two and a half years and to focus on the implementation of the Economic Recovery and Transition Program presented at the Donors' Conference in 2001.

Let me say in this respect that we have appreciated the presentation by Serbia and Montenegro early this morning. The information provided to us is very useful. The E.U. Council yesterday stressed the importance for Serbia and Montenegro to present a comprehensive reform strategy in order to allow donors to allocate international assistance most effectively in the years ahead.

The reports we heard so far today and the documents distributed clearly illustrate that remarkable progress has been made during the last period in the reform process, even though some areas have advanced further than others. The settlement of the constitutional issue between Belgrade and Podgorica followed by the entry into force of the new Constitutional Charter represents a milestone in this process. Now the E.U. wants to see now the state union to rapidly consolidate its institutions.
To get closer to the EU and to play a key role throughout the region, it is necessary to become a functional state.

Implementing structural reforms, particularly those in the public sector, is crucial for advancing on the path to democratisation, consolidating the institutions and completing the transition towards a market economy. Addressing the remaining issues of the Internal Market and Trade Action Plan is also essential in order to contribute to a positive conclusions of the feasibility study on the opening of negotiations for the Stabilization and Association Agreement with the EU.

The EU stands ready to assist in this process, which will also required a sustained effort by the entire International Community. But it is primarily up to Serbia and Montenegro to demonstrate, through concrete actions and tangible results, their determination to continue the reform effort and to make progress achieved so far irreversible.

Mr. Chairman,

Italy, over the last years, has devoted a significant part of its overall budgetary appropriations for international assistance to Serbia and Montenegro.

Since 2001, our Government has allocated contributions amounting over 160 Meuro (mostly in grants), well above our commitment at the June 2001 Donors' Conference. More than 50% of that amount has been disbursed. This includes 53 Meuro in grants which were disbursed in 2001 by our Ministry of Finance, of which: 32,5 for setting up Trust Funds with the WB and EBRD for reconstruction and development projects; and 20,6 for the supply of oil products. Other projects are implemented by the Italian Department of Cooperation or through International Organizations and NGOs.

Social protection (especially refugees), capacity building, health, cultural heritage and private sector development, with focus on SMEs, are on top of our priorities.

Allow me just a few more figures.

- in the emergency and humanitarian sector, we have contributed 12 Meuro (grants) mainly in the health and environment fields;

- other grants include five major initiatives for a total amount of 38 Meuro have been launched over the last three years. This largest items are 16,6 Meuro for balance of payments support (free supply of medical, agricultural, educational and other goods), which has been partly disbursed, and a 15 Meuro project for the reintegration of refugees in various Serb municipalities, through UN-HABITAT;

- soft loans amount to 46,5 Meuro, mainly earmarked for small and medium size enterprises. We expect this initiative to be operational in early 2004;

- the balance of the overall figure of 160 Meuro concerns initiatives in support of regional cooperation and projects implemented through NGOs.

An additional tool for financial support to the Balkan Region was introduced since the 2001 Donors' Conference: an ad hoc Law (84/01). In this first year of operation 2,3 Meuro were allocated for Serbia and Montenegro.

Finally let me recall the recent roundtable of Balkan Finance Ministers and IFIs, held in Venice in October, where Italy and the European Commission jointly pledged almost € 35 million in grants for the Balkans to support three vital sectors (private sector and development, particularly SMEs, energy and transports).

Mr. Chairman,

The cooperation activities I have briefly outlined are in line with priority areas identify by the European Commission and the World Bank.

We are determined to conclude as rapidly as possible those projects which are still under way and to complete disbursements. We will continue to work closely with local authorities, as the effective implementation of bilateral programmes equally requires full commitment and practical collaboration by the recipient country, which has its share of obligations to fulfil. We are determined to consider further financial efforts. As far as Serbia is concerned, they will have to be identified through the ad hoc bilateral forum which has been established for discussing new cooperation projects as well as the settlement of pending economic and commercial issues.

The foundations of our cooperation with Serbia and Montenegro are solidly established. We intend to continue building upon them, as we are deeply interested in supporting a stable, democratic and functional Serbia and Montenegro.