Statement by Ruth Hansen, Deputy Coordinator for U.S. Assistance to Europe and Eurasia, United States Department of State

The remarkable transformation in Serbia and Montenegro over the past three years is testament to the hard work and dedication of the reform team elected after the 2000 elections. Serbia and Montenegro has demonstrated commitment to establishing democracy, opening its economy and safeguarding the rule of law. In July, Secretary Powell complimented Prime Minister Zivkovic on his commitment to reforms and the strong public support for them. Serbia and Montenegro's actions give us great hope for what can and will be accomplished in the future. As progress is made, the United States will continue to respond with active support for the reforms Serbia and Montenegro undertakes.

We firmly believe that the future of Serbia and Montenegro lies in full engagement as a member of the Euro-Atlantic community. The United States urges Serbia and Montenegro to press ahead on reform to help accelerate its integration into Euro-Atlantic institutions. Full cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY) is an important part of Serbia and Montenegro's integration.

The United States greatly values the coordination and cooperation that other donors have offered. The fast pace of reform would not have been possible without the coordinated efforts of the many donors and supporters of Serbia and Montenegro gathered here today.

In an important recent development, the United States restored Normal Trade Relations status to Serbia and Montenegro. We are extremely pleased that we could take this step which, we hope, will help spur on its economy. Congress revoked Normal Trade Relations status in 1992 in response to the Milosevic regime's perpetration of ethnic cleansing and other acts of aggression and human rights abuses during the conflict period. Serbia and Montenegro has now adopted a foreign policy of cooperation and partnership with its neighbors and the international community. It has begun to implement the difficult measures necessary for economic recovery after a decade of upheaval. Restoring Normal Trade Relations status underscores United States support for these reforms and will help encourage economic growth, a key component to maintaining stability in the region.

Serbia and Montenegro has taken important steps toward democracy. After Prime Minister Djindjic's assassination, Belgrade acted swiftly against criminal elements. We must see equal resolve in encouraging further improvements, especially military reform. Delivering Ratko Mladic to The Hague and resolving the pending ICJ claims against NATO allies will trigger our support for Partnership for Peace membership for Serbia and Montenegro.

Serbia and Montenegro has proven its capacity for success. We note that Serbia joined the Egmont Group of cooperating financial intelligence units. We welcome recent passage in Montenegro of an anti-money laundering law. We urge Serbia and Montenegro to continue working with Moneyval, the Council of Europe's regional anti-money laundering group.

UNITED STATES ASSISTANCE TO SERBIA AND MONTENEGRO

Much of our assistance is directly dependent on the progress which Serbia and Montenegro itself makes. It is incumbent on Serbia and Montenegro to determine the pace of its own reforms, and as a result, the level of support that the United States is able to provide. As is well known, our assistance legislation will shortly require us to make a determination about Serbia and Montenegro's cooperation with the ICTY. Serbia and Montenegro must continue to cooperate fully with the ICTY, including in transfer of indictees to The Hague or assistance in their apprehension as well as unimpeded access to the archives. We hope that Serbia and Montenegro's actions will allow a positive certification determination concerning cooperation, so that our assistance can continue uninterrupted.

Since 1995, the United States has provided over $700 million dollars in assistance to Serbia and Montenegro. In FY 2004 we anticipate a budget of $113 million in development and law enforcement assistance. Our overall assistance goal for the region is a stable Southeast Europe, with a democratic and prosperous Serbia and Montenegro fully integrated into Euro-Atlantic institutions. We seek to foster stability in Southeast Europe by helping ensure that democratic and economic reforms in Serbia and Montenegro take hold.

Our Support for East European Democracy (SEED) assistance program for Serbia and Montenegro, under Department of State coordination, is structured on main pillars: democracy and good governance; a large civil society program aimed at fostering democracy at the local level; broad-based economic policy reform that supports sustained growth of the private sector and economic integration with Europe; and promoting rule of law.

Various United States government agencies have worked side-by-side with the authorities of Serbia and Montenegro to meet international standards in these areas. Through our SEED programs:

• USAID's broad-based and nation-wide "Community Revitalization for Democratic Action" program energizes and empowers ordinary citizens throughout Serbia and Montenegro to become stakeholders in the future of their community. Local citizens develop priorities for community development, engage and negotiate with municipal authorities and then see projects through to conclusion. The "Local Government Initiative" develops and broadens the skills of individuals who serve in government -- encouraging transparency, increased accountability to citizenry and more effective leadership. Likewise, the United States has been a staunch partner in training and technical assistance for independent media and development of civil society -- two areas that remain critical during this transition period in Serbia and Montenegro. Our economic reform program addresses critical macroeconomic issues, including technical assistance for Serbia and Montenegro's bid to join the World Trade Organization. We place strong emphasis on boosting private sector development, especially small business, to promote economic growth and employment creation.

• The United States Treasury Department is providing important economic technical assistance in both Serbia and Montenegro in order to improve the quality of policy-making and to remove impediments to economic growth, such as strengthening a Serbian banking system that is slowly beginning to function as a financial intermediary. The United States is currently providing Serbia with technical assistance in many areas of operation: enforcement policy, budget management, financial institutions, government debt management, and tax policy and administration. In Montenegro, we have a full-time advisor on budget policy and management as well as occasional assistance on debt management.

• The United States Department of Commerce's Central and Eastern Europe Business Information Center (CEEBIC) is a vehicle to attract additional U.S. investment to Serbia and Montenegro -- especially small and medium enterprises. We have facilitated $8.8 million in U.S. investment since 2001. In addition, U.S. financial support of MicroCredit Bank through the EBRD has helped it to expand its lending to the SME sector.

• The United States Trade and Development Agency is working to stimulate investment and development in Serbia and Montenegro's infrastructure and major industries. The energy sector has been a particular focus for the agency, whose activities have included support for a series of modernization studies at the refinery and petrochemicals complex in Pancevo. We support both private investors, as in a commercialization study at the Belgrade airport, and international financial institutions such as the European Bank for Reconstruction and Development, as the Bank considers potential investments in telecommunications and various chemicals and petrochemicals facilities.

• In a particularly important area, the United States recently launched new assistance to help Serbia and Montenegro build domestic capacity to conduct war crimes and organized crimes trials. Working with the Department of Justice, the State Department recently placed a Resident Legal Advisor in Belgrade. In coordination with the OSCE and other partners, United States assistance will help address issues such as witness and judicial security and prosecutorial and investigative capabilities. As Serbia and Montenegro pursues its responsibilities to prosecute war crimes and organized crime, the United States stands at the ready to assist with technical assistance and support.

As Serbia and Montenegro moves forward, the United States will seek to assist further in addressing economic growth and job creation. The people of Serbia and Montenegro need to see - personally - the benefits of reform in their everyday lives. They need jobs. The United States believes that international donors need to take a fresh look at how our assistance can create the environment for business growth and promote job creation. We look forward to working together with Serbia and Montenegro and our international assistance partners on these key challenges.

Serbia and Montenegro also hosts over 500,000 persons displaced from conflicts in Bosnia, Croatia and Kosovo and they place a substantial social and economic burden on the country. While many will eventually return to their pre-war homes, the majority may decide to settle in Serbia. We recognize that providing opportunities for return and local integration to refugees is important to Balkans' long-term stability and integration into Europe. Since the mid-1990's, the United States has provided more than $100 million to assist the displaced in finding a durable solution - be it return or local integration.

The United States has also assisted Serbia and Montenegro in the development of a modern, democratic police force. Each year, the U.S. Department of State seconds five U.S. police officers to the OSCE on a yearly basis, for training local officers.

The United States has underscored that we will respond to Serbia and Montenegro's efforts to implement concrete reforms that establish its character as a European state. We have already demonstrated considerable support for the reforms which Serbia and Montenegro has undertaken. We look forward to continued cooperation with Serbia and Montenegro and eventually to its full integration into Euro-Atlantic institutions.