The European Commission is the key institution for implementing EU policy towards the countries of South East Europe. In this context, its main tasks are the following:

• Contributing to the design of EU policy toward the region;

• Implementing EU assistance to the region;

• Developing assessment reports for the EU Member States on progress being made by each country of SEE towards EU integration; and,

• Negotiating Contractual Agreements on behalf of the EU (see below).

The EU's primary aim for South East Europe is to help nurture a situation where peace, stability, prosperity and freedom thrive. For the last decade, the EU has been at the forefront of efforts to make this aim a reality.

The European Unions policy towards South East Europe is anchored in two policy strategies - accession to the European Union, involving Bulgaria and Romania, and the Stabilization and Association Process for Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro to prepare for eventual membership in the EU. Following Croatia’s application for EU membership in March 2003, the European Commission recommended opening of accession negotiations with the country, and in June 2004 it was awarded the status of a candidate for membership of the EU. The negotiations for Croatia’s accession to the EU were launched on October 4, 2005.

The Stabilisation and Association Process
The Stabilisation and Association process (SAP) is the EU’s policy framework for the Western Balkan countries: Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia and Serbia and Montenegro, including Kosovo (as defined by UN Security Council Resolution 1244). Croatia, which has started accession negotiations in October 2005, remains part of the process. The SAp will remain the EU policy for the Western Balkans all the way to membership. It is a key strategic and political element in the EU's long-term engagement, explicitly linked to the prospect of EU accession, and adjusted to the level of development of each of the countries in the region, allowing them to move at their own pace, while strongly encouraging regional cooperation. It is a progressive partnership, in which the EU offers a mixture of trade concessions, economic and financial assistance and contractual relationships – through Stabilisation and Association Agreements.

FYR Macedonia filed an application for EU membership on March 22, 2004. The European Commission issued an opinion on this application on November 9, 2005 and recommended that the European Council grant fYR Macedonia the status of candidate country.

The EU policy framework for relations with Albania, Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro is the Stabilisation and Association Process (SAP). The SAP is designed to support the domestic reform processes, which these countries have embarked upon. The Stabilisation and Association process is a long-term commitment to the region both in terms of political effort and financial and human resources. It is a step-by-step approach based on aid, trade preferences, dialogue, technical advice and, ultimately, contractual association relations. The SAP provides a framework for the development of privileged political and economic relations between these countries and the EU. The rationale for the SAP was set out by the European Commission in May 1999 and was officially sealed at an EU/Balkans Summit held in Zagreb in November 2000.

At the Thessaloniki European Council in June 2003 an "Agenda for the Western Balkans" was adopted, which includes an enrichment of the current SAP through the provision of new European Integration Partnerships. Inspired by the pre-accession process and tailor-made to each country's needs, these partnerships will identify, on a regular basis, priorities and obligations to be fulfilled. EU financial assistance will be directed to the priorities set out in the partnerships. Each country will draw up a national action plan for implementation of the partnerships, which will provide a clear agenda against which to measure progress. The agenda set out at the Thessaloniki summit was reaffirmed at an informal meeting of EU Foreign Affairs ministers, held in Salzburg on March 11, 2006; ministers noted, however, that the EU's absorption capacity has to be taken into account.

The cornerstone of the Stabilisation and Association Process is the conclusion of specific bilateral agreements (Stabilisation and Association Agreements (SAA)) between the EU and each of the five countries, designed to draw them closer to the EU. Once a country demonstrates ability to implement a trade and cooperation agreement and meets political standards, it can enter into a SAA agreement with the EU. The SAAs set out rights and obligations in areas such as competition and state aid rules, intellectual property and establishment. They require respect for democratic principles, human rights and the rule of law. Aside from providing a platform for reform, they help prioritize these reforms, align them with EU standards, and monitor their implementation through benchmarks.

Accession Process
Following the completion of the accession negotiations of Bulgaria and Romania with the European Union in 2004, the Treaty of Accession of the two countries was signed by the EU Member States and Bulgaria and Romania in Luxembourg on 25 April 2005.  The European Commission reviews on a regular basis the achievements made by the two applicants in the course of the accession process and prepares annual Regular Reports in which their performance is evaluated and recommendations are given on the follow-up logic of the negotiations for membership. The most recent Monitoring Report was published on September 26, 2006. In this report, the Commission considered that, in the light of the overall progress made by Bulgaria and Romania, the two countries were prepared for membership by 1 January 2007. The report outlines, however, a limited number of areas in which the EU needed to see further progress in the months leading up to accession and beyond. Consequently, the report also spelled out accompanying measures which the Commission has initiated upon accession, which happened according to schedule on January 1, 2007.

See also:

2006 Monitoring report, September 26, 2006

Status of SEE countries' relations with the EU

Assistance to the Region
To help the SAP countries reach their objectives, the EU is by far the largest single assistance donor to the region. Since 1991, the EU has provided more than €6 billion to the Western Balkans through its various aid programmes. And by the end of 2006, that figure will have risen to some €10 billion.

The Commission, in the context of the new financial perspectives from 2007 to 2013, tabled proposals to simplify the range of financial instruments for external assistance that are in place now. The new framework consists of six instruments, four of them new, each serving a particular goal. Three of these instruments are of relevance to the countries of South East Europe:

• Instrument for Pre-Accession Assistance (IPA);

• European Neighbourhood and Partnership Instrument (ENPI); and,

• Instrument for Stability.

Instrument for Pre accession Assistance (IPA)
IPA is the new financial instrument for all pre-accession activities funded by the European Commission as of 1 January 2007. Through a series of three-year plans, funds will be allocated in line with the needs of the eligible countries, their ability to absorb and manage the funding, and their respect of the conditions for accession. A flexible system allows allocations to be made, or, where appropriate, revised in response to specific conditions and requirements in each country. Support will be available to increase administrative capacity and establish the correct management structures for the funding.

It will replace the 2000-06 pre-accession financial instruments PHARE, ISPA, SAPARD, the Turkish pre-accession instrument, and the financial instrument for the Western Balkans CARDS (see below). IPA will concern the countries with candidate status (currently Croatia, the former Yugoslav Republic of Macedonia, Turkey) and potential candidate status (Albania, Bosnia and Herzegovina, Montenegro and Serbia, including Kosovo according to UNSCR 1244). There are five broad categories under which projects fall:

• Transition Assistance and Institution Building,

• Regional and Cross-Border Cooperation,

• Regional Development,

• Human Resources Development,

• Rural Development, the first two of which will apply to both potential candidate and candidate countries, the last three will apply to candidate countries.

As the essential tasks of post-conflict reconstruction have been attained in Serbia, Montenegro and the former Yugoslav Republic of Macedonia, the European Agency for Reconstruction will phase out its activities by the end of 2008. Aid implementation, with priorities adjusted to the new realities, will be taken over by the Commission’s delegations and, when they are ready, by the countries’ own authorities. The Western Balkan countries and Turkey will benefit from almost €11.5 billion over the next seven years.

Table 1: Pre-Accession Assistance envelopes for 2007-2009 in € million