Moderators: ·
Dr. Franz-Lothar Altmann, Member of the board Southeast Europe Association; Head Dept. "Western Balkans" SWP, Berlin and
Dr. Dr. h.c. Roland Schoenfeld, Vice-President Southeast Europe Association, Regensburg
Rapporteurs: ·
Dr. Dieter Falk and Klaus Rettel

In stark contrast to the discussions in Ohrid, Macedonia, in May, this group did not discuss matters of the past at all. As one participant aptly put it, "It doesn't make sense to look back, we are all suffering."

Possibly because the group consisted only of Serbs, the ethnic question was regarded as not important, but a North-South differential was acknowledged. An old Serbian proverb even says: "The more down south, the sadder it is…", with the river Danube as the old border between the Hapsburg and Ottoman empires being the great divide. Thus, the term "region" was regarded as more important than "ethnicity", at least in the economic context. It was diagnosed that in a place, where more than two ethnicities live closely together there are less tensions and a somewhat better economic situation (Vojvodina vs. South Serbia).
Another quote from the group's work: "When the economy functions, there is no time for ethnic conflict". This sentence, however, was questioned during the general discussion on Sunday. It was strongly argued instead that it should be the other way around: Only in the absence of ethnic conflicts, the economy will stabilize and grow, and investors will regain trust.

A German saying goes: "Trade brings about change". The crossing of borders, internal as well as external ones, will lead to more mutual understanding, with the Sandzhak perhaps already being an example for that. Opening up the three-country-triangle in Banat - possibly with support from the EU and within the legal and economic framework of EUREGIO co-operation - seems to have a lot of potential in this regard. The Serbian side, however, critically views the "positive discrimination" of diaspora Hungarians by the new "Status Law" and laments that official Belgrade - unlike Romania - has not rejected it. In contrast to former centralisation of public and social life in Belgrade, some ethnic groups now suspiciously view some intentions of the Hungarian minority to reverse this process to Subotica. When Hungary becomes a member of the Schengen treaty, there could even arise a new form of discrimination of the non-Hungarian groups in Yugoslavia.

During discussion, a clear distinction between the terms "Minority" and "Refugee" was demanded. Many of the refugees (i.e. IDPs), formerly in a minority status only because of their smaller number in their places of origin, were nevertheless a constituting part of the Yugoslav Federation and the individual republics. Now, being expellees in their new places of living, they are facing numerous problems because of their new status as (protected) minority. Some problems are even of an intra-ethnic nature, as is the case with other native Serbs, who have lived in the receiving areas for generations. On the other hand, sometimes there are even some positive aspects in regions, where many esp. young people had left before. The refugees fill voids, improve the demographic balance and work, where no one has worked before any more.

Some opinion polls say that only six percent of the expellees want to return to their places of origin, meaning that about 700.000 people want to stay in the Serb republic with about 8 million inhabitants. That given, the EU policy which postulates and finances only return - which would take decades - was regarded as not-practical. There should be aid for integration instead, or else the Europeans would block themselves. During the discussion on Sunday it was mentioned that under the auspices of the Stability Pact, recent talks between Serbia, Croatia and BiH have resulted in an agreement on "triangular return" meaning the option of integration of refugees in their new areas of residence.

For many people, economic development is not progressing fast enough, despite numerous aid programmes. Two examples out of many more mentioned are the European Reconstruction Agency and CARDS, the Community Assistance for Reconstruction, Democratisation and Stabilisation. Allegedly, too little aid is reaching the ground, i.e. municipalities and companies, but gets stuck or is absorbed at higher national levels. There is, however, a lot of ignorance about the mechanisms of aid and the time it takes until it actually flows and leads to results - and also resistance to the principle that all aid is negotiated with the top level government.

In the corporate sector, many old cadres are still in command, some of them having only exchanged positions. Corruption is endemic (though with slightly falling tendencies as somebody stated) but it is not regarded to be related to an ethnic group. The upper echelons of power are rather identified with it, and they are still "strong, rich, and heavily armed", as it was put.

For sheer lack of capacity and manpower, it will not be possible to juridically prosecute wide-spread corruption and economic crimes of the past on a more than symbolic scale. Instead, a new tax law with rates between 30 and 90 percent has been proposed by which it will be attempted to tax illegal profits of the past, further criminal prosecution not withstanding. Only a determined fight against corruption and local and international economic criminals - also necessarily across borders and firmly embodied in legal networks - as well as strict obedience of the rule of law will encourage local and international investors alike.

Concrete proposals and demands for action:
Against a background of rather uniform ethnic requirements from the economic reconstruction process of Serbia, the following proposals and demands mostly apply to the needs of all ethnic groups:
The so-called "Social Market Economy" which is the paradigm throughout Western Europe is seen as the model for Yugoslavia, too
Old laws from socialist times should be abolished or reformed without further delay, esp. those still disadvantaging certain regions. New laws already enacted should be put to work, and the whole process of law-making be reviewed and prioritised. The legal system in total, above all the courts, needs to be reformed and strengthened.
Creation of a "Bank for the Equalisation of Burdens" (in Germany after WWII: "Lastenausgleichsbank") that can manage various revolving credit lines for specific purposes and target groups, such as for refugees/expellees, for small and medium-size enterprises (SMEs), or even certain underdeveloped regions. Details like maximum loan amount, interest rate, grace period, duration etc. would have to be worked out later. Such a bank could also fit into the framework of Art. 7a of the "Draft Law on the Protection of National Minorities".
A network of reliable savings banks is needed to channel huge private cash savings and even some "grey" money into the official economy. The necessity of a guarantee fund or bank to secure loans esp. to SMEs was acknowledged.
Broad promotion and support programmes for SMEs and start-ups, esp. training programmes for entrepreneurs. Support for the huge state-owned enterprises, often "white elephants", is regarded as a bottomless pit.
Publicity for economic role models and success stories
Improvement and intensification of education and training, esp. technical training and economy-related academic training such as in management and engineering, since a lot of human capital (i.e. qualified personnel) has emigrated ("brain drain") Ø Strengthening of agriculture, the sooner the better, as an engine for overall development with its strong forward and backward linkages into the whole economy. Short term help is needed desperately, esp. for inputs such as seeds, fertilisers, pesticides etc. and their financing as well as distribution.
Ireland was mentioned as a positive model for national economic development, climbing from backwardness to European middle class status. A consistent programme for the attraction of foreign capital would have to consist of measures such as
· low-cost or even free of charge land, perhaps even buildings
· extensive, long-term tax concessions
· assistance in finding qualified labour, and training programmes for workers
Creation of a "One-Stop-Shop" government agency for (foreign) investors, with all powers concentrated in one hand which are necessary for new, "green field" investments or for the acquisition and temporary ownership of companies still wholly or partly owned by employees, managers and social funds.
Creation of an "Investment Priority Law" as used in East Germany after unification might be pondered as well which relieves investors from lengthy bureaucratic processes
Promotion of new ("green field") investment can be more meaningful than privatisation which many times is stalled by bureaucratic processes.
Nevertheless, privatisation should be carried out as quickly as possible, esp. where foreign strategic investors are showing interest. Special rules for "underdeveloped regions" make it easier for investors to obtain ownership rights in those regions as in the centres.
Reform of the land register and improvement of their offices; registration of land titles and establishment of ownership rights are absolutely essential for a swift and sustained investment process which as an integral part needs loans backed by land as collateral for financial institutions.
As soon as possible activation of the Western Balkans free trade zone that has already been decided upon; over and above that, liberalisation and integration of energy and traffic flows, in telecommunications etc. is necessary.
Infrastructure such as railway lines and roads should be improved or even built newly, esp. from East to West, the Sandzhak being an example for an area in dire need. North-South connections need to be upgraded soon.
Fostering of the process of reactivation of town-partnerships (jumelages) which has already begun on a broad base as far as Germany is concerned. A lot of goodwill among civil society groups exists in this field.
Granting of visa should be liberalised from both sides, and green insurance cards for vehicles should be accepted by Yugoslavia without demanding additional car insurance. Road transit and transport in general which formerly constituted a major source of income and wealth are far too costly - and complicated - at present.

Rapporteurs:
Dr. Dieter Falk, Consultant for Business Development, Frankfurt/Main
Klaus Rettel, Political Adviser, Berlin / Brussels