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## Über dieses Buch

Professor Paul Welfens offers a unique and timely approach to the major task of stabilizing and integrating the Balkans. His book is one of the first to assess in depth the progress of reconstruction and to evaluate the success of coordination on the part of various Western governments and international organizations. Professor Welfens sees an intimate connection, in the sense of equal responsibility, between internal reform, restructuring, and revitalization in the region and Western financing, ideas, and programs. Professor Welfens has coined the term "networked approach" to capture the strategy of Western cooperation among multiple actors, particularly through the mechanism of the Stability Pact for Southeastern Europe. In addition to demonstrating where the Stability Pact works well, he identifies problem areas, with respect to both inconsistencies in donor policies and coordination and significant structural variations among Balkan countries and entities. He also flags concerns about EU enlargement overstretch. This book has emerged from a bi-national, cross-disciplinary research project at the American Institute for Contemporary German Studies on "Cooperation and Competition: American, European Union, and German Policies in the Balkans" that explores the opportunities and obstacles regarding cooperation in the political, economic and military realms. The project - financed by a grant from the DaimlerChrysler-Fonds im Stifterverband fur die Deutsche Wissenschaft ­ examines the implications of lessons learned in the Balkans for transatlantic relations, an area Professor Welfens discusses with some concern about potential conflicts. Additional individual and collective products from the AICGS research project will be forthcoming during 2001.

## Inhaltsverzeichnis

### 1. Introduction

Abstract
The EU, the US, and other OECD countries have engaged in a unique Stability Pact for the Balkans which is designed to help the Western Balkan countries to restore economic ties in the region and to achieve sustained growth after a period of economic decline, partly due to the Kosovo War. Destruction of war and civil unrest, as well as postponed systemic transformation are certainly impediments to trade, growth, and stability in the Balkans. While Poland, Hungary, and other transition countries have achieved an impressive rebound in the course of transformation, the countries in the Balkans have failed to produce similar economic progress. With Milosevic’s rule ending in a democratic election there are new opportunities for the western Balkans to catch up with Central and Eastern Europe.
Paul J. J. Welfens

### 2. The End of the Kosovo War

Abstract
On June 11, 1999 NATO led the KFOR forces into the Kosovo province while the Yugoslav army was pulling out. The Kosovo War had ended, and a new stage of Western involvement began in a region which had been rather neglected over many years although the European Union (EU) and the United States (US) had become involved in Bosnia-Herzegovina with the establishment of the 1995 Dayton Agreement between the country and Croatia and Yugoslavia. Western governments and non-governmental organizations (NGOs) quickly brought humanitarian aid to the Kosovo region and established a new administration under the umbrella of the United Nations (UN), the so-called UNMIK (UN Mission in Kosovo).
Paul J. J. Welfens

### 3. Initial Situation and Post-Kosovo War Problems

Abstract
The economic and political problems of the Balkans are partly linked to secession wars and the Kosovo War, but they are also rooted in the socialist past. The costs of reconstruction for the Balkans after the Kosovo War were in a broad range of some $20–100 bil. Total costs for Kosovo reconstruction, including reconstruction of housing, infrastructure, and industrial buildings plus the costs of returning refugees could be close to$ 30 bil.; an early estimate by Group-17 Serbian economists of the total economic damage of NATO bombardments is close to $30 bil. (PLANECON, 1999). The destruction of infrastructure and the loss of capital in economic and noneconomic areas was estimated at$ 4.1 bil. Human capital losses were placed at $2.5 bil. The remaining$ 23.2 bil. are the opportunity costs to the whole economy because of lost GDP — projected by Group-17 to fall 40.7% in 1999. Certainly overall costs for the Balkans are much higher since one also has to take into account collateral damage in neighboring countries and problems with trade and foreign investment due to destruction of many bridges over the Danube and increased political risk in the region. Finally, it is impossible to quantify the destruction of “social capital” — the confidence people in the Balkans had in each other before the Balkan War and the war in Bosnia.
Paul J. J. Welfens

### 4. Stabilization of the Balkans: Stability Pact, Actors and Programs

Abstract
The EBRD is an important actor in the Balkans since it has accumulated considerable expertise in supporting transformation in formerly socialist countries. Moreover, the EBRD has been able to contribute to financing recovery in Kosovo although there is no clear mandate due to the fact that Kosovo is not a member of the EBRD. The bank plans to channel funds through a Bosnian bank which has a focus on micro-lending and various investment funds. The biggest advantage of the EBRD is that it can directly work with the private sector. As a further strength one may note that its research department has considerable analytical skills which could help to find efficient strategies for the diverse situation in each Balkan country. Compared to the EBRD the research capacity of the European Investment Bank — engaged mainly in infrastructure lending — is very modest.
Paul J. J. Welfens

### 5. Trade, Integration and Cooperation

Abstract
Trade is crucial for economic growth but also for creating incentives to cooperate peacefully among neighboring countries. Trade creation in the Balkans is complicated by the fact that some of the newly created countries are not yet members of the WTO and that countries in the Balkans have only a very short history of any broader cooperation in trade — with the exception of the Danube Commission concerning only certain countries and EU’s support within the PHARE program which helped to establish a modernized customs system. The Black Sea Cooperation Group which goes back to a Turkish initiative in the 1990s has not achieved much.
Paul J. J. Welfens

### 6. Conclusions and Strategic EU Reform Perspectives

Abstract
The Stability Pact represents an unparalleled intervention of networked international organizations in a poor region. With a combination of technical assistance, trade liberalization and aid plus loan packages the “international community” has tried to jumpstart economic development and to accelerate transformational reforms in the Balkans. The developments so far indicate a shift from national economic policymakers towards international organizations which act in a complex framework which exhibits lack of transparency, consistency and efficiency. The IMF still is a prime example of combining excellent work in some fields and departments with apparently unprofessional work in other areas. The fact that accountability in some international organizations is low is amply borne out by the IMF disaster in Russia where nobody at the IMF seems to take personal responsibility — a strange situation in the world’s most powerful international organization; how can one credibly call for establishing responsibility in countries with an IMF program and leave responsibility at the IMF as an opaque field? All this comes at high costs for the international community since in a period of rapid changes and complex challenges lack of learning in international organizations is dangerous for a world economy with increasing interdependency. If democratic accountability cannot be achieved at least in an indirect manner, the long-term alternatives are either to leave international organizations on their own (leaving them out of democratic control) or to hope that international NGOs — plus the academic community — might become a controlling counterweight for very powerful and influential organizations.
Paul J. J. Welfens

### Backmatter

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