EU DONOR COORDINATION IN THE BALKANS (SERBIA)

UNCLAS SECTION 01 OF 02 BRUSSELS 000043

SIPDIS

SIPDIS

USAID FOR E&E AND ODP; STATE FOR EUR/ACE, EUR/SCE, EUR/ERA

E.O. 12958: N/A
TAGS: EAID PREL EUN XH ZL
SUBJECT: EU DONOR COORDINATION IN THE BALKANS (SERBIA)

REF: BRUSSELS 00034


1. SUMMARY: At a recent donor coordination meeting in
Brussels, European Commission (EC) representatives hoped for
a "smooth" Kosovo settlement while affirming that the
relationship between Europe and Serbia is now at a
"crossroads". Against this backdrop, the main EC development
objective in Serbia is to promote a "European course" for the
country. Individual European donors also highlighted a
variety of ongoing programs, many related to democracy,
governance, economic growth and private sector development.
END SUMMARY


2. BACKGROUND: On December 13, the EC hosted an all-day
donor coordination meeting in Brussels to seek bilateral
input in conjunction with the development of a new EC
assistance strategy for the Balkans. Opened by Michael
Leigh, Director-General for Enlargement, the event was partly
a "show and tell" involving contributions from individual
donors. The USAID Representative to the EU attended on
behalf of the US; other non-EU members represented included
Switzerland and Norway. This is the second of a series of
cables summarizing current programs and future plans for
various donors now working in the Balkans.


3. EUROPEAN COMMISSION (EC): The EC views Serbia as at a
"crossroads" as far as its relationship with the European
Union is concerned. It hopes for a "smooth" Kosovo
settlement that doesn't adversely affect ongoing assistance
programs. The major EC aim is to promote a "European course"
for Serbia. EC funding levels for Serbia remain high, at
around 190 million euros annually. Areas of particular
interest include rule of law, democracy and governance,
corruption and economic growth.


4. SWEDEN: Echoing EC comments, Sweden also stated that its
assistance program to Serbia is at a "crossroads". The
current country strategy concludes this year but a new one is
being prepared. Areas of interest include democracy and
governance, human rights, gender, economic growth and the
environment. Funding levels are at about 90 million Swedish
kroner annually. Programs are managed by five staffers
assigned to the Swedish embassy in Belgrade.


5. NORWAY: Norway views Serbia as a priority country within
the Balkans. Norwegian aid levels for Serbia in 2007 are
estimated at 17 million euros, the highest in the region.
Sectors covered include agriculture, energy, environment,
media, health, education and business development. Some
Norwegian programs are underway in the Sandzak region
bordering Kosovo.


6. DENMARK: Denmark has provided 20 million euros to Serbia
over the last several years, including programs related to
business development and minority protection, including for
the Roma community.


7. ITALY: Italian development programs in Serbia
concentrate on economic growth, health, welfare and culture.
Specific programs include 25 million euros for banking; 18
million euros for five medium size enterprises; and a 30
million euro credit line for public utilities. Finally,
Italy provides 50 million euros through UN Habitat for
refugee resettlement.


8. SPAIN: Spain currently provides 21 million euros to
Serbia in micro credit support and has plans for a 46 million
euro soft loan to Serbia in 2008. Also, Serbia is included
in regional programs covering such areas as rule of law and
judicial reform.


9. UNITED KINGDOM (UK): The UK development program in
Serbia is relatively modest, reaching some three million
pounds this year. Additional funding is provided through a
"global conflict prevention" mechanism. The UK expressed
strong support for the Development and Aid Coordination Unit
(DACU) in Belgrade, affirming the importance of country
ownership as well as the central role that counterpart
governments need to play in managing the development process.
It also wants to strengthen donor coordination, especially
within the EU. For the last three years, the UK program
strongly focused on good governance, social improvement and

BRUSSELS 00000043 002 OF 002


aid coordination. It supports public sector management reform
in coordination with Sweden. It is also working on a poverty
reduction paper with the World Bank (the government claims
that the rate of poverty in Serbia has been reduced by half
to 6.6 percent).


10. SWITZERLAND: Switzerland has allocated some 6.9 million
euros for Serbia in 2008 and expects a similar level in 2009
and 2010. Areas of particular interest include local
governance, minority protection, policy dialogue, private
sector development, water infrastructure and education for
Roma children.


11. COMMENT: Although basically a working level meeting, the
discussion to some extent was tinged by continued uncertainty
about how events will unfold in Kosovo. If there was a
central theme to the Serbia portion of the meeting, it was
that the EC as well as individual donors need to work
together to promote a "European course" for the country.

MURRAY