The Balkan Stability Pact: What is it good for? THE BILL, PLEASE?

In June 1999, as the Kosovo crises exploded, several Balkan countries met to sign an important international agreement. Joined by major donor countries and international organisations such as the EU, World Bank, EBRD, EIB, and OECD, they set out to "secure lasting peace, prosperity and stability for South Eastern Europe; foster effective regional co-operation; and give firm European anchorage to the region." The Balkan Stability Pact was to be a model for international cooperation, especially when it came to securing much-needed financing from Western Europe to rebuild the region's infrastructure.

Recent actions by the government of Bulgaria, however, call into question the cooperative spirit of the Pact.

When the Stability Pact was signed, one of the Pact's major infrastructure investments was to be the reconstruction of the airport in Bulgaria's capital, Sofia. In fact, the "Reconstruction and Expansion of Sofia airport" project was acknowledged as such a high priority that it received more funding than all the Pact's spending on private sector development initiatives, economic reforms, business development, vocational training and education, environmental projects, and social development. Nevertheless, when construction began with the aid of European Union ISPA funds, Bulgarian authorities claimed that the Pact had not been involved in the process of attracting financing. If so, then what was it providing money for? How could the project that received that most money from the Stability Pact actually have nothing to do with the Stability Pact?

The Bulgarian government's playing fast and easy with the truth doesn't end there. The available information about the project varies significantly in the documentation and the total cost of the project is not at all clear. First, the total cost of the project was estimated at EUR 150 million. The European Investment Bank provided EUR 60 million and the Kuwait fund for Arab Economic Development another EUR 40 million. Only another EUR 50 million remained to be found.

By 2002, the project's total estimated cost had somehow increased to EUR 210 million. A financial supplement of EUR 50 million came from the ISPA pre-accession fund, but the Bulgarian state budget still needed to cover the remaining EUR 62 million.

Since beginning construction early this year, the Bulgarian authorities have stated publicly that the total cost of the project was now only EUR 192 million, of which only 38 million was from the Bulgarian budget. The Ministry of Transport and Communications denied any participation of the Stability Pact in the procedures for attracting investments, saying that they had applied and received the ISPA financial assistance by themselves.

Construction may have begun, but the numbers and figures are still not clear. Neither is it clear who identifies the priority projects for the Balkans - and what role the Stability Pact has in all this. And what the bill for the Bulgarian taxpayer will be, nobody can tell either.

------ More information is available at www.stabilitypactwatch.info