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									                      The Regional Strategic Approach developed in the framework
                      of the Infrastructure Steering Group for South-East Europe.

One of the main principles for the work process of the ISG is that „future selected projects have to contribute
and be part of a strategic approach to develop infrastructure networks of regional importance.‟
 Regional strategies initially prepared in 2001
Taking stock of the initial comprehensive assessment made by the EIB (“Basic Infrastructure investments in
SEE, Regional Project Review”, Regional Funding Conference March 2000), lead agencies have during
2001 elaborated on an extensive set of sector focused regional strategies :
- The European Commission has finalized a strategy paper on “Transport and Energy infrastructure in
South–East Europe”;
- The EBRD has finalized the water strategy, which key features are that projects should support
decentralization, cost recovery and the polluter pays principle and the promotion of integrated approach to
the Balkans that surpasses political and administrative boundaries;
- The EIB has finalized the Air Traffic Infrastructure Regional Study (ATIRS) on air traffic control facilities,
as well as airport infrastructure in South East Europe.
These strategies form the overall framework of an ongoing process to promote regional cooperation among
the countries of the region, facilitate coordination between donors and allow adequate prioritization of the
regional infrastructure investments in South-East Europe.
These documents can be found at :

 New developments of the regional strategic approach
The strategies prepared in 2001 are supplemented by various projects, in particular in the fields of transports
and energy (regional electricity market, oil and gas networks). The projects are designed to be as operational
as possible: they shall concentrate on project prioritization rather than extensive identification; beyond
infrastructure investments, they shall also focus on sector reform issues and address some institution building
needs. The challenge, beyond the design of strategic networks and project identification and prioritisation, is
to involve with the countries of the region in effective regional co-ordination of infrastructure development,
institutional strengthening, mid- to long-term sector policies, and intensive sector and market reforms.
 Transport sector
A Transport Infrastructure Regional Study (TIRS) was completed in June 2002. Funded by Agence
Française de Développement (AFD) it had started in February 2001 and was placed under the guidance of
the Council of European ministers of Transports (ECMT) the EC and the EIB. The final report offers a first
comprehensive panorama of transport issues (road, rail, maritime and inland waterways) in South-East
Europe (The five Western Balkans countries + Bulgaria and Romania). The report elaborates on the long-
term development of the basic strategic network; lists recommendations on the nature of investments in the
various sectors (i.a. rehabilitation rather than development investments, sustainable funding of maintenance,
sector reform issues); provides a multi-criteria assessment of existing transport projects, and, on a
preliminary base, a priority ranking of these projects as well as a short/near/long term investment plan for the
region; lists accompanying measures and further issues to be examined in the second phase.
The Regional Balkans infrastructure Study (REBIS) – Transports (CARDS Regional Programme) has
been conceived as a continuation and deepening of TIRS.
It has started operations on 1st July 2002 for 12 months. Its scope is the five Western Balkans countries and
their connections to their neighbors. Under the guidance of the ISG, and supported by in-country deployed
teams, REBIS Transport is expected to : develop an operative prioritization of projects in all transport modes
according to agreed criteria; address institutional strengthening needs; establish a methodology and proper
procedures to prepare for planning and monitoring of the implementation of the transport projects on the
strategic network ; it shall examine and advise on sector reform issues, in particular on some key related
aspects, such as the study of the market of Railway Companies; it shall review in depth border crossing
needs and inland waterways potentials. A mid-term seminar will be held with authorities in January 2003.
A Transport Projects Preparation Facility (CARDS 2001, € 2.7 m) will start during the second half of
2003 with the aim of preparing feasibility studies for investments in transport infrastructures as resulting
from the REBIS transport project.
The project Aviation Safety and Air Traffic Control (CARDS 2002, € 5m) aims at strengthening Civil
Aviation authorities and Air Traffic Service providers in the 5 CARDS countries, thus complementing IFI
investment on airports and Air navigation systems. More specifically, the first project component is
concerned with the enforcement of aviation safety initiatives, whereas the second with the harmonisation of
Air Traffic Control systems in view of the Commission‟s “Single European Sky” policy. An initial needs
assessment in each country is supposed to determine the scope of sub- projects per country and across the
countries to be implemented.

 Energy Sector
The EC actively co-ordinates, with the support of the Stability Pact and with the full involvement of
concerned donors, a strategy to develop a Regional Electricity Market in South-East Europe which has
entered a new phase in 2002 with the creation of the Athens process, marked by the conclusion, at a
ministerial meeting in Athens on 15 November 2002 of a Memorandum of Understanding on creating a
Regional Electricity Market in South East Europe and ensure its integration into the Internal Electricity
Market by 2005 and the approval of a Strategy Paper listing all material measures to be taken in that regard.
The Athens process aims at creating the conditions of a functioning electricity market in SEE : it consists in a
comprehensive mid to long term regional plan; it combines institutional and structural reform, regulatory and
market rules building, as well as strategic planning of infrastructures investments based on supply/demand
analysis, from a regional perspective; it will have positive short term impact through enhanced confidence of
public and private investors in the region; it is the only sustainable option for economies of the size of the
SAp countries.
The programme also aggregates all programmes and initiatives by a variety of international donors among
which the most active to date are the World Bank, the EBRD, USAID/SECI, CIDA with SEETEC, KfW,
Edf, the Italian and the Czech Government. Two EC framework projects, Regional Balkan Infrastructure
Study (REBIS) - Regional Electricity Market (CARDS 2001, €0,75m) and REBIS - Electricity (CARDS
2001 €2,1m) are planned to be started early 2003 two complement other donors programmes as listed in the
Athens Strategy paper. Key tasks to be achieved during 2003 include :
· Achievement of workplans set out for the Market Facilitation Group, CEER subgroups (regulators),
SETSO (Transmission System Operators) and the Athens Forum;
· Indicative transmission investments and telecoms infrastructure prioritisation plan; and
· Resolution of primary trading issues between the countries.
In the future, the approach will need to be further developed and also integrate other key issues of the energy
sector such as the oil and gas networks, the security of supplies, the energy efficiency and savings, and
renewable energies in line with the Kyoto protocol. During 2003, the European Commission will in
particular help to shape the fundamentals of a Regional Gas Market approach to South-East Europe (Action
Plan for the Regional Natural Gas Market in South East Europe, CARDS 2002, €1.8m) and offer a pre-
investment facility for IFIs for the development of energy networks (Energy Networks Project
Preparation Facility, CARDS 2002, €1.5m).
 Environment
An important background here is the Regional Environmental Reconstruction Programme (REReP) -
although not primarily dealing with infrastructures. REReP, assisted by the Regional Environment Center
(REC), serves as an adequate mechanism for regional co-operation and for donor co-ordination along its four
priority components: institution building; environmental civil society; environmental regional co-operation
mechanisms and cross border projects; reducing environmental health threats. REC is progressing in its
priority investment programme which will be finalised by April 2003 and will provide a comprehensive
country by country and regional review of concrete priorities.
As regards catalytic investments for the development of infrastructures, two projects will be instrumental:
- Support for environmental investment in the Danube river basin (CARDS 2002, €4m) designed in
support of „DABLAS‟ initiative, to catalyse investments in environmental infrastructure and other
environmental pollution reducing investments, dominantly in the Danube basins and its tributaries in the
Balkan countries. Both the EBRD and the World Bank have requested the Commission to start a project
support facility in the Balkans which would parallel those in the Phare and Tacis regions.
- A Municipal Finance Facility for Transport & Environment (CARDS 2002, €1.7m) has been designed
with EBRD to serve as a pilot. EBRD has developed lending facilities for small municipalities, using long-
term lines of credit (10 – 15 years) EUR 50 mil for Croatia and EUR 15-25 mill for Yugoslavia. The
facilities will cover both transport and environment related infrastructure needs.

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