SECI Southeast European Cooperative Initiative Fourteenth Meeting of the Business Advisory Council to SECI September 26, 2000 Divan Hotel Istanbul, Turkey Chairman: Mr. Rahmi M. Koç Co-Chair: Mr. Costa Carras SECI: Dr. Erhard Busek Ms. Vera M. Budway BAC Members: Mr. Çelik Arsel Mr. Ferenc Bartha Mr. Giorgio Dominese Mr. Nikos Efthymiadis Mr. Samo Ivanchich Mr. Svetozar Janevski Mr. Roland Jurecka Mr. Muhtar Kent Mr. Bosko Kostic Mr. Anto Krvavac Mr. Gunther Mittl Mr. Michael Mix Mr. Misu Negitoiu Mr. John Scherer Mr. Ivan Stancioff Mr. Piet Steel Mr. Vassili Takas Mr. Matthew Trilling Mr. Vebi Velija Mr. Gianfranco Zoppas Participants: Ms. Tatiana Hadjiemannuel, HELLASPRO/BICC Mr. Will Keenan, UN/ECE Ambassador Richard Schifter Observers/Contributors: Mr. Gerald Ollivier (World Bank) Mr. Graham Smith (World Bank) Mr. Daniel Van Damme (Amylum, Adana) 2 1) Opening The Business Advisory Council to SECI (BAC) meeting was opened and chaired by Mr. Rahmi M. Koç. He welcomed the new members of the BAC Mr. Piet Steel and Mr. Roland Jurecka. He stressed the fact that we have accomplished so much since the first BAC meeting in Thessaloniki three years ago and pointed to some of the major achievements such as the border crossing facilitation and anti-crime efforts. He also congratulated the BAC for its initiative in helping establish the PRO committees, the Business Support Offices and the country committees. He also mentioned the role of the BAC in contributing to the EastWest Institute Economic Task Force report. Mr. Koç then reminded that there are still many challenges that lie ahead in working towards stabilizing the region as a whole. 2) Adoption of the Agenda The Agenda was adopted with the change that item 8 (discussion of projects) was moved up to item 5. 3) Adoption of the Minutes and Conclusions of the Thirteenth Meeting The minutes and conclusions of the Thirteenth meeting of the BAC were unanimously adopted. 4) Report from the Country Committees Mr. Takas reported that the FYRMacedonia country committee has examined the issue of investment disincentives in the country and conducted a survey on the current impediments to investment. Based on the results of this survey, the most pressing problems have been identified and addressed. Most of these problems are of a legal nature and there is still a general lack of transparency. The country committee hopes that they will be able to use the results as a means of pressuring the government to change things. The committee will also meet with government officials to determine the best way of promoting this report. Mr. Kent reported that the first meeting of the Romania country committee was held on 12 September and circulated the minutes from that meeting. He also gave an overview on the membership of the committee. The Romania Committee also felt that its main task should be to identify disincentives to investment. It suggested sponsoring a study on this topic and producing a brochure on securing funds. The study will also contain useful information on infrastructure projects. The Committee will also establish links with the other BAC country committees and conduct bilateral meetings. The next meeting of the committee will be in November. Mr. Mix did not submit a report from the Croatia committee but reported that he had been in Zagreb a few times but it was difficult to bring everyone together at the same 3 time. Following the advice given at the Venice meeting, Mr. Mix announced that the committee has expanded its membership to include representatives form Germany, France and Austria. The Committee will meet in full before the next BAC meeting in December. Mr. Stancioff announced that the first meeting of the Bulgaria Country Committee would be on 17 October, on the eve of the Balkan Economic Forum in Sofia. Mr. Steel, who will chair the Committee, has compiled a list of potential members and circulated this list among the BAC. The committee will be co-chaired by Nikos Efthymiadis. The committee will also include those in the government responsible for SECI as observers. Mr. Stancioff also asked Mr. Koç for advice on a possible Turkish member. Mr. Takas suggested that the Bulgarian Committee should include an American and German investors. Mr. Stancioff said that the Dutch are the biggest investors in Bulgaria while Italy is very active in small commerce. He also reported that all members of the committee live in Bulgaria but Mr. Kent said that it is not a prerequisite to live in the country. Mr. Takas said we should also see what other initiatives exist in order to avoid duplication and pointed to BIBA - Bulgarian International Business Association as an example. Mr. Stancioff said that BIBA is collapsing and it should be transformed into the SECI structure. Mr. Negritoiu was under the impression that the committees are private sector bodies and questioned why there were so many officials on the Bulgarian list. Mr. Carras strongly supported the observation that the BAC decided not to include representatives from the public sector on the committees. He stressed that it should be made clear that the state sector will not be invited to all meetings because it might hinder open discussion. Representatives could be invited to observe on select occasions, if it is in the interest of the committee. The other problem is that government representatives are constantly changing which does not ensure continuity. Mr. Efthymiadis also supported the idea that the committees should be private sector bodies that will create a lobby to governments in removing disincentives to investment. Mr. Steel mentioned the European Round Table of Industrialists and said they have established business enlargement councils in the region and there is room to cooperate with this body. Mr. Kent supported what was said and stressed we have to stick to only businessmen otherwise there soon will be no distinction between the country committees and PRO committees. Distinction must be made between PRO committees, which are an amalgamation of public and private sector, and the country committees which must be PRIVATE SECTOR ONLY!!! Mr. Carras said that in each county there is an interest in the foreign and local investment community on providing input to governments on legislation affecting investment. The country committees should be able to form a “hit list” of people to target when they want change to occur and they should be able to approach the BAC for advice and assistance. If there are people in the committee in government service who are attached to current ways of doing things, the entire purpose of the committee 4 is then negated. Mr. Negritoiu suggested that the same criteria for the BAC should be applied to country committees. Mr. Carras then expressed dissatisfaction that the Albania Country Committee was not able to come together under the leadership of Ms. Busi. He suggested that Mr. Zoppas contact her and try to determine whether she is willing to bring the committee together otherwise the BAC will have to decide on next steps at the Zagreb meeting. Mr. Zoppas said that he hopes to have the situation clarified soon. Mr. Velija reminded that he has worked very hard to push ALBAPRO and the committee but has always run into certain obstacles. 5. Status Report of SECI Projects Ambassador Schifter reported that he had recently met with Bodo Hombach who praised the SECI BAC and said it can be very useful for the Stability Pact. Concerning the issue of a meshing between SECI and the Stability Pact, Ambassador Schifter stressed to Mr. Hombach that it is crucial that both the BAC, Agenda Committee and coordinators office are preserved. The Agenda Committee will guarantee that the efforts and decisions will remain with the countries of the region. Mr. Hombach assured that he would send Ambassador Schifter his position on this issue in writing. The ultimate decision of what will happen will be made by the participating states in the Agenda Committee. Ambassador Schifter stressed that the United States acted as a catalyst in bringing SECI into being but it is the countries of the region that are controlling SECI. In reality there has not been much of an overlap between SECI and the Stability Pact because SECI is focused on operations whereas the Stability Pact is not operational. It is a platform for organizing meetings and can play a role as a political statement. Ambassador Schifter commented on the situation in Belgrade saying that the weeks ahead will determine what Serbia’s future will be. The December 6, 1996 meeting which launched SECI decided that in case the situation in the FRY changes, it is up to the Chair of the meeting, in consultation with the participating states, to invite the FRY to the Agenda Committee. The Chair of that meeting was the United States. If there is such a change, SECI can play an enormous role in Serbia. Ambassador Schifter gave an update on where SECI stands with regard to the World Bank loan application. Six states are going forward for loans to improve border crossings (Albania, Bulgaria, Bosnia, Croatia, FYRMacedonia and Romania). The World Bank/SECI Trade and Transport Facilitation in Southeast Europe – TTFSE - will address physical infrastructure improvements, police, customs, trade facilitation and work with educational institutions in the region. The other aspect is to halt illegitimate traffic and facilitate legitimate traffic and the agreement for information sharing for fighting organized crime is the result of this effort. In the framework of the anti-crime efforts, three task forces have been established to deal with the trafficking of human being, narcotics and commercial fraud. 5 Mr. Koç then asked what Mr. Hombach really meant by the meshing of organizations. Ambassador Schifter said this all depends on what Mr. Hombach proposed. He stressed that SECI is in the hands of the 11 participating states and it must remain so, and that the coordinator’s office must also remain in place. Mr. Koç then asked how Ambassador Schifter interprets the outcome of the elections in the FRY. Ambassador Schifter said that the situation is unpredictable – the voters have decided against Slobodan Milosevic but questions remain on what the consequences are. Dr. Busek said that that if there is any change in the FRY, everyone will rush in and declare that they are doing something. It might be helpful to develop a strategy on what to do and where we can really make a difference. There will be too many changes and confusion. The BAC must determine where we can assist. Mr. Kostic said that changes will happen very quickly. There are no police on the street and the Electoral Commission has virtually disappeared. The Socialist party and JUL are actually admitting defeat on the local level. He suggested that the BAC can be in touch with the opposition in Belgrade. Dr. Busek suggested that the BAC convene a small task force on the FRY before the Zagreb meeting which will propose a strategy for SECI’s work in the FRY. This meeting could be held in Budapest. Mr. Carras suggested that the BAC, as individuals, should be in a mode to work fast. He suggested that the next meeting of the BAC (after Zagreb) could be held in Belgrade if the situation is favorable. The BAC as private individuals can move faster than countries, thus the task force needs to be appointed in order to advise the leadership. Dr. Busek suggested that this task force could consist of Mr. Kostic, Mr. Takas, Mr. Dominese and an economist from G-17. Dr. Busek then reported from excellent SECI promotional meeting in Zagreb at the beginning of July. He stressed the need to keep the SECI office and support for the ECE in the event of a merger with the Stability Pact. He said that we need to push funding for infrastructure projects and mentioned that the SECI crime fighting effort is the only real project in the framework of Working Table III. Dr. Busek is concerned that there are to many governmental meetings and we do not have the capacity to attend all these meetings. He appreciated the fact that BAC members are also willing to represent SECI at some of these meetings. Dr. Busek expressed satisfaction with the EastWest Institute Economic Task Force report and said that it is more practical than the World Bank report. Concerning the other SECI projects, USAID will help fund some of the electricity projects and not much is happening in the environment field. The first meeting of the arbitration project group was a great success due to the hard work of BAC members Mr. Mittl and Mr. Ivanchich. The next meeting of this project group will be on 6 October in Ljubljana. The project on securities exchanges is now focusing on working with the regulators. Bulgaria is playing a leading role in the effort to reduce stopping times of shuttle trains and the telecommunications project will be under discussion at Agenda Committee meeting. It remains to be seen if all the countries in the region are 6 interested and how to coordinate this effort with EU. Dr. Busek praised Ambassador Schifter for two years of work in trying to convince governments to sign agreement on information sharing and bring liaison officers to the crime-fighting center in Bucharest. This effort really demonstrates how difficult real cross border work can be. Mr. Koç asked if the volume of cross border crime is increasing or decreasing. Dr. Busek said that this varies form country to country. Interpol is working more effectively than Europol but there is no consistent plan on who is doing what. Mr. Dominese said that Mr. Saccomani sends greetings and appreciation for SECI’s work. He also said that the situation in Yugoslavia will have a great impact on the Italian business community. Mr. Velija suggested that SECI could organize another presentation in the framework of the December BAC meeting in Zagreb. Ambassador Schifter said that there is a great change of attitude now in Croatia concerning SECI. He mentioned that Croatian customs did not have funds to participate in the Bucharest Center and the government sent this request to parliament and it is assumed that funding will be allocated. Concerning the Stability Pact BAC, Mr. Efthymiadis said that its members are all powerful business personalities but they are not really informed what is happening in the region. They are under the impression at meetings that they are learning and not advising. The problem is that the Stability Pact BAC does not have a regional base. It also wants to establish country committees. Mr. Efthymiadis tried to organize meetings with chairmen and he hopes that the SPBAC meeting on 17 October can be used as an opportunity for such effort. Mr. Carras hoped that a meeting with SPBAC co-chair Manfred Nussbaumer would be possible before the Zagreb meeting. He was frustrated that we have been constantly initiating this effort and now it is time for the SPBAC to start thinking on how they should best approach us. The “reinvented wheel” does not work well and we are loosing valuable time. Dr. Busek said that the SECI BAC makes its own decisions while Nussbaumer must first get permission from Mr. Sacomani and the Stability Pact office in order to do something. In essence it is the diplomats and bureaucrats who are making the decisions. In order not to lose more time, the BAC co-chairs proposed to write a letter to the SPBAC co-chairs and propose an meeting in Istanbul in the framework of Working Table II. This was done. 6. Report from the SECI Business Support Offices Mr. Arsel gave a report on the Istanbul BSO and introduced its director Mr. Emre Gonen. The Istanbul BSO is working on a network to be connected to BSOs in other cities. The meeting of the BSO coordinators will help contribute to the discussion. It is important to find ways and means to work together and create mutual links. The BSOs should prepare a joint strategy for the next BAC meeting in Zagreb. 7 Mr. Dominese said that the BSOs should follow up on the list of topics discussed by the BAC. The BSOs should become the point of reference for the BAC network and not a duplication of other investment offices and chambers of commerce. Mr. Takas reported that since the Thessaloniki meeting in May, the Thessaloniki BSO has been developing the “one stop shop” idea. It organized a business delegation from Kosovo in Thessaloniki and put together a database of EC programs. The BSO is meeting and coordinating with the various EC offices in Thessaloniki and is providing logistic support for the FYRMacedonia country committee. Dr. Busek reported that he is working on trying to establish BSO in Vienna at the Austrian Chamber of Commerce. Mr. Kent mentioned that the Istanbul BSO has some 100,000 USD at it disposal and that it has to prove that this investment was not made in vain. It is imperative that these offices do not duplicate but rather compliment existing initiatives inside the country. He reminded that now that all three offices are open, the real work begins. Mr. Koç requested a report from the BSO coordination meeting. Mr. Efthymiadis said that all the other instruments need to be coordinated. The BSOs, country committees, and PRO committees are things which makes SECI different. SECI is not another consulting company but rather a unique group of dedicated individuals. The idea to create the Business Information and Clearing Center (BICC) is to help SECI in coordinating all its initiatives. The start of the BICC was delayed due to a lack of communication and now we need to decide how it should operate. Mr. Arsel explained that the Istanbul BSO acts as a secretariat for TURKPRO and all SECI activities because there is no other instrument. Mr. Takas said that if the BSOs are supposed to function properly they have to have a mandate. 7. Report from the SECI PRO Meeting Mr. Keenan gave the report from the eighth meeting of SECIPRO that was held the previous day. There was general consensus that it was the most successful meeting yet. Bilateral meetings at specific border crossings are the most effective means of dealing with border issues. He commended Ambassador Hill and HELLASPRO for their outstanding initiatives and said that the bilateral meeting between TURKPRO and HELLASPRO was so successful that the ECE had the report translated into Russian as a model for similar activities in the CIS. There have been plenty of changes since the last SECI PRO meeting in Thessaloniki. SLOVENIA PRO has been reactivated with the help of Mr. Ivanchich and Miro Senica. ROMPRO had completely reorganized and now involves many people from the private sector. The new chairman of ROMPRO has taken much initiative to stimulate activities. He had stressed that there is a strong link between corruption and excessive bureaucracy. BiHPRO and CROATIA PRO have met in Sarajevo and BiHPRO also involves participants from Republika Srpska. 8 Members of the PRO committees want to report that there is real effort to avoid duplication. The World Bank gave a good presentation of the TTFSE program and the discussion highlighted new ideas for TTFSE such as including all of the SECI countries in the customs reform and trade facilitation component of program, even if they are not involved in loan process. The World Bank will also consider involving Kosovo in this effort. Graham Smith from the World Bank reported that loan negotiations have been concluded with all countries except for Bosnia and that all loan agreements should be signed by the end of the year. Procurement is underway for X-ray and other technical equipment for Romania. The project is also expecting a full team of US customs advisors that will be active in Romania, Bulgaria, FYRMacedonia and Croatia. By end of the year, a consortium of academic institutions should be mobilized. A Regional Steering Committee of the 6 borrowing countries (governmental agencies responsible for the loans) has been established. Turkey will use funds from an existing World Bank loan for border crossing improvements with Bulgaria and Greece. The project also plans for tracking and monitoring activities at the borders. Mr. Keenan reported that the PRO committees agreed on guidelines for SECI PRO, which includes a clause to invite the SECI National Coordinators to participate in the PRO committees. The next meeting of SECI PRO will be held on the same day as the BAC and run in parallel given that SECI PRO needs more time to discuss issues. Mr. Ivanchich announced that SLOVENIA PRO was formally established through a decision of Prime Minister. It is located at the American Chamber of Commerce which can put SLOVENIA PRO on its monthly agenda as a way to promote SECI. The Chamber has 55 members who meet monthly and includes heads of US companies and joint ventures which can serve as a base for a country committee for Slovenia. Mr. Takas said that we should follow rules of country committees and that the committees should not be associated with a chamber which is supposed to promote something else. Mr. Ivanchich pointed out that the heads of companies could form a committee as a group of private investors. Mr. Carras said the principles of country committees are clear – to first represent the foreign investment community and then the investment community generally. If Mr. Ivanchich believes that a Slovenia country committee is necessary, he should discuss with the chairmen what can be done. 8. New Members of the BAC Mr. Carras presented the CVs of potential new members of the BAC. Concerning Bosnia, Fadil Kadic had withdrawn his candidacy. Mr. Ivanchich and Mr. Krvavac have highly recommended Mr. Nermin Salman. Siemens proposed Mr. Christian Doerner and Dusko Knezevec was endorsed by an official in the Montenegrin government. Dr. Busek proposed to postpone a decision on inviting another 9 Montenegrin member. He also said that Siemens had decided to withdraw Doerner’s candidacy because they now would like to nominate a more senior representative. Mr. Koç suggested that the CVs should be presented in a standardized manner in the future. Mr. Kostic endorsed Mr. Knezevac and pointed out that he is present both in Podgorica and Belgrade and Mr. Velija supported this. Mr. Carras moved to postpone the decision until Zagreb, reminding that the BAC does not accept nominations from governments. He suggested that the nomination should come from BAC and Mr. Kostic and Mr. Velija asked that his candidacy be discussed in Zagreb. Mr. Stancioff proposed Mr. Roberto Nicastro who is an Italian banker. Mr. Arsel raised the issue of what the policy on BAC membership is and if there are any limits to the BAC’s size. He suggested that we should invite the Mr. Salman to join since the BAC does not yet have a Bosnian member. Mr. Carras suggested to make a rule that the BAC cannot have more that three members from a given country and reminded that there are already three Italians, Greeks and Turks. Mr. Carras then proposed to accept Mr. Salman and all were in agreement. Mr. Takas suggested that new members from multinationals can be accepted as observers. 9. Dates and Preparations for the Next Meetings in Croatia The next meeting of the BAC in Zagreb will begin on December 4th with a dinner and then run through December 5th. There was a proposal to meet either in Belgrade (depending on the situation) or Sarajevo after Zagreb and Dr. Busek said that he will submit a proposal before the Zagreb meeting. 10. Other business There was no other business and the meeting was adjourned.
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