June 13 2014

“Mr Genjac, Mr Borenovic, Mr Softic,  Excellences Members of Parliaments.

Let
me first of all say that I am honoured and happy to be able to join you
here today, in the company of long-serving politicians and Chairs of
the EU integration Committees, where I have been asked make several
short reflections on the state-of-play of Bosnia and Herzegovina’s
European agenda and the way I see it. But first of all let me
whole-heartedly thank all MPs present for what they have already done
and will do for the European future of  this country. Let me also thank
the Westminster Foundation for making this Forum possible.

Ladies and Gentlemen,

It
will depend on your activities your creativity and finally your pens
and votes as to how you write the European Union acquis into the laws of
the State, of the Entities, of the District and of the Cantons in BiH.
Adopting this acquis is the way you become a member of the European
Union. It will be your persistent scrutiny of the Governments that will
keep them on target for EU membership. And as a friend of BiH, as a
personal friend of BiH I will say that success will be judged on the way
we are able to rally people of this beautiful country to embark on hard
and long-awaited reforms and they have to start right now.

There
is no secret that it will be a journey, a journey of some length that
is in front of us. And it is a journey that is there in order for us to
reach what is your strategic foreign policy goal – becoming part of the
EU. IPA is the one of the main tools, which, if you put it to the right
use, will accelerate BiH’s transition to a competitive market economy
and a prosperous society. The ‘track record’ of using IPA assistance
that co-panellists have mentioned already this morning does not need to
be explained: one just has to look a bit to the west to Croatia or to
the North – to 2004 Enlargement countries – to see what the IPA money
did for those societies.

One can see how IPA changed the quality
of public administration or how it changed the quality of drinking
water, how it improved the livelihood of farmers and helped SMEs to
create new jobs, secured borders or reformed judiciaries. These
countries underwent a widespread reform process and they underwent them
with the help of the IPA funds.

On the other hand, the experience
of implementing IPA projects in BiH is admittedly a story of many
twists and awkward labyrinths and turns, which does leave the external
observer shaking their head in order to understand why this country is
often failing to take advantage of EU tax payers’ money, that we put to
use to improve your country. 

On many occasions, my predecessors
and I have seen a lack of local ownership for the projects and failure
to take advantage of results. We have witnessed major problems
coordinating assistance between authorities at different levels, we have
seen stalled projects and we have even lost money that were devoted for
BiH – most recently it was agriculture and rural development.

Of
course I have to stress that this cannot and should not overshadow many
success stories we already had in using the  EU tax payers money  –
many of them you could find on our www.europa.ba website if you do not
know them already. We have made a concerted effort in the past three
years to combine all the efforts we have done since 1996 and we have
done a quite impressive catalogue. No-one else has invested in Bosnia
and Herzegovina like the EU. I do say though that the difficulties we
have had leave a little bit of a bad taste and we have to get rid of
it. 

There is a concrete “price tag” for IPA One (2007 – 2013)
failures. It is a stunning 45 million Euros, the figure we all know by
heart by now. Nearly half of the IPA 2013 programme was lost due to the
inability of BiH to implement the judgment in the Sejdić–Finci case and
to establish an effective coordination mechanism and to respond to the
request we had for cooperation on implementing the programmes. When we
have the money we need to implement it, we cannot keep it idle otherwise
we send the money to other countries that can use it. We need to avoid
that. But what is more important at the moment – is that Governments
learn the lessons from mistakes and disagreements that were so often
manifested in the IPA One area and do not carry them over to IPA 2.

I
truly hope that these lessons will help “re-start” the way the
political establishment looks at IPA and its benefits for citizens and
public administration of this country. Last, but not least, because the
funding from the IPA 2 package of 2014-2020 will be many millions
shorter if BiH fails to meet two key conditions. Let me underline, those
key conditions are:

•    first, the country has to develop an
efficient EU coordination mechanism, both for managing assistance and
political coordination. We cannot have more situations like we had with
the IPA one – that we make an agreement with BiH and that you run away
from it the day after. It cannot be, you are the only country that has
ever done that.

•    secondly, to agree on the country-wide
strategies in the key sectors like agriculture, energy,  transport and
environment in order to allow that the investment we make supports
businesses, economy and simply higher standard of living!
You owe
that to citizens and you owe it to us. You have to remember we take the
money from our tax payers and we give them to you. Therefore, you need
to implement those two things. These two criteria have been known for
quite some time, we have been stressing them again and again and let me
say for the last time IPA 2 will not happen if you don’t do those two
things.

Turning away from the political landscape. I have to
say, that of course the EU will not leave the citizens of this country
standing alone while the country suffers from the largest natural
catastrophe of the last hundred years. The EU quickly mobilised its
efforts and is finalising a reallocation of 42.24 million Euros from IPA
One.

We are looking into allocating 15 million Euro from the
2014 programme so it will actually be a quite significant amount of
money we will invest to alleviate the consequences of this horrible
thing. The money will be made available using special fast-track
decision-making from our side. So please be aware that the obstacles, if
the money does not come, will be here. We will need a very high tempo
of ratifying by BiH of the financing agreements that need to be put in
place. Summertime is here, I hope this will not be the blockage, because
as I said, the EU is ready with money, we now need the action by BiH.

As
the local authorities, the EU and its partners (UN, World Bank) are
finalising the Recovery Needs assessment report due on June 18th, it is
clear that economic recovery will be even more dependent on the urgent
economic and social reforms, which were delayed for years.

Your
neighbours in Serbia were very clear. They also said: we might have been
hit by floods but the reform agenda does not stop. The same thing will
be the case here. You need to show the willingness to do the necessary
economic  reform in order to justify the assistance coming in.  

These
reforms should make your companies more competitive on the European
markets by cutting red tape and providing for healthy business
environment, by aligning your legislation and standards, like the ones
on food safety, to the European ones.
We intend to support all of
these reforms, including direct grants to local economic development
needs (includes SMEs) with IPA2 funds, with regional multi-beneficiary
funding and funds coming from International Financial Institutions. 

And
this is not the end of it. In line with the overall increased focus on
better economic governance that Commissioner Fuele announced in February
it is our intention to broaden our agenda to also include the
economics. The European Union, together with partners (IMF, WB, EBRD)
will be later this year proposing a Compact (Agreement) for Growth.

To
prepare for the Compact, at the end of May I hosted the first event of
the Compact – `A Forum for Prosperity and Jobs`. Some 400
representatives, from all segments of the society, academia, political
parties, think tanks and business community came. More importantly,
besides the 400 people in the room we had  4,000 people interacting with
us over the social media. Actually, this Forum for Prosperity and Jobs
has a very broad base in the society. I would say the broadest base, the
broadest discussion that has ever been conducted in BiH.

The
Forum concluded with six specific priority areas for reforms before and
beyond upcoming elections. I would like to share them with you, because
these are also areas where EU and international financial institutions
will focus their attention and financial resources over the coming
years. The priority areas are:

1.    Tax burden on jobs (spur employment and improve competitiveness by reducing labour costs)

2.   
Lowering barriers to jobs (revitalizing the process of collective
bargaining and promoting inclusion of the young population in the
workforce)

3.    Business climate (improve competitiveness by
approving a results-based plan, aimed at improving indicator rankings to
match the regional average)

4.    Enterprises (work on the
reforms necessary to strengthen the insolvency framework, stimulate
privatization and stimulate new business creation)

5.   
Corruption (it kills initiative and investments in economy. Fighting
corruption will require further adherence to the rule of law and deep
public administration reform)

6.    Targeting of social
protection (improve the targeting of social assistance through a set of
measures that would make social protection policies more effective,
efficient and equitable).

The Forum was the beginning of debate
on economic reform, which will continue in the coming months. But it
will be the basis for our assistance hence I welcome all the
participation from the institutions from the parliamentarians and so on.
To
conclude, I wish every success to those who will run again for the
parliaments, I want to repeat myself once again — a country with such
wealth of natural and human resources that BiH has should find the
courage to reform itself and address the needs of the citizens. But more
importantly for us also is to address the hurdles and targets that are
out there to become a member of the EU.

It is very clear the
offer of membership is there. It is very clear that our offer of
assistance to get you through to membership is there. It is very clear
that there are problems, for reasons we all understand and know and 20
years of history is the witness to that. The problems in implementing
IPA should not be there and we need to overcome them.

And with
those words I thank you very much once again for inviting me to address
you this morning and thank you very much for the very good event because
I think refocusing on how to use the IPA funds is exactly what we need
here.

Thank you.