SPEECH/06/477 Benita Ferrero-Waldner European Commissioner for External Relations and European Neighbourhood Policy Political reform and sustainable development in the South Caucasus: the EU’s approach “Caspian Outlook 2008” Bled Strategic Forum Bled, Slovenia, 28 August 2006 Chairman, Ministers, Excellencies, Ladies and Gentlemen, Let me first thank the organisers of the Bled Strategic Forum for their excellent initiative in bringing us together. It is a great opportunity to take a fresh look at an area of the world which is of particular strategic importance for Europe. I have been asked to talk about political reform and sustainable development in the South Caucasus. From the European Union’s perspective, now is certainly the right time, since very soon we will start implementing the European Neighbourhood Policy Action Plans with Armenia, Azerbaijan and Georgia. I look forward to celebrating their adoption when I visit the region with the Finnish EU presidency at the beginning of October. Generally however, the last weeks and months have shown worrying trends in the South Caucasus. Three negative strands are coming together, the combination of which is, frankly, alarming. First, we have seen little or no progress towards settling any of the frozen conflicts Abkhazia, Nagorno-Karabakh, South Ossetia. All parties have failed to deliver on their responsibility to find a solution. Second, defence expenditure in the region is going through the roof. Quite apart from the negative message this sends for resolving the conflicts, this cannot be good policy-making in a region where human development indicators are a matter of deep concern. How can governments justify spiralling defence spending when their countries are in desperate need of investment in education, health and small businesses? Third, increasingly inflammatory rhetoric, as we have seen over the past months, is shaping public opinion in a counterproductive direction. There is a serious danger of the rhetoric lowering the threshold for war. But it is political logic, not military logic which must prevail. Leaders have a responsibility to prepare their populations for peace, not war. These recent developments are worrying for those of us who hoped for positive movements. All sides should show restraint and adopt a balanced approach to their neighbours. Harsh rhetoric does not create an atmosphere conducive to restoring mutual trust and resolving these conflicts. Any further escalation of tension could reignite the conflicts with devastating consequences for the entire region. Let me emphasise that point – this remarkable and complex region has enormous economic promise but, to realise that potential, cool heads must prevail. Natural resource wealth is finite. Once squandered, the opportunity to boost the region’s development will not come again. I do not wish to exaggerate the risks, but it is important that we are clear about the consequences of failing to pull back from the brink. I call on the region’s leaders to realise the weight of their responsibility, not only to their own people, but to the region as a whole. True leadership and statesmanship means finding the courage to settle these disputes once and for all. The EU will continue to play its part in working for peace. The European Neighbourhood Policy will be a key tool in this regard. 2 I will talk about the European Neighbourhood Policy (ENP) in more depth this afternoon. For now, let me briefly explain that it is the EU’s response to new geopolitical realities following our 2004 expansion. It is our tool for laying the foundations for a much deeper relationship with the countries of Eastern Europe and the southern Mediterranean. And it is designed to extend the prosperity, stability and security enjoyed by the EU to our closest neighbours and partners. The most important aspects of the ENP are the following: Firstly, it brings together our main policy instruments, in a more focused way. We go beyond classical foreign policy to support reform and modernisation. Secondly, we thus cover a broader range of issues than our existing relationships, with greater intensity and throughout all fields of governance. Thirdly, the ENP will be backed by a new assistance instrument, the ENPI, with increased and improved financial and technical assistance. The ENP operates through Action Plans – such as the ones with the three countries of this region. These Action Plans, tailor-made for each country, set out the areas in which we both want to develop relations further. They contain benchmarks and commitments paving the way for a deeper relationship. The ENP Action Plans are designed to promote political reform and sustainable economic and social development. As we all know, that’s the most effective way of achieving prosperity, stability and security. They therefore cover a wide range of activities, to strengthen democracy, promote the rule of law, uphold human rights, liberalise trade, develop energy and transport connections and ultimately even give the countries a stake in the EU’s internal market. But uppermost in my mind in thinking about the South Caucasus today is the ENP’s potential to help support conflict resolution. Why? Because the most important impediments to the region’s development are the frozen conflicts. The European Neighbourhood Policy is not in itself a conflict prevention or settlement mechanism, but through promoting democracy and regional cooperation, boosting national reform programmes and improving the socio-economic prospects of the region, it can contribute to a more positive climate for conflict settlement. Resolving or at least de-escalating the conflicts must be the first priority, but their sustainable resolution is largely dependent on deepening and anchoring democratic and economic reform throughout society. ENP tackles the underlying issues which enable conflicts to fester: bad governance, underdevelopment and insecurity. But only if society as a whole participates in this transformation process will the region begin to prosper. We are also engaged more directly in conflict resolution. The appointment of an EU Special Representative for the South Caucasus, Peter Semneby, is a sign of the importance the EU attaches to solving them. We will continue our support to the Joint Control Commission for South Ossetia, the main conflict settlement mechanism for this region, and honour our €2 million pledge at the OSCE’s international donor conference for South Ossetia. We will stay involved in confidence building and rehabilitation in Abkhazia, supporting reconstruction of important infrastructure facilities and civil society projects. And we stand ready to respond to the needs assessment mission to Nagorno-Karabakh, as soon as that mission is able to depart. 3 We also fully support the work of the OSCE, which Minister De Gucht will address in a moment. And later this year our Member States will discuss a possible enhanced EU contribution to the peace processes. Ladies and Gentlemen, Returning for a moment to the ENP, which some of us will discuss in more detail in one of this afternoon’s sessions, let me just recall that it is a living and evolving policy, designed to respond to developments and treating all our neighbours equally. Later this year, the Commission will publish a report on two years of its implementation, making suggestions for how it might be further enhanced – both in terms of our partners’ efforts and our own “offers”. Given the EU’s own history and development, the ENP attaches great importance to regional cooperation. However, rather than expending effort on developing new or legally binding set-ups - which our eastern neighbours do not necessarily want or need – such as creating an institutional structure for our eastern neighbours, we should, rather, focus on strengthening existing cooperation frameworks such as Black Sea cooperation. This is of direct interest and use for our Southern Caucasus partners and others here today. The EU and its neighbours have a mutual interest in fostering prosperity, stability and security inter alia through addressing the root causes of bad governance, lack of economic development, insecurity and instability that cause the continuing conflicts. As we have shown in Western Europe over the last 50 years, promoting prosperity, stability and security is the ultimate conflict-prevention policy. Which brings me to plead, once again, for all parties in the Southern Caucasus to take their conflict-resolution responsibilities seriously. We must put the long term objective of peace, prosperity and stability ahead of short term tactical considerations. In the globalised world of the 21st century, the way to greater wealth and prosperity is to embrace an open economy and open political system. That is simply not possible while the region remains locked in a vicious spiral of tit for tat conflict. 4