| United Nations | A/50/423 |
General Assembly
Distr. GENERAL
12 September 1995
ORIGINAL:
ENGLISH
Fiftieth session
Item 20 (b) of the provisional agenda*
STRENGTHENING OF THE COORDINATION OF HUMANITARIAN AND DISASTER
RELIEF ASSISTANCE OF THE UNITED NATIONS, INCLUDING SPECIAL
ECONOMIC ASSISTANCE: SPECIAL ECONOMIC ASSISTANCE TO INDIVIDUAL
COUNTRIES OR REGIONS
Economic assistance to States affected by the implementation of
the Security Council resolutions imposing sanctions against the
Federal Republic of Yugoslavia (Serbia and Montenegro)
Report of the Secretary-General
CONTENTS
Paragraphs Page
I. INTRODUCTION .........................................1 - 33
II. BACKGROUND: RECENT ACTION TAKEN BY THE SECURITY
COUNCIL ..............................................4 - 233
A. Action taken by the Security Council .............5 - 104
B. Action taken by the Security Council Committee
established pursuant to resolution 724 (1991)
concerning Yugoslavia ............................11 - 185
C. Follow-up to "An Agenda for Peace" ...............19 - 238
III. INFORMATION REGARDING ECONOMIC ASSISTANCE TO THE
AFFECTED STATES ......................................24 - 689
A. Information received from States .................26 - 3910
______________________
* A/50/150.
95-27591 (E) 290995/...
*9527591*
CONTENTS (continued)
Paragraphs Page
B. Response of the United Nations system ............40 - 6214
C. Follow-up to regional initiatives and assistance
arrangements .....................................63 - 6819
IV. CONCLUSIONS ..........................................69 - 7321
I. INTRODUCTION
1. In its resolution 49/21 A of 2 December 1994, the General Assembly
expressed concern at the persisting special economic problems confronting
States, in particular the States that border the Federal Republic of
Yugoslavia (Serbia and Montenegro), the other Danube riparian States and
all other States adversely affected by the severance of their economic
relations with the Federal Republic and the disruption of traditional
transport and communications links in that part of Europe. At the same
time, the Assembly recognized the urgent need for a concerted response from
the international community to deal more effectively with the special
economic problems of the affected States in view of their magnitude and the
adverse impact of the sanctions on those States.
2. In the same resolution, the General Assembly invited the international
financial institutions to continue to pay special attention to the economic
problems of the affected States arising from the implementation of the
sanctions and their adverse social impact and to consider, inter alia, how
the existing facilities of the International Monetary Fund (IMF) might be
helpful to the States concerned, with a view to alleviating their special
economic problems, and how consultative group meetings of the International
Bank for Reconstruction and Development for the countries in question,
scheduled for 1995, might further help to mobilize additional resources to
mitigate the losses and costs incurred by those countries. The Assembly
also requested the competent organs, programmes and specialized agencies of
the United Nations system to take into consideration, in programming their
development activities, the special needs of the affected States and to
consider providing assistance to them from their special programme
resources. Further, the Assembly renewed its appeal to all States on an
urgent basis to provide immediate technical, financial and material
assistance to the affected States to mitigate the adverse effect on their
economies of the application of the sanctions, inter alia, through
consideration of the provision of assistance for the promotion of the
exports of the affected countries and for the promotion of investments in
those countries.
3. Furthermore, the General Assembly, in the same resolution, requested
the Secretary-General to continue to seek, on a regular basis, information
from States and the concerned organs and agencies of the United Nations
system on action taken to alleviate the special economic problems of the
affected States and to report thereon to the Security Council, as well as
to submit a report on the implementation of the resolution to the Assembly
at its fiftieth session. The present report was prepared in response to
that request.
II. BACKGROUND: RECENT ACTION TAKEN BY THE SECURITY COUNCIL
4. The report of the Secretary-General prepared pursuant to the note by
the President of the Security Council (S/25036) regarding the question of
special economic problems of States as a result of sanctions imposed under
Chapter VII of the Charter of the United Nations (A/48/573-S/26705)
contains a section (see paras. 39-46) on the initial action taken by the
Security Council, under the provisions of Article 50 of the Charter, in
response to requests for assistance submitted by eight States affected by
the sanctions against the Federal Republic of Yugoslavia (Serbia and
Montenegro). Moreover, the background information on the matter was
updated for the period ending 1 August 1994 in the previous report of the
Secretary-General on "economic assistance to States affected by the
implementation of the Security Council resolutions imposing sanctions
against the Federal Republic of Yugoslavia (Serbia and Montenegro)"
(A/49/356, chap. II). Since then, the Security Council and its Committee
established pursuant to resolution 724 (1991) concerning Yugoslavia have
taken a series of steps that may have a direct or indirect bearing on the
neighbouring and other affected States. The relevant decisions adopted by
the Council and the Committee from August 1994 to August 1995 are reviewed
below.
A. Action taken by the Security Council
5. During the period under review, the Security Council adopted a number
of decisions aimed at fine-tuning the sanctions regime against the Federal
Republic of Yugoslavia (Serbia and Montenegro) with a view to maximizing
its political impact and minimizing its collateral damage to the
neighbouring and other affected countries. As regards the latter, it has
been the Council's practice to grant partial or limited exemptions from the
sanctions under exceptional circumstances, on a case-by-case basis, and
under appropriate forms of monitoring or control. In several cases, such
measures were taken by the Council in response to requests from the
neighbouring and other Danube riparian States.
6. By its resolution 943 (1994) of 23 September 1994, the Security Council
decided, inter alia, to suspend, for an initial period of 100 days and
subject to the effective closure of the international border between the
Federal Republic of Yugoslavia (Serbia and Montenegro) and the Republic of
Bosnia and Herzegovina with respect to all goods except foodstuffs, medical
supplies and clothing for essential humanitarian needs, the relevant
restrictions relating to (a) all civilian passenger flights to and from
Belgrade; (b) the ferry service between Bar in the Federal Republic of
Yugoslavia (Serbia and Montenegro) and Bari in Italy; and (c) participation
in sporting and cultural exchanges. Subsequently, the Security Council, by
its resolutions 970 (1995) of 12 January 1995, 988 (1995) of 21 April 1995
and 1003 (1995) of 5 July 1995, extended the suspension of those
restrictions until 18 September 1995.
7. In a letter dated 14 December 1994 (S/1994/1418) from the Chairman of
the Security Council Committee established pursuant to resolution 724
(1991) concerning Yugoslavia, the Council was informed of a major
resurgence of diphtheria in several countries in central Asia and eastern
Europe, and of the fact that the only available stocks of anti-serum to
combat that serious condition were located in the Federal Republic of
Yugoslavia (Serbia and Montenegro). In view of the exceptional
humanitarian circumstances of the situation, the Security Council adopted,
on the same day, resolution 967 (1994) permitting, for a period of 30 days,
the export of 12,000 vials of diphtheria anti-serum from the Federal
Republic of Yugoslavia (Serbia and Montenegro) as an exemption from the
mandatory sanctions against that country, in particular from subparagraph 4
(a) of resolution 757 (1992).
8. Following another recommendation of the Committee, contained in a
letter dated 8 May 1995 (S/1995/372) from its Chairman, the Security
Council made a temporary exemption from the provisions of paragraph 16 of
resolution 820 (1993) relating to the restrictions for navigation on the
Danube River. By its resolution 992 (1995) of 11 May 1995, the Security
Council decided, inter alia, to permit the use by vessels of the Federal
Republic of Yugoslavia (Serbia and Montenegro) of the locks of the Iron
Gates I system on the left-hand bank of the Danube while repairs were
carried out to the locks on the right-hand bank. This measure was adopted
in view of the exceptional circumstances and at the request of Romania,
supported by other Danube riparian States, the Danube Commission and the
European Union/Organization for Security and Cooperation in Europe
(EU/OSCE) Sanctions Coordinator, who stressed the importance for safe
international navigation on the Danube of the Iron Gates I system being
properly maintained and repaired in a timely manner. The resolution came
into force on 23 June 1995 and, upon the expiration of the initial period
of 60 days, has remained in effect for another period of 60 days (22
August-20 October 1995), after the Committee had notified the Council that
such further period was required for completion of the necessary repairs
(S/1995/705).
9. In the same resolution, the Security Council recalled statements made
by its President on the freedom of navigation on the Danube, in particular
that made on 13 October 1993 (S/26572), and noted that flag States may
submit claims to the authorities in the Federal Republic of Yugoslavia
(Serbia and Montenegro) for reimbursement of tolls illegally imposed on
their vessels transiting the section of the Danube that passes through the
territory of the Federal Republic.
10. In other related developments, the Security Council requested, on
several occasions, that its Committee established pursuant to resolution
724 (1991) concerning Yugoslavia adopt appropriate streamlined procedures
for expediting its consideration of applications concerning legitimate
humanitarian assistance, as well as proposals aimed at making the
procedures of the Committee more transparent. By its resolution 1003
(1995), the Security Council noted with satisfaction that the Committee had
adopted streamlined procedures for expediting its consideration of
applications concerning legitimate humanitarian assistance, as well as a
number of measures facilitating legitimate transshipments via the Danube
River. These steps are outlined below.
B. Action taken by the Security Council Committee established
pursuant to resolution 724 (1991) concerning Yugoslavia
11. The Security Council Committee established pursuant to resolution 724
(1991) concerning Yugoslavia has the central responsibility of monitoring
the compliance with, and assisting in the implementation of, the mandatory
sanctions imposed on the Federal Republic of Yugoslavia (Serbia and
Montenegro). 1/ In accordance with the revised consolidated guidelines for
the conduct of its work, the Committee deals with a wide range of incoming
communications, including those that contain notifications to, or requests
for authorization by, the Committee for certain activities with regard to
the Federal Republic. A substantial proportion of those applications comes
from the neighbouring countries, the Danube riparian countries and other
affected countries in the region, and involves their economic interests.
12. During the period under review, the Committee authorized, as limited
exemptions from the sanctions regime under exceptional circumstances, a
number of specific requests from several States adversely affected by the
sanctions. These include:
(a) A request from Albania for the transit passage from Bulgaria,
Romania and Turkey, through the electric power grid of the Federal Republic
of Yugoslavia (Serbia and Montenegro), of 10 million kilowatt hours per day
for the period of one month;
(b) Requests from Hungary for the activities of Hungarian ice-breakers
on the Yugoslav reaches of the Danube River, and for the supply of a
certain amount of fuel for the operation of those ice-breakers; and for the
transshipment through the Federal Republic of Yugoslavia (Serbia and
Montenegro) of a dredging vessel from Slovakia, via the Danube and Tisza
Rivers;
(c) A request from Romania to deliver to the Federal Republic of
Yugoslavia (Serbia and Montenegro) certain amounts of fuel oil, diesel oil
and motor oil for the exclusive purpose of ensuring the normal functioning
of the Iron Gates hydroelectric and navigation system on the Danube;
(d) Requests from the former Yugoslav Republic of Macedonia for the
removal of 13,000 tons of welded steel pipes from the Federal Republic of
Yugoslavia (Serbia and Montenegro), where the consignment was blocked since
August-September 1992, while in transit; for the transit of three electric
motor trains through the Federal Republic of Yugoslavia (Serbia and
Montenegro); and for the transshipment through the Federal Republic of
Yugoslavia (Serbia and Montenegro) of 10,500 metric tons of railway tracks
from Ukraine.
13. By its resolution 943 (1994), the Security Council invited the
Committee established pursuant to resolution 724 (1991) concerning
Yugoslavia to adopt appropriate streamlined procedures for expediting its
consideration of applications concerning legitimate humanitarian
assistance. By Security Council resolutions 970 (1995) and 988 (1995), the
Committee was requested to expedite that work and to give priority to its
consideration of applications concerning legitimate humanitarian
assistance.
14. In response, the Committee set up an informal working group to devise
appropriate streamlined procedures. On 1 February 1995, the Committee
decided that applications from international and non-governmental
humanitarian agencies, as well as applications concerning the personal
belongings of individuals, should be processed on a priority basis. It was
also decided that requests from international humanitarian agencies for the
transshipment of humanitarian items through the territory of the Federal
Republic of Yugoslavia (Serbia and Montenegro) by land would be considered
under the "no-objection" procedure.
15. On 27 June 1995, following its 126th meeting, the Committee approved a
series of additional recommendations of its working group on its
streamlined rules and procedures, which should be read in conjunction with
the revised consolidated guidelines of the Committee for the conduct of its
work. The first group of these improvements, aimed at expediting matters,
includes the following measures:
(a) As of 1 August 1995, the Committee's application forms for exports
to, or transshipments through, the Federal Republic of Yugoslavia (Serbia
and Montenegro) have been amended to include: (i) space for the
itemization of goods and information on their end-use or end-user; (ii)
space for inclusion of the appropriate six-digit harmonized international
tariff code; and (iii) a notice indicating that applications should be
accompanied by supporting financial information such as bona fide
contracts, letters of credit or other documentation demonstrating a similar
intent to enter into a transaction. Applications providing this
information, when appropriate, receive priority processing by the
Committee, with a view to speeding up their consideration and the passage
of goods at the authorized border-crossing points;
(b) Kalotina and Dragoman in Bulgaria are now treated by the Committee
as a single border-crossing point;
(c) The period of validity of the Committee's letters of acknowledgement
and approval has been extended from three to six months, with no extensions
permitted (however, fresh applications for the same goods could, if
necessary, be made at the end of the six-month period).
16. Of particular importance to the neighbouring and other affected
countries in the region is a second group of measures, which are intended
to facilitate legitimate transshipments via the Danube River. In response
to information and assurances received from the Sanctions Assistance
Missions Communications Centre (SAMCOMM) in Brussels, the Committee decided
to consider requests from States for authorizations for specified shipping
companies to transship unlimited quantities of certain materials along the
Danube under a set of specific conditions designed to ensure appropriate
monitoring and control. Among them, a potentially positive economic impact
on the affected countries may have the following provisions:
(a) Goods that can be considered for authorization under these new
procedures are iron ore and aggregates (sand, gravel, slag), non-coking
coal, steel coils and slabs. Goods should be described on applications in
accordance with normal customs procedures; the Committee will review the
list after three months; if no violations take place under the new
procedures, it may decide, at that time, to extend them;
(b) Shipping companies making applications to transship goods via the
Danube under the new procedures must have a clear record of activity on the
Danube; the Committee will rely on the advice of States and bodies and
organizations such as the Danube Commission and SAMCOMM for this purpose;
(c) States, with the assistance of SAMCOMM, must continue to make full
inspections of all vessels and shipments on the Danube. The Committee
requests States, with the assistance of SAMCOMM, to undertake full
monitoring at Calafat (Romania)/Vidin (Bulgaria) and at Mohacs (Hungary).
Vessels inspected at loading and sealed by the Ukrainian authorities with
the assistance of SAM Ukraine at Ismail need not be reinspected unless this
is considered necessary by the local authorities on the basis of
information supplied by SAMCOMM or for other reasons;
(d) The Committee does not require the presence of monitors on board
vessels authorized by it to transship the products permitted under this new
procedure. However, the shipping companies concerned should instruct their
ship masters to provide information to SAM/Western European Union
debriefing teams.
17. By a note verbale dated 3 July 1995 (SCA/8/95(11)), the Chairman of
the Committee apprised all States of the adoption by the Committee of its
streamlined rules and procedures and of the Committee's decision to review
all those procedures after a three-month trial period. Under cover of a
letter dated 17 July 1995, the Under-Secretary-General for Political
Affairs communicated, on behalf of the Committee's Chairman, the same
information to the competent organs, programmes and specialized agencies of
the United Nations system as well as other international organizations
concerned. It was the Committee's belief that the new procedures would
significantly reduce the delays in its consideration of applications
concerning legitimate humanitarian assistance and would facilitate
legitimate trade on the Danube. The Committee also decided to consider
further ways in which humanitarian deliveries could be expedited and to
keep the question of restrictions on trade on the Danube under close
review.
18. At its 126th meeting, held on 27 June 1995, the Committee put in place
a number of measures aimed at making the Committee's procedures more
transparent, as recommended by the Security Council in the note of its
President dated 29 March 1995 (S/1995/234). To that end, the Committee
decided, inter alia, to increase the practice of issuing press releases
reflecting the most important matters discussed at the meetings. The
Committee also decided to make available to any delegation lists indicating
the status of communications processed under the "no-objection" procedure,
as well as lists of major decisions adopted by the Committee at its
meetings, to be prepared on a monthly basis. An annual report to the
Security Council on the Committee's activities would also be prepared. The
implementation of these measures should significantly increase the
transparency of the Committee's procedures in the conduct of its work and
further enhance the Committee's effectiveness in carrying out the mandate
entrusted to it by the Security Council.
C. Follow-up to "An Agenda for Peace"
19. In the document entitled "Supplement to an Agenda for Peace: position
paper of the Secretary-General on the occasion of the fiftieth anniversary
of the United Nations" (A/50/60-S/1995/1), the Secretary-General
highlighted, inter alia, key issues in the area of sanctions as one of the
instruments for peace and security "where unforeseen, or only partly
foreseen, difficulties have arisen and where there is a need for the Member
States to take the 'hard decisions'" (para. 6). In paragraph 73 of the
report, the Secretary-General noted that "there is an urgent need for
action to respond to the expectations raised by Article 50 of the Charter.
Sanctions are a measure taken collectively by the United Nations to
maintain or restore international peace and security. The costs involved in
their application, like other such costs (e.g., for peacemaking and peace-
keeping activities), should be borne equitably by all Member States and not
exclusively by the few who have the misfortune to be neighbours or major
economic partners of the target country".
20. In order to address the problems in the area of sanctions, the
Secretary-General suggested the establishment at the United Nations
Secretariat of a mechanism to carry out several important functions in that
regard. In particular, the proposed mechanism would assist the Council to
assess the potential impact of sanctions, to measure their effects and to
explore ways of assisting Member States that are suffering collateral
damage and to evaluate claims submitted by such States under Article 50.
To this end, it should be empowered to utilize the expertise available
throughout the United Nations system, in particular that of the Bretton
Woods institutions.
21. The Security Council considered the position paper of the Secretary-
General (A/50/60-S/1995/1) at its 3492nd and 3503rd meetings, held on 18
and 19 January and 22 February 1995, respectively.
22. In a statement on behalf of the Security Council, made by its
President on 22 February 1995 (S/PRST/1995/9), it was the Council's
position that appropriate consideration should be given to submissions
received from neighbouring or other States affected by special economic
problems as a result of the imposition of sanctions. In the same
statement, the Council urged the Secretary-General to take appropriate
steps to reinforce those sections of the Secretariat dealing directly with
sanctions and their various aspects so as to ensure that all these matters
be addressed in as effective, consistent and timely a manner as possible.
Further, the Council welcomed the Secretary-General's efforts to study ways
and means of addressing the various aspects related to sanctions.
23. In a letter dated 31 May 1995, addressed to the Secretary-General
(S/1995/440), the President of the Security Council stated, inter alia,
that the members of the Council welcomed the recent increase in staff to
support the sanctions committees, and looked forward to a report in due
course on whether that increase had decreased the backlog in processing
applications to these committees.
III. INFORMATION REGARDING ECONOMIC ASSISTANCE
TO THE AFFECTED STATES
24. Originally, the reporting procedure on information regarding economic
assistance provided by the international community to States adversely
affected by the implementation of sanctions imposed on the Federal Republic
of Yugoslavia (Serbia and Montenegro) was established by the Secretary-
General pursuant to the relevant recommendations of the Security Council
(S/26040 and Add.1 and 2). In a series of communications addressed, during
1993-1994, to all States as well as to the competent organs and specialized
agencies of the United Nations system, including the international
financial institutions and the regional development banks, the Secretary-
General requested them to provide him, on a regular basis, with information
on action taken or contemplated by them to alleviate the special economic
problems of the affected States (see A/49/356, para. 10).
25. Pursuant to General Assembly resolution 49/21 A, entitled "Economic
assistance to States affected by the implementation of the Security Council
resolutions imposing sanctions against the Federal Republic of Yugoslavia
(Serbia and Montenegro)", a note verbale by the Secretary-General was
circulated on 9 May 1995 to Governments inviting them to submit information
on the matter. In addition, by a set of letters dated 16 May 1995, the
Under-Secretary-General for Economic and Social Information and Policy
Analysis requested, on behalf of the Secretary-General, the competent
organs, programmes and specialized agencies of the United Nations system,
including the international financial institutions, as well as the regional
organizations concerned, to furnish him updated information on the
activities undertaken by them in response to the relevant provisions of the
resolution. Substantive features of the replies are outlined below.
A. Information received from States
26. As of 1 September 1995, the Secretary-General had received replies to
the note verbale from seven States, namely, Belgium, Finland, France,
Germany, Italy, Luxembourg and the United Kingdom of Great Britain and
Northern Ireland. In addition, five affected countries, Bulgaria, Greece,
the Republic of Moldova, Romania and Ukraine, addressed, collectively or
individually, letters to the Secretary-General regarding the negative
impact of the sanctions on their economies, as indicated below.
1. Affected countries
27. In a letter dated 18 April 1995 (S/1995/313), the Permanent
Representative of Greece to the United Nations informed the Secretary-
General and the members of the Security Council that the Ministers for
Foreign Affairs of Bulgaria, Greece, the Republic of Moldova, Romania and
Ukraine had adopted, on 14 April 1995, in Athens, a joint statement, by
which they had agreed to undertake a collective demarche to the Secretary-
General and the Security Council addressing the issue of the negative
impact of the sanctions against the Federal Republic of Yugoslavia (Serbia
and Montenegro) both on the affected countries and on the region as a
whole. In the statement, the Ministers asserted, inter alia, that, by
virtue of the geographical situation of their countries, the sanctions
against the Federal Republic of Yugoslavia (Serbia and Montenegro) had
caused significant direct and indirect losses to their economies, and that
the burden of the sanctions was exceeding the reasonable point of economic
and social tolerance. Moreover, the implementation of the sanctions, in
their view, could have a considerable long-term negative impact on the
overall political, economic, security and social situation in the affected
third countries and the region as a whole.
28. In a letter dated 18 May 1995 (A/50/189-S/1995/412), the Permanent
Representatives of Bulgaria, Greece, the Republic of Moldova, Romania and
Ukraine to the United Nations, on behalf of their Ministers for Foreign
Affairs, transmitted to the Secretary-General a letter related to the
special economic problems of States directly affected by the implementation
of the Security Council resolutions imposing trade and economic sanctions
against the Federal Republic of Yugoslavia (Serbia and Montenegro). The
letter outlines a number of steps that should be taken, in their opinion,
as a matter of priority. These include: (a) speeding up the procedures
for processing the applications, as well as general enhancement of the
capabilities of the Sanctions Committee, with a view to treating most
expeditiously and on a priority basis the numerous submissions of the
affected States; (b) easing the access of companies from the interested
affected countries to orders by United Nations humanitarian organizations
for rendering humanitarian assistance to Bosnia and Herzegovina and the
Federal Republic of Yugoslavia (Serbia and Montenegro); (c) allocation of
additional financial resources in order to carry out long-term transport
infrastructure projects; (d) additional measures or special assistance
projects in the areas of telecommunications, energy, water supply,
environment etc.; (e) enhanced technical assistance and analytical support
of the international financial institutions for the objective estimate of
losses and their impact on the balance of payments and the national
economies of the affected countries; and (f) elaboration of a special
mechanism to address effectively and systematically the adverse effects of
sanctions on non-target States. With regard to points (c) and (d) above,
the letter proposes to convene a special meeting with the participation of
the relevant programmes and agencies of the United Nations system, the
major donor countries and the interested affected States.
29. Under cover of a letter of 27 June 1995 (A/50/259-S/1995/517), the
Permanent Representative of Ukraine to the United Nations transmitted to
the Secretary-General a letter dated 8 June 1995 from the President of
Ukraine concerning a number of proposals for alleviating the negative
impact on third countries of sanctions imposed by the Security Council
under Chapter VII of the Charter of the United Nations. The proposed
economic measures to be undertaken by the international community would
include: (a) opening special credit lines by international financial
institutions to render direct financial assistance to third countries to
support technical projects carried out in those countries; (b) introduction
by the donor countries, on a bilateral and multilateral basis, of trade
preferences for third countries, including promotion of their exports; and
(c) donor-country support, on a bilateral and multilateral basis, of
investments in the economies of third countries, special preference being
given to the sectors that sustain direct losses from the sanctions. In
addition, the letter draws attention to an urgent need for further
consideration at the United Nations of several other proposals, such as the
establishment of an effective mechanism based on Article 50 of the Charter
to solve special economic problems, which would include a voluntary
compensation fund; reduction of the affected countries' dues for financing
peace-keeping operations by the amount of losses incurred by those
countries as a result of the sanctions regime; and creation of a standing
sanctions committee of the Security Council.
2. Donor countries
30. On the other hand, the donor countries that replied to the
SecretaryGeneral's note verbale shared, in general, the concern about the
persisting special economic problems of States adversely affected by the
severance of their economic relations with the Federal Republic of
Yugoslavia (Serbia and Montenegro) and the disruption of traditional
transport and communications links in the region. While reaffirming their
strong commitment to the sanctions regime as an important instrument of
preventive diplomacy, most of these countries recognized, in principle, the
need to provide assistance to the affected States to mitigate the adverse
effects of the sanctions on their economies. In this connection, the
critical role of the international financial institutions, as well as the
special regional arrangements in support of the affected countries, was
highlighted and welcomed in several communications.
31. Some donor States (Belgium, France, Germany, Italy and the United
Kingdom) provided specific information on their financial and technical
assistance to the countries in question. Some other countries (Finland and
Luxembourg) stated that they had not taken any specific action to alleviate
the special economic problems of the affected States.
32. Belgium has focused its relevant bilateral assistance on the former
Yugoslav Republic of Macedonia. This includes technical assistance in the
amount of 15 million Belgian francs provided for border-crossing
development, as well as a package of 50 million Belgian francs as financial
support of the balance of payments, rendered by the Belgian Government in
the framework of the assistance plan of the European Union, adopted at the
Edimbourg Summit in December 1992.
33. France has been channelling its assistance to the affected countries
in the region through the PHARE (Pologne-Hongrie: Assistance a la
restructuration economique) programme, in order to ensure aid coordination
with its European Union partners. In accordance with the particular
concerns expressed by the affected countries at the relevant OSCE meetings,
these efforts have focused on infrastructure-development projects in the
countries with economies in transition. Since 1991, the budget of the
PHARE programme has been growing at an average annual rate of 5.5 per cent,
and, for 1995, will reach a total of 962 million European currency units
(ECUs) or 6.7 billion French francs. The French contribution to the
programme will amount to 1.3 billion French francs. At the same time,
France has continuously stressed the need to improve the functioning of the
Security Council Committee established pursuant to resolution 724 (1991)
concerning Yugoslavia through strengthening its secretariat and
streamlining its procedures to expedite its consideration of applications
for legitimate humanitarian assistance. These efforts would also
contribute to alleviating the economic difficulties of the affected States.
34. As a Danube riparian State, Germany has stated that it has also been
adversely affected by the economic sanctions against the Federal Republic
of Yugoslavia (Serbia and Montenegro). From 1990 to 1993, German exports
to the former Yugoslavia decreased from 8.2 billion deutsche marks to DM
4.7 billion, and its imports from this territory also dropped, from DM 7.3
billion to DM 4.8 billion. None the less, Germany has provided
comprehensive assistance to other countries economically affected by the
sanctions, in particular to the countries that border the Federal Republic
of Yugoslavia (Serbia and Montenegro). In the context of its technical
assistance to these countries, Germany has endeavoured to take into account
the effects of the sanctions by: (a) providing technical support for the
development of infrastructure (the most important example is the
construction of the railroad line between the former Yugoslav Republic of
Macedonia and Bulgaria); (b) organizing and hosting events to promote and
strengthen the export capacity of Bulgaria, the former Yugoslav Republic of
Macedonia and Hungary; (c) fostering the development of business contacts
(e.g., participation in trade fairs in Bulgaria and Romania); and (d)
promoting small and medium-sized enterprises (e.g., through seminars on
investment promotion, held recently in Albania and Hungary).
35. Germany has also reported aggregated data on its direct bilateral
assistance, in 1993-1994, to the following countries: Albania (DM 46.4
million), Bulgaria (DM 85.2 million), Croatia (DM 372.3 million), Hungary
(DM 1,179.8 million), Romania (DM 905.9 million) and the former Yugoslav
Republic of Macedonia (DM 95.2 million). In addition, the German share of
assistance provided by the European Union is 28 per cent. Accordingly, the
German contributions for the period 1990-1994 in this context are as
follows: DM 260.4 million for Albania, DM 548.8 million for Bulgaria, DM
935.1 million for Hungary (from 1989), DM 105.8 million for Slovenia, DM
712.8 million for Romania and DM 34.7 million for the former Yugoslav
Republic of Macedonia.
36. Italy has expanded its bilateral humanitarian relief programmes in
Bosnia and Herzegovina (in the amount of 5 billion lire), Croatia (3
billion lire), Slovenia (3 billion lire), the former Yugoslav Republic of
Macedonia (5 billion lire) and Ukraine (2 billion lire). As regards
economic assistance, Italy is the major bilateral donor for Albania in its
current cooperation programme focused on the rehabilitation of
infrastructure, agricultural development, development support and
restructuring of the health system. Since December 1994, the former
Yugoslav Republic of Macedonia has become a beneficiary under the
provisions of Law 49/87 on Italy's development cooperation; it is also
expected to receive balance-of-payments support on concessional terms.
Initiatives have been taken in Bosnia and Herzegovina to ensure assistance
in the reconstruction of war-damaged housing facilities and to provide
shelter for refugees. To facilitate trade, talks are under way with
Bulgaria to reopen two credit lines (each for $200 million) that were
frozen in March 1990.
37. In the framework of the European Union, Italy has contributed 1.8
billion lire to a fund to be utilized for a master plan of feasibility
studies for the East-West transport corridor between the Black Sea and the
Adriatic as an alternative to the ground and river routes via the Federal
Republic of Yugoslavia (Serbia and Montenegro). Other projects include the
starting up of a monitoring system of the traffic flow in central Europe
(at a cost of 2.8 billion lire), a training programme in commercial law
(3.7 billion lire) and a study for the creation of industrial areas in
Slovakia (initial contribution of 95 million lire).
38. The United Kingdom has provided detailed data on its assistance to
Albania, Bulgaria, Hungary, Romania, the former Yugoslav Republic of
Macedonia and Ukraine. At the bilateral level, budget allocations to the
Know-how Fund for 1995-1996 are as follows: L800,000 for Albania; L2.6
million for Bulgaria (in addition to L2.2 million in 1994-1995); L4.5
million for Hungary (L5.5 million in 1994-1995); L4.5 million for Romania
(L4 million in 1994-1995); L800,000 for the former Yugoslav Republic of
Macedonia; and L7 million for Ukraine (L5.5 million in 1994-1995).
Further, a total of more than L1 million has been allocated in 1994-1996
for scholarships to these six countries, and their aggregated share in
1994-1995 allocations for BBC World Service has amounted to L6.6 million.
Furthermore, British Council allocations comprise the following: L110,000
for Albania (1995-1996); L2.1 million for Bulgaria (1993-1994); L5.6
million for Hungary (1994-1995); L2.7 million for Romania (1994-1995);
L760,000 for the former Yugoslav Republic of Macedonia (1995-1996); and
more than L1 million for Ukraine (1995-1996).
39. At the multilateral level, the United Kingdom has been participating
in the assistance programmes of the European Union and operations of the
European Bank for Reconstruction and Development (EBRD), as well as in IMF
and World Bank lending to the affected countries. The United Kingdom's
share of 16 per cent accounts for its contribution to the PHARE programme
in the amount of 266.4 million ECUs (L224.5 million) committed for 1990-
1994 for Albania, Bulgaria, Hungary, Romania and the former Yugoslav
Republic of Macedonia, and 53.6 million ECUs (L44 million) allocated for
1995 for the same group of countries. In the case of Ukraine, the United
Kingdom's share (also 16 per cent) in the Technical Assistance for the
Commonwealth of Independent States (TACIS) programme totals L21.6 million
committed for 1991-1995, and the participation of the United Kingdom in EU
support for energy sector reform, food and medical supplies loan and
balance-of-payments assistance involves an additional 114.4 million ECUs.
B. Response of the United Nations system
40. As of 1 September 1995, updated information on the matter had been
provided by the Economic Commission for Europe (ECE), the United Nations
Conference on Trade and Development (UNCTAD) and the United Nations
Development Programme (UNDP), as well as by the World Bank and the
International Monetary Fund.
1. World Bank
41. The World Bank has initiated wide-ranging programmes of support to the
countries of central and eastern Europe that have been affected by the
implementation of sanctions against the Federal Republic of Yugoslavia
(Serbia and Montenegro). Assistance to the affected countries - whether
they formally invoked Article 50 of the Charter or not - is provided in a
variety of ways, including balance-of-payments support, project financing
and technical cooperation. In view of the appeals for special economic
assistance, these programmes have been reviewed, on a case-by-case basis,
to make them as responsive as possible to the particular needs of the
affected countries. For example, during the Consultative Group meetings
for Bulgaria and Romania of May 1993, as well as the 1994 Consultative
Group meetings for Albania and the former Yugoslav Republic of Macedonia,
the assessment of the cost of the sanctions to those countries was
discussed in the context of the need to mobilize additional financial
resources. Within the priorities of the investment programmes of the
affected countries, several projects have been redesigned to take into
account the need to upgrade and diversify alternate trading routes.
42. In Albania, the Bank has supported economic reforms with its Critical
Imports Project, which initially addressed the shortages and main supply-
side constraints, and later provided support for the stabilization of the
economy and stimulation of the supply response. To support the balance of
payments, a quick-disbursing operation for enterprise and financial-sector
adjustment is being implemented. The Bank is also supervising a transport
loan, which is mainly aimed at rehabilitating existing roads and should
contribute directly to the improvement of the East-West transport corridor
from Bulgaria to the Adriatic. This first transport sector investment will
be followed by a second road project to improve the East-West corridor, and
an operation to rehabilitate the port of Durres, Albania's principal port
of trade.
43. In Bosnia and Herzegovina, direct financial assistance from the Bank
will not be possible until the issues surrounding Bank membership have been
resolved. However, the Bank is working, together with EBRD, on a programme
of technical assistance and advisory services in planning for eventual
reconstruction and economic recovery of the country. This work is being
carried out with the support of resources from a small trust fund
established at the initiative of the Netherlands.
44. In Bulgaria, the current Bank strategy is to support market reforms,
restore external creditworthiness, define a comprehensive approach to
protect vulnerable groups, help create and maintain infrastructure and
foster a supply response by financing private investment. In this context,
the Bank reimbursed a portion of the upfront costs of the Debt and Debt
Service Reduction (DDSR) Agreement concluded with Bulgaria's commercial-
bank creditors in July 1994, by providing a DDSR loan of $125 million.
Bank support was part of a joint effort with IMF to replenish partially
Bulgaria's international reserves. Moreover, agreement has been reached
with the Government on a railway rehabilitation project (loan amount: $95
million), which would support the railway restructuring programme and
enable the railways to operate independently in a commercial manner.
45. In Croatia, the Bank's assistance began with the approval in June 1994
of a reconstruction project (loan amount: $128 million), which is
currently being implemented, supporting the Government's priorities in the
reconstruction of some war-damaged infrastructure (including roads and
railways), agricultural assets, housing and community facilities. A
highway project approved in April 1995 (loan amount: $80 million)
addresses the overdue rehabilitation and remaining reconstruction of roads.
The Bank has also been heavily involved in supporting the Government's
economic reforms: a health project supporting public-expenditure reform
was approved in February 1995 (loan amount: $40 million); a public
expenditures adjustment loan is in preparation; and an enterprise and
financial sector adjustment loan has recently been appraised.
46. In Hungary, the Bank has provided considerable balance-of-payments
support. In the transport sector, two investment projects are under
disbursement. Although not directly addressing the loss of markets, the
1993 Roads Project (loan amount: $90 million) focuses on improving the
efficiency of public expenditure on roads by supporting improvements in
management, programming and planning techniques, increasing the proportion
of works carried out by competitive bidding, and addressing the backlog of
roads needing rehabilitation. The 1989 Transport II Project (loan amount:
$95 million) was designed to reduce transport costs, increase system-wide
operational efficiency and raise foreignexchange earnings by providing
important infrastructure, increasing competition in transport markets and
upgrading transport technology. Some funding in these two projects may
still be reallocated for improvement of alternative border crossings.
47. In Romania, the Bank continues to provide balance-of-payments support
through adjustment lending. It has also been supervising a first
transportsector loan ($120 million), the principal objectives of which are
the rehabilitation and maintenance of roads. While not designed explicitly
to deal with the effects of the sanctions, the project seeks to ameliorate
traffic conditions in the East-West corridor that has experienced the
greatest increases in passenger and freight traffic. Under this sector
loan, the Bank stands ready to consider allocating resources to finance
appropriate subprojects with a strong national priority, including
addressing the problems caused by the sanctions.
48. In Slovenia, because of its relatively high per capita income, Bank
support has focused on a few high-priority activities. Slovenia had to
confront several challenges, including the need to establish fiscal and
monetary independence and the lack of access to parts of the former
Yugoslav market. Its adjustment to these challenges has been fairly
successful owing largely to the country's orientation to western markets.
A large part of Bank assistance aims, therefore, at supporting the
Government's efforts to complete economic reforms, through an enterprise
and financial sector adjustment loan ($80 million), which was approved in
July 1993.
49. In the former Yugoslav Republic of Macedonia, the Bank has been
heavily involved in supporting the Government's market-oriented reforms.
In its first operation, the Bank approved, in February 1994, an economic
recovery loan/credit ($80 million), half of which came from the
International Development Association (IDA) and which is now fully
disbursed. In April 1995, the Bank approved a $24 million transit
facilitation project, which would upgrade portions of the East-West
corridor, and improve the country's border crossings with Albania and
Bulgaria. In addition, two operations were approved by the Bank in May
1995 (all on soft IDA terms) in support of the Government's far-reaching
programme of reform in the enterprise, banking and social sectors. Such an
exceptionally high level of IDA resources was made available in recognition
of the country's special circumstances, including the adverse effects of
the sanctions. However, the first Consultative Group meeting organized by
the Bank in June 1994 did not succeed in mobilizing funds commensurate with
the country's urgent needs. It is important, therefore, that the second
Consultative Group meeting, planned for September 1995, evoke more
substantial financial support by the international community, especially
bilateral donors, to this small country, which is most seriously affected
by the sanctions.
2. International Monetary Fund
50. The Fund has continued to assist the affected countries through policy
advice, including assessment of the estimated impact of the sanctions and
the design of an appropriate policy response in the context of the
country's overall economic situation. 2/ The Fund has also helped those
countries prepare estimates of the financing requirements arising from the
application of the sanctions for presentation to donor and creditor groups.
51. By the beginning of 1995, all of the eight countries invoking
Article 50 of the Charter of the United Nations - Albania, Bulgaria,
Hungary, Romania, Slovakia, the former Yugoslav Republic of Macedonia,
Uganda and Ukraine - had made use of Fund resources during the period of
implementation of the sanctions, in support of programmes aimed at
addressing their balance-of-payments difficulties. In the second half of
1994, the Fund approved a new Stand-by Arrangement (SBA) and a second
purchase under the Systemic Transformation Facility (STF) for Slovakia
(total access: $264.3 million), a new annual arrangement under the
Enhanced Structural Adjustment Facility (ESAF) for Uganda ($176.8 million)
and a first STF purchase for Ukraine ($365.9 million). In the first half
of 1995, the Fund approved additional financial assistance, totalling $1.8
billion, for the former Yugoslav Republic of Macedonia and Ukraine, in each
case involving a new SBA and a second STF purchase. Two other affected
countries - Albania and Hungary - whose SBAs expired earlier this year, are
discussing new arrangements.
52. From May 1992 to June 1995, Fund disbursements to the eight affected
countries amounted to $2.3 billion, including drawings by Albania ($69
million), Bulgaria ($362.2 million), Hungary ($88.3 million), Romania
($381.7 million), Slovakia ($250.7 million), the former Yugoslav Republic
of Macedonia ($42.5 million), Uganda ($197.5 million) and Ukraine ($901.4
million). An additional $1.9 billion for six countries of the group -
Albania ($17 million), Romania ($117.5 million), Slovakia ($130.6 million),
the former Yugoslav Republic of Macedonia ($30.4 million), Uganda ($135.6
million) and Ukraine ($1.4 billion) - had been approved and could be
disbursed according to the timetable adopted under existing arrangements
when conditions are met.
53. In providing financial assistance to the affected countries, the Fund
has taken into account, inter alia, the strength of the country's economic
policies and factors affecting its balance of payments, including estimates
of the adverse effects of the sanctions. Relative to the member's quota,
access to Fund resources by most of the affected countries has been higher
than the average access provided to other countries. In many of those
cases, resources have been provided under the Fund's recently established
special facility, STF, largely in recognition of the longer-term, systemic
nature of the disruptions and particular difficulties related to the
transition to a market-based economy.
3. United Nations Development Programme
54. UNDP provided assistance to several affected countries (Albania,
Bulgaria, Romania, Slovakia and the former Yugoslav Republic of Macedonia)
in the preparation and verification of data related to the economic impact
of the application of the sanctions imposed on the Federal Republic of
Yugoslavia (Serbia and Montenegro). The consultant retained for the
purpose submitted a report dated 15 April 1994, and briefed the working
group (on Article 50) of the Security Council Committee established
pursuant to resolution 724 (1991), at its meeting on 22 July 1994, on the
main findings of his missions to the affected countries (see A/49/356,
paras. 64-66).
55. At the same time, UNDP has been proceeding with the implementation of
its respective regional and country programmes in the region. In addition,
UNDP has undertaken efforts to mobilize additional financial resources on
behalf of the affected countries. Starting in late 1993, UNDP received
from the Government of the United States of America several successive
contributions for a total of more than $5.7 million in support of improving
border-crossing facilities and procedures at selected locations in Albania,
Bulgaria, Romania and the former Yugoslav Republic of Macedonia.
56. This programme has been undertaken in the context of the OSCE/EU-
sponsored initiative to provide relief to critical customs/border
bottlenecks to commercial traffic around the territory of the Federal
Republic of Yugoslavia (Serbia and Montenegro) (see A/49/356, annex II).
It is executed by the United Nations Office for Project Services (UNOPS) in
close cooperation with the local UNDP representatives, Governments
concerned and other donors. The construction process is now being
completed at three locations: (a) Giurgiu/Ruse (Romania/Bulgaria); (b)
Deve Bair/Gyueshevo (the former Yugoslav Republic of Macedonia/Bulgaria);
and (c) Kafasan/Qafa e Thanes (the former Yugoslav Republic of
Macedonia/Albania). Additional construction work and studies are also
under way in Vidin (Bulgaria) and Calafat (Romania), as well as in Novo
Sello (the former Yugoslav Republic of Macedonia), and port Durres
(Albania).
57. It is noteworthy that Governments of all the affected countries have
made significant contributions from their own resources to complement and
expand the above-mentioned construction projects in their respective
countries. For example, Albania has made a cost-sharing contribution of
almost $600,000 to cover additional costs related to the construction of
the Qafa e Thanes border-crossing point. Therefore the UNDP Regional
Directorate for Europe and the Commonwealth of Independent States, in close
collaboration with the affected countries in the region, is actively
involved in efforts to mobilize additional internal and external resources
to further alleviate the negative effects of the sanctions.
4. United Nations Conference on Trade and Development
58. UNCTAD has been involved in several technical assistance programmes
with regard to countries affected by the implementation of sanctions
against the Federal Republic of Yugoslavia (Serbia and Montenegro), in
particular in the areas of trade facilitation and foreign-investment
promotion. Thus, UNCTAD's Automated System for Customs Data (ASYCUDA) is
being implemented in Hungary, Romania and Slovakia. Requests for the
installation of ASYCUDA have also been received from Albania, the former
Yugoslav Republic of Macedonia (likely project initiation in October 1995)
and Uganda (final negotiations currently under way).
59. Within the context of the UNCTAD-UNDP technical assistance programme,
the Albanian Centre for Foreign Investment Promotion (ACFIP) was provided
with various equipment. Financing was also provided for ACFIP staff to
participate in study tours and meetings concerning investment promotion,
foreign investment strategies, tourism and industrial development projects.
In addition, UNCTAD assisted ACFIP in developing a promotional brochure for
foreign investment in Albania.
5. Economic Commission for Europe
60. The ECE Inland Transport Committee, through its Principal Working
Party on Inland Water Transport, noted an urgent need for concrete action
to alleviate the difficulties experienced by Danubian and other countries
in the region as a result of sanctions against the Federal Republic of
Yugoslavia (Serbia and Montenegro). At its thirty-eighth session, in
November 1994, the Principal Working Party reiterated its request to the
Inland Transport Committee and ECE to take urgent measures with a view to
facilitating, to the extent possible, the transit via the territory of the
Federal Republic of Yugoslavia (Serbia and Montenegro) of vessels not
entering Yugoslav ports and thus reviving the freedom of navigation on the
Danube without hindering the sanctions regime (TRANS/SC.3/135, para. 4).
61. At its fifty-seventh session, in January 1995, the ECE Inland
Transport Committee shared the concern of its Principal Working Party with
regard to an extremely difficult situation in Danubian shipping as a result
of the sanctions, took note of the proposals made in that regard and asked
the Commission to come back to that question with a view to mitigating the
problem (ECE/TRANS/111, para. 90). Accordingly, the issue was brought to
the attention of ECE at its fiftieth session, in April 1995, in order to
consider the possibility of compensation for the losses and costs incurred
by the affected countries. However, the Commission did not consider the
issue since it was felt that the matter was outside the competence of ECE;
it was, indeed, taken up directly by the Security Council (see chap. II
above).
62. ECE is the executing agency for Pan-European Transport Networks, the
Trans-European Motorway (TEM) and Trans-European Railway (TER) projects, in
central and eastern European countries. As both projects cover several
countries affected by the sanctions, efforts have been made to ensure that
the TEM and TER projects provide road and rail infrastructures to bypass
the territory of the Federal Republic of Yugoslavia (Serbia and
Montenegro).
C. Follow-up to regional initiatives and assistance arrangements
63. During the Special Ad Hoc Meeting of Senior Officials, organized by
the Conference on Security and Cooperation in Europe (CSCE) at Vienna from
31 January to 1 February 1994, to identify international projects to assist
affected States in the region to better cope with the effects of the
sanctions against the Federal Republic of Yugoslavia (Serbia and
Montenegro) (see A/49/356, paras. 68-71), several parties, including the
European Union and its member States as well as the United States of
America, undertook to ensure a follow-up to a number of infrastructure
projects presented by neighbouring and other affected countries. To this
end, the contribution of the European Union has focused on the development
of the infrastructure network in the region, financed through the PHARE
budget, as well as coordination measures in the framework of the Group of
24 countries, especially its Transport Working Group, chaired by the
European Commission.
64. The European Union remains committed to support the development of the
transport infrastructure and especially the development of alternative
transit routes in the Balkan region. In the 1994 PHARE budget, some 100
million ECUs was committed (in addition to approximately 30 million ECUs
allocated in the 1992 and 1993 budgets) for the co-financing of short-term
projects in the region for the development/upgrading of the infrastructure,
border-crossing modernization and supply of customs control and
communication equipment. Thus, the Copenhagen co-financing scheme has
opened the way for the PHARE programme to fund major road rehabilitation
projects in Bulgaria (10.6 million ECUs), Hungary (15 million ECUs) and
Romania (22 million ECUs). Under the cross-border cooperation facility,
the PHARE activities also include a multi-country project for
infrastructure upgrading and border-crossing modernization in the Balkans
(12.3 million ECUs) and smaller-scale country projects for Albania (20
million ECUs), Bulgaria (10 million ECUs), Hungary (8 million ECUs) and
Romania (1 million ECUs). 3/ Implementation of most of these projects is
well under way and is expected to be finalized before the end of 1995.
65. In order to support the development of realistic priorities for the
longer-term development of infrastructure in the region, the Commission has
financed a number of pre-investment studies which are currently being
implemented. These include: (a) the Balkan Transportation Study, which
will develop a simplified transportation and planning model for the region
as well as carry out a preliminary analysis of the feasibility of the
development of a number of transport corridors; (b) a study on the
development of Danube navigability; and (c) a feasibility study for the
construction of a new Danube bridge between Romania and Bulgaria.
Moreover, PHARE co-financing of a limited number of major infrastructure
projects in the region for the period 1995-1999 is currently being
examined.
66. At a series of meetings held in the second half of 1994 and the first
half of 1995, the European Commission continued its efforts to integrate
the short-term priorities identified at Vienna into the ongoing activities
and longer-term projects included in the Trans-European Networks (TENs).
This concerns, in the first place, the functioning, since 1 June 1994, of
the two customs corridors in the Balkans that were originally established
as part of a wider initiative to improve transit to and from the Balkan
States most seriously affected by the sanctions against the Federal
Republic of Yugoslavia (Serbia and Montenegro). Eleven countries (Albania,
Austria, Bulgaria, Greece, Hungary, Romania, Slovakia, Slovenia, the former
Yugoslav Republic of Macedonia, Turkey and Ukraine) are currently involved
in the two customs corridors designed to relieve certain critical
bottlenecks and accelerate the transit of traffic through selected border-
crossing points in eastern and central Europe. 4/ To this end, efforts
have been focused simultaneously on the improvement of infrastructure at
the frontier posts, supply of necessary equipment to each border post
through a tendering process and simplification of customs procedures and
training of staff. A close link has been sought between these customs
corridors, the PHARE activities in this area and the transport corridors in
order to reduce the waiting time at borders. For example, a special
agricultural regime aimed at enabling the rapid transport of perishable
foodstuffs from the Balkan countries to markets in western Europe has been
established. As a result, the situation has improved, but further efforts
remain necessary.
67. The second area of particular concern is the development of transport
in the region. The follow-up of the CSCE Vienna meeting on infrastructure
was discussed during the general meetings of the Group of 24 Transport
Working Group, held at Brussels in September 1994 and January 1995, as well
as the regional joint meetings of the Group of 24 Transport and Customs
Working Groups, held at Sofia in December 1994 and at Bratislava in March
1995. Special attention should be drawn to the important developments and
challenges concerning the transport corridors as defined by the Pan-
European Conference of Ministers of Transport, held in Crete in March 1994,
and in particular those parts of the Balkans that are covered by corridor 4
(Prague-Budapest-Constanta/ Thessaloniki), corridor 5 (Trieste-Ljubljana-
Budapest-Bratislava-Uzhgorod-Lvov), corridor 7 (Danube), Corridor 8
(Durres-Tirana-Skopje-Sofia-Varna), and corridor 9 (Helsinki-Kiev/Moscow-
Odessa/Kishinev/Bucharest-Plovdiv). The discussions on these transport
corridors continue in the framework of various meetings intended to ensure
the technical and financial aspects of their effective functioning.
68. At its summit meeting in Essen in December 1994, the European Council
adopted a broad strategy for the preparation of accession by the associated
countries of central and eastern Europe (CEECs) to the European Union. The
key element of this pre-accession strategy is the preparation of the
associated countries for their integration into the European Union's
internal market as outlined in the European Commission's white paper on the
issue. The Council further stressed the importance of intraregional
cooperation between CEECs themselves and decided, in this context, that the
Commission should develop a multi-country programme to eliminate delays at
the borders, and that the programming should be done on the basis of an
indicative multi-annual budget. 5/ Accordingly, the Commission has reserved
a budget of approximately 90-95 million ECUs for 1995-1997 (including some
30 million ECUs on the 1995 budget) for the implementation in PHARE
countries of a "consolidated border-crossing programme (transit
facilitation)", which deals with further measures for modernization of the
infrastructure of border-crossing points on the major transit and customs
corridors and upgrading of customs procedures, including training of staff
and supply of equipment. The programme also provides for a coordination
mechanism within three regional areas, including the south region, where
most of the affected countries belong. It is envisaged that, by the end of
1995, all the preparatory studies and priority setting will have been
completed.
IV. CONCLUSIONS
69. In the context of its continued efforts to maximize the political
impact and to minimize the collateral damage of the sanctions imposed on
the Federal Republic of Yugoslavia (Serbia and Montenegro), the Security
Council has adopted a number of decisions that are particularly relevant to
mitigating the special economic problems of the neighbouring and other
affected countries. At the request of those countries, the Security
Council and its Committee established pursuant to resolution 724 (1991)
concerning Yugoslavia have authorized, as partial exemptions from the
sanctions regime and under exceptional circumstances, designated
transactions or services for specific commodities or products of crucial
importance to the neighbouring States as well as the safety of
international navigation on the Danube. Moreover, the new streamlined and
more transparent procedures adopted by the Committee should help reduce the
delays in its consideration of applications concerning humanitarian
assistance and should facilitate legitimate trade on the Danube. The
Committee will continue to consider further ways in which all deliveries of
humanitarian assistance, including those from the neighbouring and other
affected countries, can be expedited and will keep the question of
restrictions on trade on the Danube under close review.
70. In a series of communications addressed to the Secretary-General,
neighbouring and other affected countries in the region have asserted that,
owing to their geographical location and the structure of their economies,
they continue to experience special economic problems as a result of the
severance of their economic relations with the Federal Republic of
Yugoslavia (Serbia and Montenegro) and especially the disruption of
traditional transport and communications links in that part of Europe.
Although no updated estimates of the incurred losses and costs resulting
from the sanctions have been submitted by the affected countries, the heavy
burden of the sanctions and their adverse long-term impact on the overall
economic and social situation in those countries have been reaffirmed in
several communications. To mitigate the collateral damage caused by the
sanctions regime to their economies, the affected countries have addressed
the international community at large with a wide range of far-reaching and
specific proposals that deserve consideration as an urgent and important
matter.
71. Because of the small number of responses received by the Secretary-
General from the donor States, it is not possible to assess fully the level
of bilateral economic assistance provided to the affected countries; nor is
it possible in all cases to identify distinctly the amount of assistance
directly intended to address their special economic problems arising from
the implementation of the sanctions. A large part of the information
provided by the donor countries relates to their ongoing assistance
activities in support of the transition process in the affected countries
and does not indicate a supplement of funds to compensate for the losses
and costs incurred by the affected countries as a result of the sanctions.
Although many reported projects had not initially been intended as special
assistance measures directly aimed at mitigating the negative effects of
the sanctions, they should have yielded indirect positive impact on the
affected countries.
72. The World Bank and IMF, as well as relevant United Nations bodies and
organs (UNDP, UNCTAD and ECE), continue to implement, within their
respective mandates, existing facilities and available resources,
substantial programmes of financial and technical assistance in the
affected countries. In view of the renewed appeals for special economic
assistance, these programmes have been reviewed, as appropriate, in order
to make them as responsive as possible to the particular problems of the
countries concerned. In recognition of the adverse effects of the
sanctions on the balance of payments, IMF has undertaken efforts to ensure
that the affected countries, when eligible, receive higher than average
access to the Fund's resources and that their drawings be made on more
favourable terms. Within the priorities of the investment programmes in
the affected countries, the World Bank has contemplated, as warranted,
redesigning the relevant projects, reallocating funds under existing loans
and credits and expanding lending, taking into account sanctions-related
concerns. Most important, however, remains the need to mobilize new and
additional financial resources from all potential funding sources, in
particular bilateral donors and also the regional development banks, with a
view to mitigating, in an effective and timely manner, the adverse impact
of the sanctions regime.
73. The CSCE initiative to convene a special meeting at Vienna has
resulted in a viable approach towards supporting a number of infrastructure
projects in the affected countries and integrating them into a longer-term
regional perspective of transport, infrastructure and communications
development. The full and timely implementation of donor commitments
reached at the Vienna meeting is essential to help the affected States in
the region to cope with the disruption of transit traffic caused by the
sanctions. However, substantial additional resources are needed to carry
out longer-term transport and infrastructure projects. At the regional
level, the PHARE and TACIS programmes of the European Union will continue
to be crucial in unlocking funds for new projects to be implemented in
cooperation with other donors - notably EBRD and the European Investment
Bank - through studies, capital grants and, increasingly, direct
investment. At the bilateral level, continued financing by donor countries
of the improvement of border crossings in the priority corridors would be
beneficial to all countries in Europe whose goods and passengers are
transiting through these border crossings. Participation of international
financial institutions and private-sector involvement, through public-
private partnership arrangements, in such projects should be encouraged.
Moreover, serious consideration should be given to holding a follow-up
meeting to the meeting held at Vienna in early 1994, in order to ensure
that the affected countries continue to receive the support of the
international community in coping with the adverse effects of the sanctions
regime.
Notes
1/ The Committee's present mandate covers the arms embargo imposed by
the Security Council on the former Yugoslavia in paragraph 6 of resolution
713 (1991); the mandatory sanctions established by the Security Council
against the Federal Republic of Yugoslavia (Serbia and Montenegro) in
paragraphs 4 and 9 of resolution 757 (1992), paragraphs 9 to 11 of
resolution 787 (1992), and paragraphs 12 to 30 of resolution 820 (1993), as
amended by resolution 943 (1994); and the sanctions imposed by the Security
Council in paragraphs 7 to 18 of resolution 942 (1994) against those areas
of the Republic of Bosnia and Herzegovina under the control of Bosnian Serb
forces.
2/ An internal document entitled "Impact of implementing the United
Nations sanctions against the Federal Republic of Yugoslavia (Serbia and
Montenegro)" was submitted to the IMF Executive Board in December 1994.
3/ These projects relate to the following border stations: Qafa e
Thanes and Kakavia in Albania; Ruse, Vidin, Gyueshevo and Kulata in
Bulgaria; Nagylac, Redics and Artand in Hungary; and Calafat, Giurgiu,
Nadlac and Bors in Romania.
4/ At a meeting held at Thessaloniki, Greece, in March 1994, all the
countries and agencies concerned agreed to establish, subject to the
necessary infrastructure improvements and on the basis of the Customs
Convention on International Transport of Goods under the T.I.R. Carnet
(1975), two fast-lane customs corridors: first (north-south) customs
corridor: Austria-Nickelsdorf/ Hungary-Hegyeshalom, Slovenia-Dolga
Vas/Hungary-Redics, Hungary-Artand/RomaniaBors, Romania-Giurgiu/Bulgaria-
Ruse, Bulgaria-Kulata/Greece-Promachon, BulgariaKapitan Andreevo/Turkey-
Kapikule; second (west-east) customs corridor: AlbaniaDurres (port),
Albania-Qafa e Thanes/the former Yugoslav Republic of MacedoniaKafasan, the
former Yugoslav Republic of Macedonia-Deve Bair/Bulgaria-Gyueshevo. At the
third evaluation meeting, held at Bratislava in March 1995, it was agreed
to enlarge the first customs corridor by adding the following border-
crossing points: Hungary-Rajka/Slovakia-Rusovce and Hungary-
Zahony/Ukraine-Chop.
5/ The Essen Council also decided to increase the possibility of co-
financing major infrastructure projects from 15 to 25 per cent of the total
annual PHARE commitments. The follow-up discussions on the TACIS programme
have been going in the same direction.
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