Europe, Hungary and the Balkans

(zusammengestellt von Attila Pók, József Juhász, Zoltán Sz. Bíró, László Bíró, Sándor Miszlai, Attila Seres and Andrea Antal)

Hungary has the most favourable geographical positions as a potential mediator between the European Union and the Balkans. The route Brussels–Budapest–Belgrade–Bucharest–Byzantium is obvious. At present Hungary has the longest common border with the Balkans from among the Union member states. Historically evolved local knowledge, experiences and the potential bridge-building role of Hungarians living in the region also enhance the value of the dowry. The requirements of our European integration can well be combined with the demands of good-neighbourly relations and of protecting Hungarians set in the doctrine of Hungarian foreign policy more than one and a half decades ago.

However, the most important current element of Hungarian foreign policy is constituted by economic interests. The Balkan region represents that part of world economy where the Hungarian economy possesses relative advantages due to the country’s geographical position, historical experiences and heritage, and to its relative level of development. Problems and losses deriving from differences in bargaining power, interest asymmetries can never be fully eliminated from the relations of small countries and great powers. Though the economic potential of Romania among the Balkan countries, expressed in GDP, is precisely 30% bigger than that of Hungary, the latter one is undoubtedly in the first place in the Southeast European region in respect of foreign economic relations, in foreign trade and capital flow. Hence asymmetries in bargaining power do not cause a problem, and the effort of small countries to develop closer economic cooperation with other small countries of similar strength can be realised.

The possibilities of cooperation are well illustrated by the fact that seven decades ago, in the tense and hostile atmosphere of the 1930s, 12-15% of Hungarian exports were oriented to states of the Balkan region. As a result of four decades of friendly cooperation in the framework of CMEA and at the threshold of the system change this rate dropped to its half, to 6%. As a result of the system change and the process or European integration a return to the natural partnership relations can be clearly sensed. The Balkan region means the most rapidly growing, biggest sector of Hungarian foreign trade. In the first half of 2008 Romania already became the third or fourth most important partner with a 5% share in tie team with Austria. The share of Croatia was 1.8%, of Serbia 1.6%, of Slovenia 1.3%, and of Bulgaria 1.1%. All in all the Balkan states jointly reached their relative pre-war importance. More than half of the stock of capital, located abroad from Hungary, which was the largest in scale among the former socialist countries, can be found in the Balkan countries. The Balkan region is a more favourable field of cooperation for Hungarian small and medium enterprises participating in our foreign economic relations with little weight, and the ‘upgrading’ and preparation of the Balkan states is also in the interest of our foreign economy.

The dynamics and mass of economic relations clearly indicate that the Balkans is a field of eminent importance for our foreign political activity. Foreign politics can rely on economic interests and presence, at the same time it is also supposed to serve the deepening of economic cooperation in several ways. There are significant reserves for the development of relations in the exploration of the new channels and scenes of foreign relations. The strengthening of our foreign political presence is a first-rate national interest. In addition to interstate relations the significance of relations with local and provincial self-governments in the Balkan region as well as with big companies has been growing with exceptional speed. Companies with headquarters in Hungary operating in the region tend to concentrate on direct profit-making and do not always pay attention to the opportunities of modernising Hungarian structures, of improving competitiveness and the supply range. .The instruments of ‘small diplomacy’ are also being upgraded, such as the potential in the development of relations among cultural institutes, universities, sports and chambers. The success of our Balkan policy greatly depends on the standard of work of the Ministry of Foreign Affairs as a ‘conductor’ coordinating Hungarian presence and activities in the region as well as orienting, informing and encouraging Hungarian actors.

Participation in the solution of the specific problems of the Balkan region demands extraordinary foreign affairs skills. Local knowledge is a competitive advantage in the Balkans. The knowledge of the common European foundations and cultural heritage is not enough here to a successful foreign policy. We need well-trained Balkans experts who are perfectly aware of the local conditions, hence we need high-quality education in Balkans affairs and various forums where the actual state of affairs can be assessed. In a difficult world economic situation requirements of competitiveness and improving achievements would particularly grow. Today it is still possible to utilise the potential Hungarian comparative advantages hidden in cooperation with the region.

I. Russia and the Balkans: the Energy Dimension

It can be safely stated that with the exception of the issue of Kosovo there is no meaningful difference between Moscow’s Balkan and East-Central European policy. The two regions are equally significant for Russia primarily because of their transit roles, and due to the fact that they are not supposed to hinder the Russian suppliers in reaching the most important West European markets with their products, neither in terms of politics, nor in term of business or technology. This transit role has been prevalent for a long time in East-Central Europe, for the decisive majority of the high-capacity East-West oriented gas and oil pipelines (built in the Soviet period) goes through these countries. In this respect the Balkans is more of a promise or possibility for the time being.

However, the realisation of the ‘South Stream’ gas pipeline, the joint project of Gazprom and the Italian ENI will all of a sudden change this situation. In addition, as a result of the joint Russian–Italian statement made in mid-May, the parties wish to increase the originally planned capacity of 30-31 billion cubic metres per year to more than its double. A pipeline of a transfer capacity of 63 billion cubic metres, provided both its European branches are to be built, would significantly revaluate the Balkan region for Russia. The actual building of the pipeline, however, is still doubtful, while Moscow does everything to maintain the image that it is indeed ready and capable of realising this huge investment under certain conditions. If the ‘South Stream’ is to be built it would also mean that Russian capital export would significantly expand in the region. For the time being, however, the Balkans is just as important for Russia as a target of capital export as the East-Central European region. A large-scale investment into energy technology would create a new situation, also due to other related Russian acquisitions, which in theory may have political consequences as well. All this is nothing more than supposition for the time being. It is, however, sure that with the gradual fading of the Kosovo issue the South Stream project seems to be the only possible scenario for the ‘return’ of Moscow to the region. However, it does not mean that Russia needs this project because it wishes to return to the Balkans. It does not mean either that the capital export related to laying the pipeline would be necessarily accompanied by gaining political influence. It only means that an enhanced Russian economic presence in the region will open up the possibility of political expansion as well.

Several doubts and questions have emerged in relation to the viability of the South Stream project right from the outset. One thing has always seemed to be sure, namely that if there is a political will, Moscow would be capable of building the pipeline irrespective of the amount of related costs. The readiness of the Italian energy giant ENI further accelerated the process. However, the world economic crisis reached Russia as well and the foreign exchange reserves started to melt away drastically. The plan for building the South Stream was only implicitly included in the strategic development plan of the Board of Directors of Gazprom in 2008. The General Outline of the Development of the Russian Gas Sector (2008–2030) the final variant of which would be soon surveyed and approved by the government, deserves particular attention in several aspects. On the one hand, the West-Chinese Altai-pipeline (announced in 2006), so-called pipeline along the Caspian Sea is missing. On the other hand, only the Russian overland segment of the South Stream is involved in the document, but there is not a single word about the 900 km segment under the sea and about the European trajectory and the related Russian tasks. At the same time, he North Stream does figure in the development plan as something that has to be completed between 2011 and 2012. What is even more telling is that while Moscow is planning to build about 21 to 27 thousand kilometres of main pipelines between 2008 and 2030, the document only mentions two fields of significant gas reserves to be linked up to production and does not state anything definite in relation to possible gas fields that would supply for the South Stream. All this suggests that Moscow, sensing its financial difficulties as well as a fall in the European demand for gas and the possible rather moderate growth even in medium term, would concentrate only on the realisation of a single giga-project and that is the North Stream.

Moscow seems to postpone the final decision because it is not sure whether the South Stream would be necessary. There are several reasons underlying this notion. The first and perhaps most important reason is that the growth of European gas consumption presumed earlier is not at all certain. The Russian side tends to repeat that the EU’s demand for gas import will grow by minimum 100 billion cubic metres by 2020. This is, however, highly doubtful. The new energy policy concept of the EU published in November 2008 suggests that the demand for specific energy would be reduced, the proportion of renewable energy would be increased, and the internal energy resources of the EU would be better utilised. In fact the EU strives to keep the energy demand on the same level by 2020 and wants to achieve that the current demand for imported gas of EU Member States should only grow to a rather limited extent. (Today this demand is an annual net 290 billion cubic metres.) According to recent estimates, if the new energy concept is realised the EU would only need to import net 337 billion cubic metres of gas per year in 2020. The demand of the EU for imported gas might only grow by an annual 45 to 55 billion cubic metres or even less during the coming 11 to 12 years. In this case there is no need for all the pipelines that are currently on the agenda. In fact additional supply could be carried out by the North Stream with its delivery capacity of 27.5 billion cubic metres in two parallel pipelines.

Actually, Russia would be able to forward 207 billion cubic metres of gas per year through the three major operational lines towards Europe (through Belarus, Ukraine and Turkey) whereas the actually supplied quantities in 2007 and 2008 were almost 40 billion cubic metres less. The capacity of these overland systems could be further expanded by relatively modest investment. All this taken into consideration, it seems fairly obvious that Russian projects are partly politically motivated and reflect Moscow’s fears and negative experience acquired in relation to Poland and Ukraine. We must not forget that it is not only Russia who wishes to ‘cover’ the demand for imported gas of the EU Member States but other significant gas suppliers as well, such as Norway, Algeria and Nigeria. Russia will have to vigorously exert itself if it wants to preserve its positions as gas importer in Europe. In fact Moscow’s share in the total gas imports of the 27 EU Member States has been continuously decreasing compared to the early 1980s. As opposed to the 80% share it had in 1980, in 2007 is was only 41%. True, the extent of being ‘exposed’ is not evenly distributed among the Member States: while the share of non-Russian suppliers has significantly grown in the case of the West European states, the same cannot be said about the countries of East-Central Europe.

It is rather unlikely that Moscow would use the ‘energy weapon’ against the former satellite states, setting political expectations as conditions of supply. It is beyond doubt, however, that Russia attributes utmost significance to the extent of reliability of the countries of the region as reliable transit states. For Moscow the most important markets for energy supplies are not these countries but larger European states such as Germany, France and Italy. Russia has no chance to gain political influence in the former satellite countries, irrespective of the energy weapon, because of the lacking social support. This, however, does not apply for the CIS region. Consequently any business or technological conflict related to energy supply immediately acquires political colouring. As mistrust is continuous, strong and mutual, there is little chance that the parties, Moscow and Kiev would be ready and able to make compromises in respect of the Ukrainian route, though obviously this solution would be the cheapest.

The conflicting interests of Moscow and Kiev are difficult to overcome. The plan of the South Stream was partly invented by Moscow to exercise serious pressure on Kiev. It is gradually becoming obvious that the primary aim of Moscow is to ensure the safety of the transit route through Ukraine and it is ready to make financial sacrifices for this aim. If they cannot reach an acceptable compromise with Kiev, Moscow will certainly strive to realise the highly expensive South Stream project. (Recent estimates suggest that the 900 km-long segment in the sea bed alone would cost USD 10 billion, whereas the European overland segments, the northern and southern branches together would cost another USD 22 billion.) It is also quite probable that if this project is realised, the cost would be invoiced most probably to Ukraine and Eastern Europe in general and Kiev would sense the consequences in several ways. If the Ukrainian transit route was substituted by the North and South Streams, it would be a sensitive loss to Ukraine as about 17-18% of the state budget comes from transit fees. In fact Russia may sway Ukraine’s internal stability, and neither Europe, nor the United States will be in the position to offer effective protection to Kiev.

For Hungary the best solution would be the consolidation of the Ukrainian route. If it fails troubles of gas supply would be recurrent, or the irrationally expensive South Stream would be built. Hungarian foreign policy should not play for aggravating the Ukrainian–Russian relations but should strengthen those who understand and support the consolidation of the Ukrainian transit route as the best and cheapest solution - in a way that is acceptable both to Moscow and Kiev. We should also urge the building of pipelines of north-south orientation in the region, thus making our supply more reliable and flexible. Last, but not least our actions should be in line with the EU’s energy concept to reduce our import dependence.

II. Bosnia and Herzegovina

The two major issues of concern related to Bosnia and Herzegovina in 2009 are the following: what role would international forces take in the peace-keeping process in Bosnia, and to what extent would the internal democratisation and integration of the country progress (which is a basic precondition to its accession to the European Union). European integration is generally supported international and domestic political forces, but meeting the criteria of the EU is often confronted to the short-term domestic political interests of the country. Reliable international observers say that although several steps were taken in order to create a more unified state, tension among the various nations of Bosnia and Herzegovina has not been decreasing recently.

The transformation process taking place in Bosnia and Herzegovina shows that national identity is stronger and more decisive in politics in Eastern Europe to this day than any other affiliation. The transition to a multi-party system was also determined by the national conditions at the turn of the 1980s and 1990s. Asserting national interests took shape in the worst possible form and had led to war and ethnic cleansing.

The present structure of the state of Bosnia and Herzegovina was created by the peace talks closing the war. The Dayton Treaty maintained Bosnia by preserving the borders of the former member republic but divided it into two entities having broad autonomy. The Bosnian–Croat Federation was established on 51% of the total territory, and the Serb Republic (Republika Srpska, RS) on the remaining 49%. While the Dayton Treaty preserved the unity of the state (neither of the entities can secede from the state federation), it wanted to prevent earlier conflicts by granting large autonomy to both parts of the country. Both entities have their own constitution; they have presidents, parliaments, governments, armed forces, tax system and administration of justice. The Serb Republic has a unitary structure with a relatively high degree of administrative centralisation. The Federation consists of ten cantons, shaped basically along ethnic borders. It derives from the competencies of the individual entities that the social system is not uniform in the country, the economic space is divided, two tax systems have been established, and the introduction of laws aimed at the transformation of the economy has become more difficult.

It was laid down in the Dayton Treaties that the UN would appoint a High Representative in order to help organise the life of the country, and his office (OHR) was also set up. The High Representative was only given controlling and coordinating tasks in Dayton. After it became clear that a stronger international participation was necessary to achieve the objectives spelt out in the Treaty, the Peace Implementation Council, authorised the High Representative in its session held in Bonn in December 1997 to remove local politicians from their office who happen to hinder the Dayton process. In addition he can enact or alter legal regulation in his own competency in case local forces are unable to reach an agreement.

On 21 June 2003 it was decided by the Thessaloniki Summit of the EU dealing with the Western Balkans that all Balkan states were ‘potential candidates’ and the catching-up to the EU would begin within the framework of the Stabilisation and Association Agreements. On 25 November 2005 talks began on the Association Agreement in Sarajevo. The EU insisted on a democratic political system and on the respect of human rights. It spelt out directives that would strengthen the unity of the state and presuppose agreement between the entities. The most important preconditions were the following: more efficient governance (enhancing the authority of the central government), creating a uniform legal system and judiciary, fight against organised crime, a reform of customs and taxation in keeping with the recommendations, a coherent policy of external economy, the establishment of an integrated energy system, a telecommunications system covering the entire country, and cooperation with the International Court of Justice in The Hague. In March 2007 the EU Commission did not judge the preparedness of Bosnia as sufficient to signing the Stabilisation and Association Agreement and was of the view that political development slowed down in Bosnia. Yet, as in the case of Serbia, it decided for speeding up the negotiations of the agreement. The conditions of the EU were spelt out in the document entitled “European Partnership” in November 2007. The EU insists among others on 1) the reform of the police, 2) cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY), 3) the reform of public administration in the spirit of the strategy drawn up in 2006. The Stabilisation and Association Agreement was finally signed on 16 June 2008.

It is shown by the above passage that the international forces and the EU would like to see a public administration system that would cover the entire country. In this framework various reforms enhancing the functions of the uniform governmental organs have been initiated since 2000. The most important current advancement from the angle of the integration of the country is the ‘Prud Process’. On 8 November 2008, a few days after the EU had expounded that it was the growing vigour of national rhetoric sensed in political life that hindered the integration of Bosnia, the representatives of the three nations met in Prud and signed an accord. In that document they laid down their resoluteness to implement the reforms required by the EU. They agreed on the settlement of several issues. 1) They would introduce amendments of the constitution to coordinate it with the rulings of the European Human Rights and Political Freedom Rights Convention; they would enhance the efficiency of state institutions as well as the institutions of the so-called medium-level territorial administration. 2) They would settle the issue of state ownership. 3) A census would be taken in 2011 surveying the ethnic, linguistic and religious condition of the population. 4) The situation of Brčko would be settled by two-thirds majority. 5) The Parliament should pass a law on promoting the return of refugees and to help those who settled down elsewhere. Several rounds were held since November, without any particular result, and further conciliatory talks are expected in 2009.

The Bosnian political conditions are still determined primarily by national politics. A significant part of political forces does not consider the integration of the country necessary; they only support unifying reforms and giving larger competencies to the central government in order to acquire subsidies.. As far as the objectives of individual national groups is concerned, it is the Bosnian of the three big nations that insists most on the unity of Bosnia and Herzegovina, and basically wants to create a centralised state. The Serb community tries to enforce the conditions set in the Dayton Accords, primarily because the agreement guarantees the separate treatment of relatively homogenous areas in Bosnia. It cannot be excluded though that Serbs living on these territories want greater autonomy, even independence and closer relations with Serbia, but the Dayton Accords guarantee the survival of the Serb Republic. The Serbs try to slow down or hinder the efforts that would increase the competencies of central authorities (police reform, transformation of the army), and support endeavours aimed at the survival of individual entities. In June 2009 they passed a parliamentary resolution stating that they would not support constitutional amendments that are aimed at taking away competencies from the Serb Republic and transfer them to the competency of the republic. The Croat is the smallest community in Bosnia and Herzegovina. Most of them have Croatian citizenship which makes it possible for them to travel in Europe without visas, and many people work or study in Croatia. Significant economic advantages ensue from dual citizenship: they may have bigger salaries and access to better social services in Croatia than at home. The leading Croat party, the Croat Democratic Community (HDZ) strives to create an entity of their own which had various manifestations during the past years.

Bosnia and Herzegovina is still a ‘captive’ of the Dayton settlement. The Dayton principles, namely that Bosnia and Herzegovina would remain a united state and no territorial changes would take place are still valid for the great powers. In late 1995 the accord terminated a war situation; its major aim was to stop armed conflicts and to create peace among the various nations. The peace itself, however, did not automatically bring along a functioning state structure, and it was extremely costly. The international forces did not expect to be present in the region for such a long time. For the time being the international forces seem to stay on in Bosnia as long as they feel that the operation of the united state is at risk and the fight among ethnic groups would once again flare up if they pulled out. Since 2003 the EU has intended to enhance the stabilisation of the region by the perspective of European integration. Nevertheless, the precondition of accession is to develop an efficient state structure and a functioning economic system. As opposed to earlier notions the European Union is not taking over full responsibility for the peace-keeping process in Bosnia and Herzegovina for the time being, and the OHR is not going to be transformed into EUSR as yet. The Stabilisation and Association Agreement, signed last year, may mean yet another step towards the accession of Bosnia to the Union even though an ‘enlargement fatigue’ can be experienced inside the EU.

The EU and the great powers outside Europe try to create a well-functioning united state. In this framework they strive to 1) reduce the significance of the nationality factor in political life and 2) to enhance the competencies of the central authorities of public administration in the course of constitutional reforms. Fulfilling these tasks is extremely difficult because it presupposes a mutual trust among the nations involved and it is often confronted with the particular interests of local forces. Hungary, as a member of the European Union is supposed to support the accession of Bosnia and Herzegovina to the Union and the EU also expects Hungary to take up an active role in the reconstruction and consolidation process. This, however, knowing the difficulties of local conciliations and conditions, requires a highly enduring, patient and well organised work.

III. Kosovo

The process of Kosovo becoming independent was irreversible. Though Serbia had accomplished some diplomatic successes in the first half of 2008 and managed to slow down the admission of Kosovo into international organisations, the only gain seemed to be the reduction of Serbia’s sense of loss and a kind of emotional and moral gratification, which strengthened Belgrade’s bargaining position with the northern Serb-majority enclave, with Bosnia and Herzegovina and in the Serb–Western set of relations. In relation to Kosovo, however, the question has not really been independence for a long time but rather the issue of whether Kosovo would be a failure as a state or not. Whether the process of state building which started under international command in the former Serbian province would lead, in a foreseeable time, to a political system capable of operating on its own, respecting certain minimum norms of democracy and minority protection, and whether it would lead to an economic system released from the criminal envelope.

Many people are sceptical about it, and not without reason, because the balance of the period since the declaration of independence is rather ambiguous. As far as the institutional sphere of state-building is concerned (constitution, legislation, the development of public administration) Kosovo has been performing acceptably, but in respect of halting corruption and protecting minorities it has not, whereas it is on the ‘respiratory machine’ of external aids from economic and social aspects. The process of the acknowledgement of the state has been slow (so far 60 countries have acknowledged it), and the international community seems to be divided in this issue. It is certainly not in favour of Kosovo’s development. At the same time all relevant Western powers and all neighbours (except for Serbia) have acknowledged Kosovo, and the majority of those who deny it are more or less uninterested in the issue of Kosovo (the only exception being Russia). Therefore, although the ‘introduction’ of Kosovo into the set of international relations has been slow, it is an process that can be implemented.

All in all, if there is a constant Western will to carry through the political process and grant the indispensable financial and economic assistance even amidst the world economic crisis, Kosovo’s chances for consolidation are not any worse than those of any other state in the region. Moreover, it has one great advantage compared to Bosnia and Herzegovina, Macedonia, and to some extent to Montenegro: in the eyes of 90% of the population this new state is legitimate. International presence continues to be necessary and surely this will be the case even after 2010. By now the EULEX has been deployed, but the UNMIK is also present (partly because its function survives and partly because there is no way of modifying Resolution 1244 of the UN Security Council because of Russian opposition) as well as KFOR.

As far as the minority issues and the creation of a ‘uniform, multi-ethnic state’ are concerned, the May reports of the Minority Rights Group International and of the Amnesty International are warning that neither the Kosovo authorities nor the present international institutions can ensure the effective protection of minorities, which aggravates the situation of smaller ethnic groups and encourages them to leave the country. According to the reports they are exposed to political, social and economic exclusion, their right to free movement is often violated, their access to information (in their mother tongue) is limited, and their segregation continues. The deepening gap between the Albanian and Serb communities is a particularly grave problem. The vicinity of Northern Mitrovica practically lives a separate life, integrating into the economic, infrastructural and political structure of Serbia, not having contacts with the set of institutions of Kosovo. If the de facto division continues the Serbs living in this northern (Serb majority) part of Kosovo would be increasingly endangered and they constitute about half of the 100-120 thousand Serbs living in Kosovo.

Serb–Albanian (or Serb–international) skirmishes are almost continuous (most recently because of the reconstruction of Albanian real estates in North Mitrovica and problems of electrical energy supply in Eastern Kosovo), but serious violent acts could be successfully avoided so far. At the same time a solution is not yet accessible, and attention should be focused on keeping conflict under control and at low intensity in the near future. The government of Pristina implements decentralisation slowly, the local population is afraid of re-integration, and the Belgrade government is interested in keeping up a ‘controlled core of crises’. In the short run one should count with the survival of the de facto partition, but Belgrade is not even interested in the de jure partition because that would mean the acknowledgement of the secession of Kosovo and giving up the entire territory of the ‘southern province’. Pristina does not want to hear about partition and it is also rejected by NATO and the EU, fearing that official talks on the partition would provoke the attacks of Albanians against Serbs living in diasporas and it would whip up emotions among Albanians living beyond the borders of Kosovo (in the Presevo Valley and in Western Macedonia), whereas the remaining Albanians in the northern regions would have to flee – not to mention the precedent value of the affair.

Regarding the economy of Kosovo, one should set out from the fact that this was the most backward part of the former Yugoslav province. The structure had been integrated into the economy of Serbia, which would cause significant losses of income to the new state as a result of the fact that trade between Serbia and Kosovo would presumably drop to the minimum while Serbia was one of the most important foreign trade partners of Kosovo. The industrial branch of the economy is almost totally missing, and it is mostly agriculture that means some kind of official source of livelihood. About 53% of the territory of Kosovo (5743 km²⁾ is cultivated land. In 2005 the number of people earning their living in the agricultural branch was more than 1.34 million. At the same time the major source of income continues to be the operation of illegal structures (smuggling of cigarettes and fuel). The incomes of guest workers (transferred or brought back in cash) are also a significant revenue source for Kosovo which, according to UN estimates, may reach even one sixth of the GDP. The widespread corruption network also makes the stabilisation of the economy difficult. It is worth mentioning that the mineral resources of Kosovo are significant even from a European angle, at the same time the capacity of the processing industry is underdeveloped, since raw materials had been utilised by the Serbian economy so far. Although there are significant reserves in the mining sector (including nickel, zinc, tin and lead as well as silver, lignite and coal), many of the mines have not been operating for one or two decades, the machinery is outdated and their renewal would require significant investment resources.

According to the estimates of the UN Development Programme various goods were imported to Kosovo to the value of 1.2 billion Euros in 2007, and exports made up only 100 million Euros, half of which was constituted by the most exportable branch of the country which is the trade of junk cars. The UNMIK, however, prohibited the import of cars older than eight years to the country from January 2006, with reference to traffic safety regulations and the protection of the citizens of Kosovo, resulting in the decline of the business. Therefore the import of scrap iron is gradually replaced by recycling. According to international assessments about 52% of the population of Kosovo is below the age of 26, and a significant part of the population is illiterate. Unemployment reaches 50%. This proportion, however, is even higher among those belonging to the minority; untrained labour, the young ones and women, and can reach even 80% in some villages. It can be seen from the surveys of UNDP–USAID that unemployment and poverty represent a significant problem that may lead to serious social tension in the near future. Kosovo depends on foreign aid to a great extent. The total amount of foreign support is decreasing each year and presumably it has significantly contributed to the stagnation and recession of the country’s economy.

From the point of view of Hungary the independent Kosovo is a new, for the time being less significant economic partner offering only potential possibilities. It is certainly worth building bilateral relations with Kosovo, but Hungary should try to avoid irritating Serbia unnecessarily, since Serbia is a more important economic partner of the country than Kosovo, not to mention aspects of security policy and minority issues. At the same time the one-year V4 period beginning on 1 July 2009 as well as the Union presidency of Hungary starting from 1 January next year will bring lots of tasks for Budapest in terms of crisis management in the Western Balkans and in Kosovo in particular. Hungary should simultaneously mediate the interests of the region towards the West, and should make the governments and the political elites of the region aware that Euro-Atlantic integration is primarily in their own national interest. In addition, taking up roles in the international missions in Kosovo is also important for Hungary because it offers one of the ‘easiest and cheapest’ opportunities to perform some of our alliance obligations and to compensate for some of our unfulfilled commitments.

IV. Serbia

The present political map of Serbia evolved after the parliamentary elections held on 11 May 2008. The pro-West Democratic Party (DS), headed at that time by Head of State Boris Tadić and its allies had a surprising victory over the nationalist Radical Party (SRS): they could acquire 102 mandates out of the 250 as against the 78 mandates of the SRS, and could form the government with the support of some smaller parties. The new government is a true ‘rainbow coalition’, including representatives of the former Socialist Party of Milošević and the Hungarian Alliance of Vojvodina (VMSZ) as an outside supporter. The output of the government so far has been rather rhapsodic from the angle of the EU but it is not unacceptable. The arrest and extradition of Radovan Karadžić to the International Court of Justice in the Hague was a significant step forward, economic crisis was moderated, and they have been campaigning against the independence of Kosovo in an internationally more or less tolerable manner. On the other hand, legislation is rather slow, two people accused by the International Court are still at large (Ratko Mladić and Goran Hadžić), and the implementation of a series of election promises is being delayed (like the acceptance of the new statute of Vojvodina). All in all it can be stated that President Tadić and the government headed by Mirko Cvetković are worthy of the trust of the Euro-Atlantic community, though not unconditionally.

The international position of the country may be regarded as stable. The government still considers EU membership as the major strategic objective of Serbia, which is accompanied by the intention of ‘defending’ Kosovo and a foreign policy using the rhetoric of neutrality (Serbia is a member of the Partnership for Peace Programme, but NATO membership is not an officially declared objective). These strategic directions meet the preferences of public opinion and the majority of parties. Naturally EU membership is not envisaged in the near future, but the approximation to the Union is a real possibility which may be accelerated by visa liberalisation and the most recent relatively positive report of The Hague Chief Prosecutor Serge Brammertz (issued on 4 June 2009). Approximation to the Union would be further speeded up by the arrest and extradition of Ratko Mladić. The relationship with Russia is still among the Serbian political priorities. In addition to pragmatic considerations concerning the energy supply this commitment is also indicated by the newly signed Russian–Serbian–Bulgarian–Greek accord on the building of the South Stream (15 May, Sochi). At the same time the danger of Serbia’s pro-Russian reorientation has significantly decreased last year, as Moscow suffered a serious loss of prestige because it was unable to force out a decision on Kosovo that could be acceptable by Serbia. The visit of American Vice-President Joe Biden to Belgrade on 20 May could mean a truly ‘new beginning’ in the Serbian–American relations, as it was for the first time after six years that a high-ranking American leader visited the Serbian capital. Washington’s role in the secession of Kosovo would probably burden the US-Serbia relations for a while but Serbia is economically interested in maintaining the good intentions of America therefore it is ready to rebuild a certain degree of pragmatic cooperation. Belgrade’s regional policy has also become more predictable and ‘acceptable’ after the change in May 2008. They keep their campaign against Kosovo’s independence within a diplomatic framework and have not exceeded the permissible limits in supporting the Bosnian Republika Srpska either.

We may assume that Serbia is also stable economically today. Although the international financial crisis reached the country in October 2008, loan agreements concluded with the IMF have stabilised the financial sector. Macro-economic indicators and the exchange rate of the Dinar have fallen only to a small extent. As a compensation for the IMF loan Belgrade has undertaken to restrict budgetary expenditure, freezing the wages of public employees and pensions and halting new recruitment in the public sphere. The danger of a deepening crisis and its escalation into a political crisis is still there.

The acknowledgement of Kosovo’s independence by Hungary has temporarily damaged Hungarian–Serbian relations but the mutual visits of foreign ministers and the Hungarian Prime Minister’s visit to Belgrade (21 November 2008) have dissolved tension. Today neither of the parties wishes to let bilateral relations be poisoned by the different assessment of Kosovo’s independence, and there is no other political conflict between the two states. There are open questions, mostly in minority issues and the necessary political will to their management is not always available, but they are rather unlikely to accumulate into serious interstate conflicts. It is in favour of the development of bilateral relations that both parties consider mutual relations as of outstanding significance. On the Serbian side interest is primarily based on the fact that they consider Hungary as a gate into Europe. However, Hungary is not so high on the agenda of Serbian foreign strategy and the image of Hungary in Serbian public opinion and in the eyes of the political elite is not always positive. This is partly due to historical reasons and partly to current affairs, and it is not easy to change.

The Hungarian–Serbian economic relations may be regarded as moderately intensive. There are about five hundred Hungarian investors in Serbia (mostly small and medium enterprises, but also major companies like MOL and the OTP), representing 1.5% of the total Hungarian working capital investment abroad. This lags behind the potential level of economic cooperation and Hungary’s contacts with other neighbouring countries (Romania, Croatia or Bulgaria), but the enhanced transformation of the Serbian economy may improve relations in this respect. Serbia is one of the priority target countries of the Hungarian international development programmes and this contact may also strengthen economic cooperation.

From a Hungarian angle the issue of anti-Hungarian incidents is regarded as a critical factor in bilateral relations. The issue of Vojvodina’s autonomy was halted by the postponement of voting on the statute and the autonomy of Hungarians (figuring in the programmes of Hungarian parties in Vojvodina) is not a realistic alternative. A currently emerged perspective proposed by the governing Democratic Party is to fit the issue into the process of regionalisation: accordingly Vojvodina would be one of the seven regions of Serbia besides Belgrade, Kosovo, West-, East-, Central-, and South Serbia.

At present the acknowledgement of Kosovo’s independence is not regarded as a precondition of Serbian–Western relations. The Serbian political elite and public opinion (with the exception of the small Liberal Democratic Party) will certainly not be able to acknowledge it for a very long time. The loss of Kosovo is the latest wound and also the top of those national defeats suffered by Serbs during the past more than one and a half decades. Hence nationalism overwrites practically everything in Serbian politics, and the (more) democratic and pro-Western actors of the political scene must not be burdened with tasks impossible to implement. Acknowledgement is not even necessary on the present level of relations, and in the next phases of progress ahead. What can and should be expected of Belgrade is to respect certain rules of the game and to keep protests and lobbying against the independence of Kosovo within a diplomatic framework. They more or less comply with this expectation since May 2008. It might not even be a precondition of the future EU membership of Serbia if the Union Member States so far denying acknowledgement (Spain, Greece, Romania, Slovakia, Cyprus) keep up their refusal up to that moment. Hence currently Serbia can use the phrase “both Europe and Kosovo”, but it is not interested in provoking a situation of “neither Europe nor Kosovo”, i.e. to lose the possibility of integration into the Union because of stubbornness demonstrated in the issue of Kosovo, which the present government is trying to avoid.

Hungary’s coming presidency of the V4 (2009–2010) and of the EU (2010–2011) make the implementation of an active Western Balkan policy a prominent international task. It means the management of the policy of the European Union and the Visegrad Group in the region and also the task of making our Western partners aware of the danger of decreasing international attention in the region. This trend could be well observed in the past one year and it could becom highly dangerous if the states concerned are left alone at the time of economic crisis).

Despite financial problems the Western Balkans have to be kept among the priorities of Hungarian foreign relations. It is worth emphasizing, however, that the most important state of the region for Hungary is Serbia (naturally besides Croatia). Therefore it is expedient to concentrate our foreign activities and resources to these (two) relations. Hungary should remain one of the ‘European lobbyists’ of Serbia. In this spirit visa liberalisation should be supported, together with an early enactment of the Transitory Commercial Treaty and the full Stabilisation and Association Agreement. Hungary should also support the Serbian efforts towards reaching candidate status for Serbia and enhance the country’s cooperation with NATO. On the other hand, Budapest should mediate certain expectations towards Belgrade and make efforts to drive home the point in the Serbian government and political elite that Euro-Atlantic integration is in their primary national interest. In addition Hungary has to raise the issue of Hungarians in the Vojvodina openly in bilateral relations. It is an interest of the Hungarian state and nation that the Serbian processes of transformation should accelerate the respect of minority rights The issue of dual citizenship is primarily a domestic political issue in Hungary. It should, however, be expected that the current rhetorical openness of Serbian politics may change towards the dual citizenship of Hungarians in Vojvodina if the issue obtains practical significance.

V. The situation of the Turkish Minority in Bulgaria

The continuous monitoring of the situation of the Turkish minority in Bulgaria, the analysis and assessment of the political self-organisation of Bulgarian Turks, their social integration and economic mobility may offer several lessons to Hungarian national policy.

On 7 June 2009 at the European Parliamentary elections in Bulgaria the party of the Bulgarian Turkish minority (constituting about 10% of the population), the Movement for Rights and Freedom (DPS) could obtain 14.21% of the votes and delegate three MEPs to the Parliament due to the fact that the voters of Turkish nationality went to the polls in a far greater proportion than the national average. Though this result is somewhat overshadowed by the fact that the anti-minority, EU-sceptic radical rightwing grouping, the Ataka (Attack) can also send two delegates to Brussels, the success accomplished at the EP-elections in Bulgaria indicates the conspicuous political and social weight of the Turkish minority. Moreover, the Turkish minority has been a governmental factor in governments of various political hues after the system change, most recently as member of the socialist–liberal oriented three-party coalition formed in 2005 (Coalition for Bulgaria).

According to the census of 2001 the number of people belonging to the Turkish minority was above 800 thousand which meant approximately 9.5% of the then population of the country. Despite the fact that in the wake of the system change in Bulgaria about 300 thousand citizens of Turkish nationality left the territory of the country, by the early 2000s their proportion in the population did not fall significantly. This is partly due to the fact that more than one third of emigrants, about 120 thousand people could return to their homeland now as dual Bulgarian–Turkish citizens in the 1990s. On the other hand, the birth rates of the Turkish majority have been traditionally higher than the trends observable in the majority Bulgarian society.

At the conference on “Political, Social, Economic and Cultural Elites in the States of Central and Eastern Europe in the 19th and 20th Centuries” organised by the Hungarian–Bulgarian Joint Academic Committee of Historians and the Centre of Balkan Studies at the Institute of History of the Hungarian Academy of Sciences on 24–15 May 2009, three presentations dealt with the situation of the Turkish minority, offering several lessons for Hungary. It was revealed that the changes of economic and social conditions and the tendencies to be observed in the labour market exercise a strong influence even on the situation of the Turkish minority. During the period between the 1992 and 2001 the population of the northern and southern ethnic blocs decreased. Emigration of the Turkish population was particularly marked from the southern obstinas of the country considered as the most backward region. In the north the ethnic border of the Turkish group is gradually moving towards the vicinity of Varna, the so-called northern seacoast, where entrepreneurs of Turkish nationality have been implementing significant investments in the servicing industry related to tourism. The residents of the southern bloc on the other hand rather move in the direction of the big cities of Sofia and Plovdiv having significant industries.

The relative success of the radical right-wing political party operating with extremely anti-minority slogans is worrying but it does not offer a solution for the economic problems that can be increasingly sensed as a result of the global economic crisis or for social and ethnic tensions that have accumulated since the system change, nor for the increasingly ominous demographic crisis. Even the Bulgarian political public opinion is increasingly being inclined to integrate the Turkish entity more organically into the set of social institutions by ensuring certain legal preferences. The slowly emerging imbalance of ethnic relations, the constantly growing demographic pressure of the Turkish and Roma population encourage soberly thinking politicians to win over at least one of the two communities for the majority society, and the Turkish minority seems to be more suitable for this role because of its intellectual and economic strength respecting the basic norms of social coexistence.

VI. The Greek–Macedonian Naming Dispute

The Greek–Macedonian dispute over the name of the latter has been one of the decisive sources of tension on the Western Balkans since the declaration of Macedonia’s independence in 1991. According to Greece the heritage of the Classical Macedonian Kingdom is exclusively that of Greece and the northern neighbour has no right to use the word ‘Macedonia’ in any form (Macedonian Republic). The name Macedonia, as the Greeks say, expresses territorial claims for the Macedonian region of Greece. Thus, Macedonia could become a member of international organisations only under the temporary name ‘the Former Yugoslav Republic of Macedonia’ (FYROM) as a result of pressure by Greece, and changed its constitution as well as national flag in 1995, but it refuses to give up its name. Greece, in order to force Macedonia to change its name, vetoed the admission of the country to NATO in April 2008, and has been blocking the beginning of accession talks with the EU for three years already.

The dispute over the name has reached a turning point in 2009. Macedonia has met those criteria that are necessary to NATO membership and to the beginning of accession talks with the EU. The overwhelming majority of the population of Macedonia supports Euro-Atlantic integration, regarded as priority by all the actors of Macedonian politics. If, however, there is once again no progress made in the talks reopened in later June under the direction of UN Special Mediator Matthew Nimitz and integration would suffer further delay, one should seriously fear the growing strength of scepticism towards NATO and the EU in Macedonia. Parallel to it the loyalty to Macedonia of the Albanian population would further decrease. The Albanian political leaders tend to state over and over again that they refuse to endanger the national interests of Albanians by a dispute over name. The governing Albanian party, the Democratic Union for Integration (DUI) gave a time limit to its coalition partner, the rightwing Internal Macedonian Revolutionary Organisation–Democratic Party of Macedonian Unity (VMRO–DPMNE) up to the end of 2009 to reach an agreement with Athens so that the country could move ahead in Euro-Atlantic integration.

Tension related to the naming dispute has been growing also between VMRO–DPMNE and the biggest opposition party, the Macedonian Social Democratic Alliance (SDSM). While the VMRO–DPMNE, winning outstanding victory in the May presidential elections with its anti-Athens rhetoric is apparently not inclined towards compromise, the SDSM would be ready for compromises with Greece. The position of the Macedonian leadership is also weakened by the fact that it had lost its most important foreign supporter with American President Bush leaving office. Presumably it cannot hope for a similar support from the new American President since as Senator Barack Obama played an active role in the assertion of Greek interests and gave his name to the resolution condemning Macedonia in 2007. The pressure on the position of the Macedonian leadership is naturally also sensed by Athens: they seem to look forward to the continuation of talks on the naming dispute and does not feel the need of finding a compromise.

As it is laid down in the Hungarian External Relation Strategy (passed in February 2008), the long-term stabilisation of the Western Balkans, hence the Euro-Atlantic integration of Macedonia is a basic interest of Hungary. Hungarian foreign policy has represented it right from the outset, and has repeatedly ensured its support to the accession efforts of Macedonia. This is why it was surprising that Hungary joined that group of countries at the NATO Summit last year in Bucharest that undertook solidarity with Greece and supported the stand according to which accession would only be possible after the settlement of the naming dispute. After this unfortunate intermezzo the former direction of Hungarian foreign policy supporting the fastest possible integration should now be resumed. In addition bilateral relations should be developed and both parties should be encouraged to find a compromise solution for the name dispute as soon as possible. Athens should be reminded that it obliged itself in the so-called Temporary Agreement signed in 1995 under the aegis of the UN not to hinder the admission of Macedonia to international organisations. Whereas Skopje should refrain from steps hurting Greek sensitivities and avoid provocations, such as the planned erection of the statue of Alexander the Great in Skopje. Further on, the acceptance of the transport proposal based on the recommendations of the International Crisis Group should be pressed for sent by the Macedonian Foreign Minister to his Greek colleague in March. It contained the proposal for a joint declaration on good-neighbourly relations, for holding bilateral political consultations and for setting up a joint committee to clarify the disputed issues of the common past. Hungary could offer practical experiences in the implementation of these objectives.

VII. General Conclusions for Hungary’s Balkan Policy and the Main Tasks
of Further Research

Taking the possible sources of conflict and burning issues of the Balkan region into account, several conclusions can be drawn with regard to Hungarian interests. First of all, it is well-founded and expedient to continuously support the Euro-Atlantic integration of all the states of the region without preferences, but timing is very important for our diplomatic steps. The presence of international forces is an indispensable precondition to the preservation of peace, though their concerns about expenses and their wish for decreasing their role is justified. The world economic crisis has strongly hit the Balkans, and in addition to the national and minority conflicts a series of political and social crises are to be expected. The majority politicians of the region have major aversion towards the idea of autonomy, therefore the international control of the respect of human rights and minority rights should be put into the frontline. Developments of domestic politics in Serbia are promising and point towards consolidation, and even Kosovo has a chance for consolidation, though the possibility of the partition of the Serb territory in Kosovo cannot be totally discarded. The most fragile situation of the entire region is to be observed in Bosnia and Herzegovina, where the long process of consolidation has broken.

The main tasks of the research cycle of 2009–2010 set out from the basic objective of monitoring the current political, economic and cultural processes of the Southeast European region, with special regard to Hungary’s regional set of relations and to the approaching Hungarian EU presidency. For this purpose the main possible scopes of research are the following:

– Studying issues related to the maintenance of the European perspective of the Western Balkan region: the effects of the world economic crisis on the processes of Euro-integration, differences of opinion within the Union, the possibilities and directions of Hungarian role-taking in the issue of enlargement, and changes in the interest of the Western Balkan states in terms of integration;

– Observing the reception of plans related to the ‘Southern energy corridor’ in the Balkans, and an analysis of the political conflicts related to the projects;

– Examining the impact of the Southeastern enlargement of the EU (Romania, Bulgaria and presumably Croatia) on the Hungarian regions along the borders and the perspectives of cross-border cooperation;

– Formulating Hungarian priorities in the bilateral economic and political relations with special regard to the EU presidency;

– Devoting special attention the most critical issues of the region: the Serbian transformation process, the state building in Kosovo, the future of Serbian–Albanian relations; the perspectives of the peace process in Bosnia and Herzegovina as well as the possible solutions of the naming dispute between Macedonia and Greece.