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Interview with Nicolas Marcoux, head of operations in Serbia: Putting a country back together again is ‘a long and hard and painful process’

Serbia has the biggest operation of the agency’s four. How do conditions there differ from the others? The type of problems here, the kinds of work we are engaged in, is getting increasingly similar. Serbia received the most public assistance in per capita terms [in the world] after Israel. So it’s quite a unique situation. That’s also because of the crucial role Serbia plays in the stability of the Balkans. The EU wants Serbia to take its place on the train toward the European Union. Since 2000, 2003 has been the biggest budget, at 230 million euros. So it’s a substantial package. Next year maybe it will go down a little bit, to 170-180 million euros. Could you describe the most important projects and the challenges they have raised? We arrived to face an emergency situation in winter 2000. It was critical in the energy sector, and we financed it at 15 million euros to get through the winter. The second type of emergency program was in essential drugs and medicines, and the third was for fertilizer and essential foods, like getting sugar and oil to the citizens. Once the emergency situation was over, we moved to more «normal» types of development programs in the perspective of Stability and Association, which is the Bible for us. We gradually shifted our assistance from infrastructure-related projects to preparing institutions to deal with the challenges of European integration, which are many. Like to establish a treasury; there was none at all. Similarly, we worked with the tax assistance side to raise public revenue, introduce VAT, and gradually we developed models of a treasury. The energy sector was next; electricity is the biggest recipient of funds. Basic repair of units, in two to three coal-fired facilities, then building [the] capacity of electricity operators and preparation for an integrated electricity market, with a 2005 deadline. As this process is increasingly long-term, how do you measure success as you go along? It’s a very good question. In two to three years we have had to go about changing mind-sets, introducing new reflexes, new behavior; we’re talking about a massive change. The first set of elements is the degree and the pace at which a ministry, a beneficiary, understands the need and responds to the project. [To see] if someone understood the challenge, and got around to address the issue, is always something critical. It’s very technical, but you get a sense of engagement quite quickly. What happens if you get into the middle of a project and it’s not working out? How do you know when to press on or to cut your losses and get out? Well, if there’s one model, anywhere, I’d like to know! We cannot predict a country’s situation a year ahead. We have to adapt every day to a changing situation. There are projects that started badly, but none in which we had to take our money back. If they are going badly, we meet with the people, talk to Brussels. If the government isn’t ready, the money goes somewhere else. So monitoring is an extremely important part in the decision. But I’m not saying all is pink and rosy; its a long and hard and painful process. What is the direction for your next projects? There is a lot of emphasis on the social aspect of civil society, a framework for justice, judiciary reform. It’s the least trusted public institution in Serbia, with only 17 percent satisfaction! Justice was worst in corruption, with abuse, all you can imagine. So it’s a big task and it’s not going to be solved tomorrow. The judicial system is not only needed for the trust and confidence of people, but also as a major boost for foreign investment and a commercial environment. Whenever you are not paid for your operations, and the judge can be bribed, then you’re not going to put your money there. Also EU integration issues, making sure they are abiding by the acquis communautaire – which is 125,000 pages long. For the economic part, we have mainly assisted in agriculture, making sure the ministry is geared toward reform, policy implementation of standards, and sanitary control of animals. We also worked on transport; we had the first project, a bridge in Novi Sad, 80kms north of Belgrade, and are reconstructing it for 35 million euros. It will be done in late 2004. As for financial and non-financial aid to Serbia, it involves technical assistance, information sharing, helping business plans, the internal EU market, so gradually SMEs are made aware of the need to reform principles of management. There was no credit line at all before. So we started by establishing a credit facility in a limited number of banks. It is important because it loaned money and helped create 800 new jobs. On March 12 [the Djindjic assassination] we saw how fragile democracy was, how risky it was. There was a state of emergency for two months, massive waves of arrests. But measures were taken, there is renewed capacity for law enforcement agencies. The unforeseen consequence of the assassination is [it pulled] people together and the government has been quite involved. And there is quite a sense of momentum. What is your biggest single project underway now? It is the rehabilitation of a power plant, Nikola Tesla, near Belgrade. It’s a unit of 310 megawatts, and is being completely overhauled. It should be done by summer. Does Greece have a role in all this? Now is harder to find nationality in consortia, so it is a bit confusing. But Greece has put a strong emphasis on the Western Balkans. Investment is improving communications and transport. So yes, Greece is a major player here because of location, so it is one of the EU states to express more interest. How long will this process take? There is much to be done in the long term [that will need] reforming and transition. For the EU it is hard to say, but the current candidate countries [admitted for 2004] started 15 years ago, though it could [have been] quicker. It is not politically easy to say so, but the S&A process needs time. By rushing, you risk doing the work halfway; it’s uneven, unbalanced. So there is virtue and value in waiting sometimes. It’s not a quick-fix job; it will take time.