Croatia is entering into the Energy Community of Southeast Europe, which will stretch from Zagreb to Ankara. As Nacional’s sources claim, this political energy association of states which is about to be formed is to sign a Contract with the European Union on the creation of an integrated electricity and gas market in Southeast Europe. This was also the primary motive for last week’s visit of Special Stability Pact Coordinator Erhard Busek to Zagreb, which occurred at the same time as the removal of Ambassador Spomenka Cek from her position as the national Stability Pact coordinator.

Signatories to this Contract, launched within the framework of the Stability Pact, will be Croatia, Albania, Bulgaria, Bosnia Herzegovina, Macedonia, Serbia and Montenegro, Turkey and the Civil administration of the international community in Kosovo. All this indicates that in the eyes of Brussels, Croatia continues to be firmly positioned in the Balkans, which considering its geographical position, and realistic economic interests, should not present a problem.

However, most of Nacional’s relevant sources claim that the feats that the establishment of this community will necessarily result in some form of a Balkan Oil and Steel Community, or rather the beginning of a Balkan Federation, claim that there are no such dangers. The issue here is the gradual establishment of an organized energy system and market in the European Union, which will be completed in full in 2008.

However, the first victim of the still undeveloped Energy Community of Southeast Europe, Erhard Busek’s greatest project, was Ambassador Spomenka Cek, who spent almost 5 years as Croatia’s Ambassador to the UN and WTO in Geneva. Prior to receiving that post, under Foreign Minister Mate Granic, she ran his Office for Economic Diplomacy in the Foreign Ministry.

As Nacional reported last week, she was removed from her post as national coordinator for the Stability Pact. However, Nacional’s sources close to Busek claim that the problem was not in her alleged opposition to the entire project. Interest groups gathering around this certainly lucrative job in fact hindered her attempts to have serious negotiations prior to the signing of this documents, which will certainly have no only broad economic but also political impacts.

Foreign Minister Miomir Žužul, well acquainted with the lobbying business, agreed with these reasons and decided Spomenka Cek’s fate. Until he arrived in office, Cek had succeeded in surviving all the political changes on the Croatian political stage. She was an Ambassador under two presidents: Franjo Tudjman and Stjepan Mesic, and she was appointed as National Stability Pact Coordinator in 2002 by Tonino Picula. Regardless, both Busek and Žužul publicly denied that Busek had demanded Cek’s replacement, proving that the process of removing virtually all the diplomats who had formed their professional dignity under former Minister Picula and Granic is entering into its final phase.

It is certain that the intention by Sanader’s government to sign this undoubtedly important document for Croatia’s future will cause a new storm on the Croatian political scene. At this time, while the Croatian government still does not have a defined negotiating strategy or a set negotiation team, political forces have grouped together and will demand that this international contract be passed with a two-thirds majority in the Parliament. All indications suggest that the only disagreement will be which Article of the Constitution they will call upon when they make their demand.

This could seriously be a problem considering the promise that Premier Sanader and Minister Žužul gave to Busek, as well as their credibility in fulfilling the expectations important for improving the image HDZ has in the eyes of the international community. This is a particularly sensitive point for these two men, who have thrown all their efforts into foreign policy.

According to the current relation of power, it is unlikely that Sanader will succeed in avoiding the request that the document be ratified in the Parliament by a two-thirds majority. Parliamentary speaker, Vladimir Šeks, despite his skills in such operations, will likely not be able to secure this kind of support. At this time, in addition to the expected objections calling upon the patriotic Article 141 of the Constitution, objections are also arriving from pro-European legal experts who are calling upon the far more neutral Article 139 of the Constitution, and are demanding the same thing – a two-thirds majority.

As former Foreign Minister and head of the SDP Board Tonino Picula stated for Nacional, his party will support requests that the entire business surrounding the establishment of the Energy Community in Southeast Europe be conducted publicly and openly. And he agrees, that there is no better possibility for that than for the ratification of the Contract in the Parliament to receive full support from all the parties or at least a two-thirds majority vote.

Article 141 of the Constitution, which is being called upon by opponents to the Energy Community forbids any “It is prohibited to initiate any procedure for the association of the Republic of Croatia into alliances with other states if such association leads, or might lead, to a renewal of a South Slav state community or to any Balkan state form of any kind”. This Article continues “Any association of the Republic of Croatia shall first be decided upon by the Croatian Parliament by a two-thirds majority vote of all representatives.” The following paragraph reads that “Any decision concerning the association of the Republic of Croatia shall be made on a referendum by a majority vote of the total number of electors in the State.”
In any case, this operation is too complicated for HDZ to voluntarily opt for it, and so we can expect Sanader and Šeks to invest all their efforts in avoiding this possibility. They will attempt to push the case through the parliament with the usual majority vote, and Nacional’s sources have assessed that they hid not only the preparation of this document from the eyes of the public, but also from the relevant experts, who would certainly have something to say on the whole idea, as well as to help better define certain items in the Contract.

Contrary to calling upon this rigid position in the Croatian Constitution, which according to the opposition is in principle harmful for Croatian interests, experts in European law commented for Nacional that they advocate the much softer Article 139 of the Constitution, which also stipulates a two-thirds majority. This article claims that “International contracts which provide an international organization or alliance authority outside of the Constitution of the Republic of Croatia” also require a two-thirds majority vote in the Parliament. And when the issue is a large project such as an Energy Community, then this Article is applicable.

Arguments for Article 139 come from item 47 of the Draft Contract, which states that the Council of Ministers of the Energy Community of Southeast Europe, the main decision-making body in the energy sector, and the Standing Group, which supports that body, decide by a two-thirds majority vote on all issues not stemming from the regulations of the European Union. In fact, this is a decision making process on issues specific for Southeast Europe, and not on harmonizing standards with the EU, which Croatia is obliged to do based on the Stabilization and Association Agreement.

In short, with this decision, Croatia passes over its sovereignty in decision-making on issues concerning production, distribution and consumption of electricity and natural gas to the Council of Ministers of the Energy Community of Southeast Europe and its Standing Group. The Council of Ministers will be composed of a representative from each member state, as well as two representatives from the European Union. Furthermore, the European Commission is to secure the secretariat for the operation of these institutions, which proves that this idea has been seriously worked out in great detail.

The legal experts Nacional consulted with stated that were this plan to have included the principle of unanimous voting or consensus, then a two-thirds majority vote in the Parliament would not be necessary. In that case, Croatia would have the right to veto in the Council of Ministers, which would certainly ease Croatia’s position in making important decisions, and the consequences of such important decisions would not be as far-reaching. However, Croatia is to hand over its decision-making in this exceptionally important sector to the Energy Community of Southeast Europe, despite the fact that this sector has not uncommonly been the stimulus for war conflicts, as the protection of a state’s interests is crucial. Contrary to this restraint in issues of regional specificity, is the obligation to harmonize the state’s energy system to the EU, which is foreseen under the Stabilization and Association Agreement. And therefore there is truly no reason for the creation of a protective mechanism.

The document Nacional received from a source in Croatian Electric, which was also delivered for consultation with experts there, was interesting to our European Law expert in that he revealed within the document a new model of EU association which is not identical to the path Croatia had to take. As he explained, this variation of creating a community based on several economic issues could serve as an integration model for those countries not yet able to fulfill the political terms of the Stabilization and Association Agreement. This is an acceptable model to the pragmatic EU, as it does not leave states behind which could then become new crisis spots on the European map, outside the actual integration processes in Europe. This is one of the ways of controlling the possibility of the creation of new crisis areas.

According to his words, the Energy Community, despite the fact that four of the states are currently candidates for full EU membership such as Croatia, Bulgaria, Romania and Turkey, could turn into a model for association for their neighboring countries. These are states that are not yet ready to fulfill the demanding conditions set by the Stabilization and Association Agreement, which has been signed by Croatia and Macedonia. They are now trying new variations in this region, which to date has acted as a suitable laboratory.

Tonino Picula confirmed for Nacional that preparations for this Contract begun under the last government, and he signed the Letter of Agreement on the regional market of electrical energy in Southeast Europe last February in Brussels. He added however, that his government approached this Contract cautiously with a certain level of reserve, as they consulted with experts who had expressed their fears that Croatia could be left in the dark due to the lack of harmonization in the energy system in the event of, for example, a short circuit in Bulgaria or Montenegro.

Proof that this system is very difficult to harmonize was clearly seen in 2002, when Albania was left with electricity for only an hour or two per day due to a lack of water in their hydroelectric plants. At that time, Croatia attempted to assist Albania by supplying Albania from its southern locations, but had great difficulties in doing so because the Albania energy system simply doesn’t exist. “Other than the fact that energy is certainly one of the key points in all state policies, such that, for example, the relations between the Russian Federation and European Union can be assessed through their relations of supplying and consuming Russian oil and natural gas, it is also an issue of technology. Therefore, in this area, a healthy dose of skepticism is required,” concluded Picula.

According to Picula, we need to bear in mind that the energy system in Serbia and Montenegro is in serious difficulties, as Đerdap, the largest energy plant in Serbia was not maintained during the Milosevic years. He added his opinion that at this time, it is much more important for Croatia to resolve outstanding issues with our western neighbours, such as border issues with Slovenia and payment of the Yugoslav debt to Italy for refugee property. Both in the Parliament and in an open public debate, the reality of the situation should come to light and it is necessary to see whether there is any benefit to such an idea, while of course, not turning our backs on the entire idea.

In addition to thinking this way about the energy market of Southeast Europe, Tonino Picula, who can now speak much more freely without his position as Foreign Minister, claims that we should also be more cautious about membership in multilateral organizations, including the Stability Pact, which is the prime promoter of the Energy Community for Southeast Europe. “The Pact came to be in 1998 under very specific circumstances. It was supposed to have been in exchange for political unity in a part of Europe that had been ravaged by war. Former US President Bill Clinton and a number of European heads of state supported the idea, gathering in Sarajevo following the conclusion of the EU Council of Ministers in Köln,” recalled Picula.

He added that over time, Croatia succeeded in normalizing itself and then began assisting in normalizing relations in the region, and the Pact began to lose its original purpose. “Even at certain regional conferences, where large amounts of money were to be distributed, nothing came of it, and in searching for a sense of purpose, they instead concentrated on a few projects which could succeed,” Picula commented. And not only that, Picula also stated that it is time we begin to ask questions about other forms of multilateralism, such as the OSCE as “it was once established with a certain purpose which today, after the terrorist attacks on New York and the war in Iraq, is certainly questionable.” In any case, Picula today holds a certain amount of reserve not only for the joint energy market in Southeast Europe, but also towards its prime initiator – the Stability Pack, lead by Erhard Busek.

In short, we are again witness to a certain turnabout on the Croatian political scene. The main promoter of projects relating to regional initiatives has become the HDZ government under Sanader. Obviously, they have recognized elements that could make them the darlings of the centres of world politics, from Washington to Brussels. Prior to this rapid step towards the Energy Community of Southeast Europe, Foreign Minister Miomir Žužul decided that Croatia should become a standing member of the SEECP – South East Europe Cooperation Process. This regional initiative was viewed with reserve by Tonino Picula and Ivica Račan’s government for years, and Croatia was only an observer.

According to Picula, the entire project of the Energy Community in Southeast Europe should not be rejected, but there is no need to rush into a decision. Inasmuch, it must also be noted that joint trade of electrical energy is also a novelty in the European Union. Though there are systems for production, distribution, consumption and control of electrical energy in the EU, the plan is for that all to come together in 2008. For the time being, there is a functional system of regional connections in the North Pull, which includes several Scandinavian countries: Denmark, Norway, Sweden and Finland, which established a regional market in 1999, and this is the direction the EU is heading in towards 2008. In addition to this example, currently under preparation is another regional market for Southeast Europe which, however, is facing many more serious problems. This refers primarily to the different technological levels of those systems, which will not be easy to harmonize.

According to Picula, considering that this is a serious state problem with long-term consequences for the state economy, it is necessary to make the process fully transparent, even where the Constitution does not offer such a possibility such as ratifying the Contract with a two-thirds majority vote in the Croatian Parliament. Picula also spoke of when he, on behalf of the Račan government, participated in working groups aimed at formulating the idea of a Energy Community of Southeast Europe, emphasizing that since the Athens meeting in 2002 of the energy ministers of the nine Southeast European states, Croatia opted for the right to postpone signing the document. Croatia restricted itself only to the statement that this was a politically important issue, which demonstrated Croatia’s desire for cooperation in the region with the goal of economic promotion.

However, those times are behind us and now we need to look at the situation with long-term caution, knowing that this is an unstoppable integration process of creating a European energy system. If there are reasons for serious considering on how to establish cooperation in the area of production and consumption of electricity and gas in Southeast Europe, then that section in the Agreement which relates to the European Union is a clear issue according to our expert in European law.

He also stated that despite the fact that there are objections that the Energy Community of Southeast Europe will contain a decision-making system in which proposals will be made and decided on by the European Union, decision-making on those issues with a majority vote in the institutions of the future community, that is the Council of Ministers and the Standing Group, is not questionable, as Article 101 of the Stabilization and Association Agreement binds Croatia to harmonizing this sector with EU standards.

Until now with this unclear situation on the real reasons behind the removal of Ambassador Cek, the Croatian public had no idea just how far-reaching a project was being secretly prepared. A series of questions has arisen concerning the future of the Energy Community of Southeast Europe. Among those are the question of whether or not this Community was really the reason why the Ambassador had to go. This again opens another topic – the problem of leading foreign policy in which there is no longer room for anyone who is not directly tied to Minister Žužul and Premier Sanader.