Historic Treaty to Boost South East Europe Energy Integration
The first-ever multilateral treaty in South East Europe was signed in Athens, Greece on October 25, 2005. The Energy Community Treaty, signed by the European Union and Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Macedonia, Albania, Romania, Bulgaria and United Nations Mission in Kosovo on behalf of Kosovo, will create the legal framework for an integrated energy market. Negotiations with Turkey are ongoing for joining the treaty at a later stage.
This historic event marks the first time that all of these states and territories have signed a legally binding treaty. A significant milestone for reconciliation efforts stemming from the wars of the 1990s, the creation of the Energy Community is widely expected to enhance social stability and boost economic growth and investment in the Balkans. The treaty is consciously modelled on the European Steel and Coal Community which was the genesis of the European Union.
As a result of the Energy Community Treaty, the Internal Market for Energy will be extended into the Balkan Peninsula as a whole, where the relevant European Union (EU) rules on energy, environment and competition will be implemented. Market opening, investment guarantees and a harmonized regulatory environment in the energy sector will be enhanced.
The treaty will create a sound policy framework for investments, up to $20 billion in the electricity sector to reach EU standards by 2015. It will also facilitate the expansion of the natural gas system to create an intermediate gas market between the Caspian Sea and the EU. Strategically, the treaty creates a supply route for gas into the EU from the Middle East and the Caspian region that will increase competition and expand supply security through diversification.
According to Dr. Erhard Busek, Special Coordinator of the Stability Pact for South Eastern Europe, “The "implementation of this treaty will have far-reaching political, economic and social consequences for all of us, among them the development of a stable and efficient energy supply in South Eastern Europe, the introduction of market based regulatory systems and the geo-political importance of securing different supply routes for energy in Europe."
He stressed the treaty’s emphasis on the benefits of regional cooperation for South Eastern Europe (SEE) which calls for the pooling of otherwise limited resources among member states and territories to meet the economic demands of energy integration.
Before an audience which included prime ministers and EU dignitaries who had gathered in Athens for the treaty signing, Dr. Busek recognized the European Commission for its leadership on this energy initiative and thanked international financial institutions and bilateral donors such as the U.S., Canada, Germany and France for their commitment. He commended SEE countries on their “political courage,” dedication and willingness to adopt EU standards before accession. Dr. Busek also used the opportunity to acknowledge one person—Robert F. Ichord, Jr., Chief of Energy and Infrastructure with the U.S. Agency for International Development (USAID) Bureau for Europe & Eurasia—for his role in advancing regional energy cooperation.
Busek offered special thanks to Ichord, noting that he had been “particularly instrumental to this initiative's success and without whom, we would not have accomplished as much as we have."
As one of the key donors to this effort, USAID has played a significant role in the progress to date by targeting Mission and Regional resources to advance regulatory harmonization, investment planning and competitive electricity market design.
“The Treaty is an important signal of the political will of the Balkan governments to establish a larger, regional energy market and to work towards effective integration with the structures of the European Union,” says Ichord. “The process has important implications for US interests and I hope the US Government will stay involved has a partner and catalyst for effective implementation and realization of the Treaty targets and vision.”
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