great private sector expertise to the table, Steve kept the Task Force focused on thekey issues and was tremendously effective in forging consensus out of diverseperspectives.We would also like to extend our thanks to everyone who gave so generously of theirtime in connection with our meetings in Washington, D.C., New York, Brussels, andthroughout the Balkans. We owe a particularly great debt of gratitude to ourcolleagues on the Task Force who provided invaluable input based on their wide-ranging backgrounds and experience.Haleh Nazeri and Jessica Duda provided important research and administrativeassistance, and Colonel Stanley McChrystal was instrumental in organizing our fact-finding missions to Brussels and the Balkans. The writing and editing of this reportwas helped considerably by our consultant, Bill Primosch.At the Council, Les Gelb, Mike Peters, and their colleagues were extremelysupportive and offered excellent guidance throughout. In addition, I am personallygrateful to Craig Kennedy, Steve Grand, and the German Marshall Fund for theirguidance and support during this project.Michael B.G. FromanProject Director
After two wars, thousands of deaths, hundreds of thousands of displaced persons,and billions of dollars in destruction, the importance of stability in the Balkans cannotbe ignored. Historical grievances, ethnic rivalries, and the political ambition of misguided leaders have all played important roles in triggering these conflicts. Butthe region's many economic problems--poverty, unemployment, stagnatingeconomies, and a pervasive lack of hope for a better future--have contributed to anenvironment that made such conflicts possible. Creating sustainable economicgrowth and increasing standards of living cannot solve the region's political andethnic problems. But they can contribute to stability in the region and createincentives to avoid conflict. At issue is whether the economies of this region willbecome sustainable over time or whether they will become or remain largelydependent on foreign assistance. Drawing on a broad range of expertise ininternational business and investment, the Task Force has sought to provide practicalrecommendations that will help policymakers in and outside the region meet thischallenge.
Macroeconomic conditions vary markedly within the region. All of the Balkancountries are struggling to make the transition to market economies. They havesubstantial work ahead to establish ongoing, stable macroeconomic environments.There are numerous obstacles, particularly at the micro-economic level, to attractinginvestment to the region. In general, privatization of publicly owned companies hasproceeded badly and failed to produce a strong, competitive private sector. Thebanking system is weak, both financially and institutionally, and lends mainly togovernments and state enterprises rather than to the private sector. Small nationaleconomies are insufficiently integrated into markets around them.