Welcoming Remarks:
[Executive Director, Western Policy Center]:
Good morning, ladies and gentlemen. My name is John Sitilides, and I am Executive Director of the Western Policy Center. On behalf of my colleagues, I would like to welcome you here for today's conference: "Greece in Southeastern Europe," the second in a series of conferences.

Many of you were here with us last year when we had our first group of think-tank analysts and scholars who had been to Greece in January 2000 and assembled at our March 2000 conference. We repeated that trip with a new group of analysts and scholars in January 2001. We're very pleased to have them with us this morning. We'll have two panels today, and our moderator will introduce each of them to you.

Before we begin, I'd like to offer a little background on the trip. Our five delegation members met in Greece with a number of government and military officials, with business leaders, with their peers in the think-tank and scholarly communities, with journalists, and with other prominent figures for a closer look at U.S.-Greece relations and developments in southeastern Europe.

We're especially pleased to have with us this morning as well a number of distinguished figures. I would like to acknowledge their presence. First of all, the Ambassador of Greece to the United States, the Honorable Alexander Philon. He is joined by Mr. Dimitri Droutsas, the Special Advisor to Greek Foreign Minister George Papandreou.
We also have with us the Ambassador of Cyprus to the United States, the Honorable Erato Kozakou-Marcoullis, and, from the State Department, the Special Cyprus Coordinator, Ambassador Tom Weston.

We'll have with us later this morning Ambassador Raymond Ewing and the former Special Cyprus Coordinator, Ambassador Nelson Ledsky. In addition, we have many of our friends and colleagues from the National Security Council, the State Department, the Defense Department, the intelligence community, and the various embassies representing the countries of southeastern Europe.

Before I introduce our keynote speaker for today, I'd like to present an unofficial overview of developments in southeastern Europe since January 2001.

In the Balkans, Slobodan Milosevic is in jail. Yugoslavia is advancing with its Western integration plans, and its troops are moving closer to Kosovo. They might, in fact, be deployed in Kosovo in the months ahead. Croatian nationalists threaten to dismember Bosnia's political structure. The independence movement in Montenegro is underway, and it may proceed to the next stage in June.

There's a guerrilla war in Macedonia, now in remission of sorts. But it may proceed to round two of fighting in the months ahead with the possible resurgence of KLA-type forces and the radicalization of elements of the ethnic Albanian communities in Balkan countries.

The process of westernization and European integration continues apace in Albania and in Bulgaria with considerable economic and military assistance from both Greece and Turkey.

In the eastern Mediterranean, one of the major stories has been the financial crisis in Turkey. I'll be the eternal optimist here and talk about the silver lining that this crisis presents, that the possibility of accelerated economic, legal, and political reform in Turkey can help propel Turkey's EU accession ambitions.

Personally, I think that the U.S. will certainly support Turkey as it looks to get its proverbial house in order, but that help will not come without conditions. It will be important for Turkey to take some of those initial steps, and we've seen part of that already in play with the announcement that Turkey will delay about $20 billion worth of programs in its plans for arms modernization.

In Cyprus, there is continued paralysis in the negotiating process. The economic situation in Turkey is creating new political and economic tensions among Turkish Cypriots. In the meantime, Cyprus is proceeding to meet and to exceed almost all the EU accession criteria, and it will be extremely difficult for Brussels not to welcome Cyprus into the next round of enlargement expected in the next several years.

Regarding Greece, you'll hear a lot more detail from our discussants this morning. I will note that Greece is now in the euro-zone, with all of the attendant benefits and some of the drawbacks involved in full EU integration. There's been a scaled-down Greek armaments program totaling about $5 billion, and there have also been announcements regarding significant standing troop reductions of as many as 80,000-90,000 Greek troops.

Greek-Turkish confidence-building measures are being renegotiated, with talks having resumed in mid-April. The process of normalization of ties between Greece and Turkey is underway, albeit delicately. There's been other good news in recent weeks: a landmark landmine-clearance agreement was signed between Greece and Turkey to deal with the landmines along their common land border in Thrace. Heralded in the region is a new energy project that will help deliver natural gas from the Caspian Sea and Middle Eastern regions across Turkey, across Greece, and onto Western European markets.

That's an unofficial overview of developments in the region in the last couple of months. Now, it's time for the official version and the official position here in Washington. We're especially honored to have with us the Deputy Assistant Secretary of State for European Affairs, James Swigert.

Mr. Swigert is here to present an overview of the Bush administration's foreign policy in the Balkans and in the eastern Mediterranean. James Swigert assumed his official duties as Deputy Assistant Secretary of State in March 1999. He had previously served as Director of the Office of South Central European Affairs. Prior to that, he served as Political Counselor and later as Acting Deputy Chief of Mission at the U.S. Embassy in Belgrade from 1991 to 1994.

The Western Policy Center is especially pleased to have Mr. Swigert deliver this morning's keynote address. I would like to welcome Deputy Assistant Secretary of State James Swigert.

Keynote Address:
[Deputy Assistant Secretary of State for European Affairs]:
I appreciate the opportunity to be here today and contribute to the discussions about southeastern Europe that the Western Policy Center works very hard to foster. At the risk of repeating some facts about what is going on in developments, I will give you an official overview.

It's really a good time to talk about the approach of the Bush administration to the challenges in southeastern Europe. This is an issue that is very high on the foreign policy agenda. Two weeks ago, as you know, in his second overseas trip, Secretary Powell visited Paris, Skopje, and Sarajevo for consultations with his Contact Group colleagues and with regional foreign ministers and political leaders in the Balkans.

This was the first visit by the Secretary of State to the region. It was the first visit by a senior Bush administration official to the region. It occurred against a backdrop, as you alluded to John, of new fighting in the Balkans, as insurgents had a few weeks earlier taken up arms in Macedonia.

Various commentators were at that time expressing alarm that the Bush administration was not adequately engaged and involved in quelling a potential conflict. Some argued that we should appoint a special envoy. Instead of a special envoy, they got the chief envoy, the Secretary of State. And I think that has answered the question about U.S. involvement.

Ironically though, one reporter asked Secretary Powell on the plane ride back why he had gone when there really wasn't a conflict. Hadn't the fighting stopped? Was this administration more pro-active than the last in terms of crisis prevention?

First we're too late; then we're too soon! Basically, I think there is no winning in the speculation game. But I think there should be no doubt about where the new U.S. administration stands vis-a-vis the Balkans. The United States is engaged and committed to working with our European allies and partners within the region to protect regional security.

What I would like to do today is to talk about some of the key Balkan challenges we face and specifically about how the Bush administration is working together with our allies and our partners in the region to address these. Finally, I'd like to close with just a brief word on the eastern Mediterranean, the focus of the discussions today, particularly relations between Greece and Turkey, given their very important engagement in the Balkans.

Let me start, if I could, by going back to Secretary Powell's recent trip.

While in Skopje, as I mentioned, Secretary Powell had a meeting with the foreign ministers in the region. He didn't just go to Paris to talk to the Contact Group ministers about the situation in the Balkans. He went to the region to talk to people who are actually living the situation. This group was an ad hoc grouping. I wouldn't try to fit it into any particular organization, but, as you'll see, it brought a breadth of interests and engagements to the table: the foreign ministers of Greece, Turkey, Bulgaria, Macedonia, Albania, Bosnia-Herzegovina, Slovenia, Croatia, Hungary, and Yugoslavia. Although this event got very little attention, just a word or so in the U.S. press, it really was a remarkable meeting.

First, in the fact that all those around the table represented democratic governments, including, for the first time in such a group with the United States, Yugoslavia.
Second, in the common vision that everyone around the table expressed for the future of the region, that is a commitment for Europe and to European integration.

Third, in the commitment by everyone around the table to deal with what all recognize are severe challenges for the region and in cooperating against organized crime and corruption, and in readiness by all to meet international obligations, including cooperation with the International War Crimes Tribunal.

Fourth, in the agreement that minorities in their respective countries should not be a source of conflict, but rather a source and a basis for cooperation and confidence.
Finally, it was remarkable in the complete solidarity that everyone there expressed for Macedonia's territorial integrity, in light of the recent challenges, and for the Macedonian government's efforts to respond with proportionate means to the violence that has taken place.

When he came back, Secretary Powell mentioned to all of us at the Department, in one of his meetings, how impressed he was by the commitment of the ministers to a common approach to the challenges that they were facing in the Balkans and to working together to address these challenges. For his part, he made clear in Skopje and in Paris, and later in Sarajevo, that the Bush administration supports the Alliance's commitment to the region, repeating as he had before in Brussels on his first overseas visit that our forces came in together and will go out together.

Certainly, as we look around the Balkans, as John alluded to this morning, obstacles remain, but the progress that we've seen is real and considerable. I think it is important to recall that the situation is dramatically different than a decade ago when the break-up of Yugoslavia began.

Ten years ago, in the unstable environment created by the break-up of Yugoslavia, people seized opportunities for unspeakable violence in pursuit of unacceptable goals. Such people still exist, as we have seen, but the United States and its European partners have learned from the mistakes that were made and have reduced the opportunities for this mischief-making to lead to absolute destruction.

Consider the recent events in Macedonia. The Former Yugoslav Republic of Macedonia secured its independence peacefully and, for years, has taken a peaceful approach toward resolution of differences between major ethnic communities. Multi-ethnic governments including representatives of the Albanian community have been the norm.

Despite the recent violence, I think we can see proof that we can avert the sort of tragedy in Macedonia that occurred elsewhere in the former Yugoslavia. For the moment, violence has subsided. It was contained by action in Macedonia and in Kosovo. International solidarity with Macedonia has sent a strong signal to those would-be supporters of the insurgents and allowed the government to turn the security crisis into an opportunity for political progress.

The European Union and other international actors are fully engaged. The European Union has played an important leading role in encouraging dialogue by helping to move the country toward Europe, signing the first Stabilization and Association Agreement just recently with Macedonia. That is a step toward European integration.

The OSCE is engaged, as well. The Chairman in Office of the OSCE, Romanian Foreign Minister Mircea Geoana, has appointed distinguished former U.S. diplomat Robert Frowick as his special envoy. He is working closely with the European Union and others in Macedonia. NATO is engaged as well through KFOR in Macedonia directly and will play a leading role in the effort by Macedonia's friends and neighbors to help the government control further outbreaks of violence.

The United States is working hard to assist. U.S. security and development this year will total more than $55 million, over $17 million in military assistance and over $38 million in economic assistance. We hope to see other donors help as well.

The process of dialogue has begun. In Skopje, Secretary Powell applauded and encouraged the effort by the government and the leaders of both principal ethnic communities to open this dialogue, which we are confident will bring tangible results to resolve the legitimate concerns of the Albanian community.

President Bush's invitation to [Macedonian] President [Boris] Trajkovski to come to Washington next week will provide further support for Macedonia and further encouragement for settlement of Macedonia's political and social issues within the context of the democratic system.
Those who might still contemplate using violence, and they are there, should pay heed to what President Bush has said. Violence is unacceptable. Those who use violence will be condemned. They should seek to address their concerns through the democratic political process.

Looking around elsewhere in southeastern Europe, there is reason for confidence that freedom and democratic political process are taking hold across the board.

In Bosnia-Herzegovina, while we are all very conscious of the efforts being made by a small group of Bosnian Croats to challenge the Dayton Agreement, recent elections have shown a continued decline in support for mono-ethnic parties. Moderate leaders and multi-ethnic parties are now assuming positions of power at every level of government.

In Croatia, there is a success story in progress, with many impressive strides in democratic reform since last year's elections. In a short year, Croatia has joined the Partnership for Peace and the World Trade Organization, and has initialed a Stabilization and Association Agreement with the European Union. We've also begun to rely on Croatia as a real partner in the region. In Bosnia, the Croatian government has become a part of the solution instead of a part of the problem, as it was before.

In Serbia, since the dramatic democratic uprising in October, we have witnessed significant steps toward reintegration into the international community and efforts to implement long-overdue economic and political reforms that will bring Serbia and Yugoslavia into sync with its neighbors. Another milestone, an important milestone, was reached with the arrest of Slobodan Milosevic. We hope this will mark the beginning of further steps toward cooperation with the War Crimes Tribunal.

Looking more broadly, governments throughout the region, from Slovenia to Turkey, have shown readiness to resolve differences peacefully, cooperate with each other, integrate themselves into Western institutions, and meet standards of political and economic reform that foster peace and prosperity throughout the region. We now see that it does not take visits from the United States or the European Union to start dialogue and discussion among regional leaders on how to deal with their own problems. Many processes are operating on their own. The Bush administration is committed to advancing this progress and overcoming those obstacles that still remain.

In southern Serbia, we have stressed the need for negotiation and a comprehensive package of social and economic reform, as part of the process, which is now ongoing for the return of Yugoslav forces to the Ground Safety Zone.

In Kosovo, we are taking on the building of a multi-ethnic, democratic, self-governing society as called for by U.N. Security Council Resolution 1244. We've strongly supported the holding of elections this year as called for in Resolution 1244, as a key step in its implementation, because we believe it offers the best hope of tamping down support for extremism in Kosovo. This indeed was the subject of discussion during Secretary Powell's trip and his discussions in Paris and Skopje. On this point of elections, there was wide agreement.

In Bosnia-Herzegovina, as I mentioned before, recent obstructionist action by the Bosnian Croat HDZ Party is the latest challenge to implementation of the Dayton Agreement. This challenge will not succeed. Extremists may continue to test our resolve to stay the course on Dayton, but we will continue to make clear that they will not succeed and have no hope of succeeding. We support the steps taken by High Representative [Wolfgang] Petritsch and SFOR to deal with this situation in a firm and determined manner.

In Montenegro, recent elections have raised prospects of a further fragmentation of what remains of Yugoslavia. For our part, the United States has made clear that we favor a democratic Montenegro within a reformed, democratic Yugoslavia as the best solution for the region, the countries of the region, and in the best interest of the people of Serbia and Montenegro. Along with our European allies, we are encouraging dialogue between Podgorica and Belgrade and discouraging unilateral acts. We hope that dialogue will begin soon. As challenging as the issue is and as deep as the differences may be between Podgorica and Belgrade, this is not 1991 again.

Although there are these sharp differences, both governments are committed to reform and democratic solutions. The people of Montenegro have learned and seen what has happened when people have sought to use violence to resolve political disputes in the region. No one is threatening war or violence.
Turning to the eastern Mediterranean, an important element in this overall positive trend in southeastern Europe has been the constructive engagement of two leaders, Greece and Turkey. Both of the countries are our NATO allies, and both countries have made great strides in their bilateral relationship since the advent of "seismic diplomacy" in the aftermath of the 1999 earthquakes. All of you in this room know this record, and it's a good one. I'd like to refer to a few highlights.

Early last year, if you recall, Greek and Turkish foreign ministers completed the first visits to each other's capital in 40 years, and they signed nine new bilateral agreements covering everything from tourism to environmental protection to combating drug trafficking and organized crime. Ratification of most of these agreements is proceeding and nearly completed.

In a historic meeting last month, [Greek] Foreign Minister [George] Papandreou and [Turkish] Foreign Minister [Ismail] Cem worked out a new plan to remove land mines from the Greek-Turkish border along the Evros River and to intensify coordination on another important development of the past few years, Turkey's EU accession process. Over the last year and a half, business, academic, media, and other exchanges -- the so-called "Track Two initiatives" -- have also flourished between Greece and Turkey.

This is a very substantial record of progress in bilateral relations, and it occurs against a background of constructive action by both countries in southeastern Europe, where both have common goals and common concerns. Both countries have contingents in the Balkans. They have units in KFOR and SFOR, and they have both contributed to the multilateral efforts to rebuild the police forces in both areas.

Greece has made a very impressive commitment to Balkan reconstruction, with a five-year, $500 million program. It is very important to the region that the Greek program move ahead as quickly as possible.
We have also seen plans between the Greeks and Turks for joint projects in the region, to build on the positive record of assistance and investment.
Greek private investment has now reached a level of $2 billion, an important development engine for the region. The dynamic Greek private sector can help drive structural reform in the region, and its investments in Macedonia, Bulgaria, and Romania, to name just a few, have been significant. U.S. companies are beginning to partner with Greek firms for joint projects, and this is a trend we hope will continue.

As Greece and Turkey have engaged their forces, their resources, and their private investment, they have also engaged together politically in regional discussions not just in ad hoc groups such as the one that was assembled when Secretary Powell was in Skopje a few weeks ago, but also in the Stability Pact, which is a key mechanism to further the integration of the region into European and Trans-Atlantic institutions; in the Southeast European Cooperation Process, which is a gathering of countries within the region to which Greece and Turkey belong; and in the Southeast European Cooperative Initiative (SECI), the U.S. initiative that works on practical discussion of trade and lowers the barriers between the countries in the region. The Bush administration welcomes this engagement and encourages efforts by Greece and Turkey to continue to improve their bilateral relations.

We look to Athens and to Ankara to chart the path ahead to resolving remaining issues between Greece and Turkey, and hope that Foreign Minister Papandreou's recent visit to Ankara is the start of a period of increased engagement in that regard.

While not part of southeastern Europe, Cyprus deserves a special word because of its importance for Greece-Turkey relations and for the eastern Mediterranean. The U.S. is working hard and will continue to work hard to assist the parties in achieving a comprehensive settlement of the longstanding division of Cyprus. We believe now is the time to reach such an agreement, and we are very committed -- the presence of the Special Cyprus Coordinator here today makes it clear -- to supporting U.N. efforts to restart the talks.

Nearly a century ago, in The Devil's Dictionary, a noted American journalist, Ambrose Bierce, defined an optimist as "a proponent of the doctrine that black is white." As a diplomat, I am by definition an optimist. I am optimistic, as you can tell, about the future of southeastern Europe. I have to admit the picture is not all white. There are still a lot of gray areas, and there are still a number of black spots. But it is getting better.

I think the prospects for the future are quite clear. Progress has taken place in the last years. The engagement of the United States is obvious with the visit of Secretary Powell to the region. The cooperation between the United States and our partners in Europe made clear that we have a completely different situation today than was the case 10 years ago. I am confident that the challenges we face in dealing with this region are not obstacles, but opportunities.

As Secretary Powell made clear in discussing the situation in Macedonia, the key to progress is not the use of force, but the building of political and social conditions that foster peaceful resolution of disputes. This approach is as applicable to the region at large as it is to Macedonia. It works.

The U.S. will continue to support open societies and democratic political systems, encourage the international cooperation, which such systems make possible, and oppose with determination threats to political, social, and economic progress. The U.S. cannot and should not do this alone. And we're not doing it alone. We're part of a combined effort that includes regional leaders like Greece and Turkey, who play a critical role in southeastern Europe. As Secretary Powell said in Paris, we're part of an Allied commitment.

Thank you.

Thank you very much, Mr. Swigert, for a comprehensive and quite detailed overview of Bush administration policy in this region. We share Mr. Swigert's confidence that the area continues to move forward, although with setbacks and bumps in the road. That will be natural. And we do look forward to working with this administration in engaging these difficult issues and promoting practical solutions to a number of problems in the area in the years to come.

Our moderator for today's program is not only a top notch professional in this town, but someone that I've come to consider a friend. Alan Makovsky has been Senior Fellow at the Washington Institute for Near East Policy going back six or seven years, and he has been tremendously helpful as a resource on information regarding Turkey, Israel, the Middle East, and the eastern Mediterranean.

It's been a pleasure to work with Alan at the institute, and now we're looking forward to working with him beginning May 1, when he moves over to the House International Relations Committee. He'll be working as a professional staff member for ranking minority member Tom Lantos, and he'll be working on Turkey, the Middle East, and related issues.

I'm a little envious of Alan because, on a personal note, I enjoyed getting to know our three panelists in the first round and the panelists in the second round later this morning.

Professionals and experts, they know their issues extremely well and are looking to engage southeastern Europe on a more energetic level within the larger scope of their own fields of interest.

It's going to be a pleasure for the Western Policy Center to work with them and their respective institutions. With that, I would like to introduce my friend and colleague, Alan Makovsky.

Panel with Gary Dempsey, Dr. Robin Niblett and Dr. Kim Holmes:

MR. ALAN MAKOVSKY [Senior Fellow, Washington Institute for Near East Policy, Director, Turkish Research Program]:

As John mentioned, I will be leaving my current position in the think tank world very shortly. And, although think tanks are somewhat competitors, I would like to take the opportunity to congratulate John for the outstanding work that I think he's done and that the Western Policy Center has done in Washington.

The Center has filled a very important niche concerning the role of U.S. policy in southeastern Europe and in Greek-Turkish relations, a niche that was begging to be filled. The Center should be saluted for that. It has been a privilege for me to work with you over the past few years. Thanks.

As you can see from a glance at the program, we intend to cover a very wide array of issues this morning, all grouped around the theme of Greece and its role in southeastern Europe. The variety of topics listed here, in and of itself, illustrates the importance of Greece to Western interests and to U.S. interests, as well as the importance of southeastern Europe.

I intend to be a non-intrusive moderator. As John said, my own personal focus has been primarily the Middle East and Turkey, and to some extent, Greece through the Greek-Turkish lens. As someone who has devoted a fair amount of his life to working on the Middle East, I think what is going on in southern Europe, especially the efforts at integration and reconstruction, can have wider ramifications beyond the region -- not just in Western Europe or in the United States, but also to the south and to the east, in terms of peacemaking. Frankly, we all hope it will be a definitive rebuff to the notion of the inevitability of clash of civilizations. This is a theme that is common between both the Middle East and southern Europe, and I am sure it will, to some extent, be touched on this morning.

Our first speaker is Gary Dempsey, with the Cato Institute here in Washington. He is the coauthor of a book, Fool's Errands: Washington's Recent Encounters with Nation-Building.

He has shamed some of the rest of us in the think-tank community because he's somewhat of a renaissance man, having been involved not only in writing, but also in filmmaking. He put together a documentary called "Collateral Damage: The Balkans After NATO's Air War." He has also served at various times as an elections supervisor on behalf of the OSCE in Bosnia and Montenegro. The topic of his talk is "Turning the Corner in the Balkans."

MR. GARY DEMPSEY [Cato Institute]:
Thank you very much. First of all, I'd like to thank John Sitilides and the Western Policy Center for organizing this event and inviting me to go along on the trip in January.

I'm going to shift gears a little bit from what I normally talk about. I'm going to refrain from talking about what is wrong in southeastern Europe and talk about what is right.

The Balkan peninsula is home to 10 countries, four of which have been independent for 10 years or less. Conflicting ethno-religious claims, border disputes, political turmoil, and economic hardship have all afflicted the region. Given that instability, there was considerable discussion at NATO's 50th anniversary summit here in Washington in April 1999 about creating a "Marshall Plan for the Balkans." According to those who are familiar with the Marshall Plan idea, there would have been three components: an economic component, a democracy-building component, and a security component.

The first formal meeting to sketch out a working framework on the idea was held in May 1999 in Bonn, Germany. Representatives from NATO, the European Union, the International Monetary Fund, the European Bank for Reconstruction and Development, and other international institutions attended. A follow-up meeting was held in July 1999. European donors subsequently promised $2.1 billion for Kosovo's reconstruction and nearly half a billion dollars for economic aid to Yugoslavia's neighbors. A few days later, then-president Bill Clinton pledged $700 million to help rebuild the Balkans.

The idea of a Marshall Plan for the Balkans must be approached critically. Indeed, it is telling that we have to go back 50 years to find an example of something like this working. Similar plans since have routinely failed. Indeed, since World War II, the United States alone has provided $1 trillion in foreign aid to countries around the world. The result: according to the United Nations, 70 of the countries that received aid are actually poorer today than they were in 1980, and an incredible 43 are worse off than they were in 1970. Thus, good intentions must be matched by effective, corruption-free administration on the part of the aid recipients.

The failures are not surprising if one actually studies the Marshall Plan experience in detail. If massive government spending could work anywhere, it would have been in Europe in 1948. Skilled labor was largely available. The rule of law and pro