Investment into South-East Europe plays a considerable role in the economic development of the countries concerned. Invested funds are often not targeted well. The main conflict lies in finding a balanced agreement about the nature of investment - should funds be allocated primarily to infrastructure projects, like roads or bridges or should they be invested into people, their professional skills and educational reforms. Traditionally the EU is rather reluctant to strengthen "soft-sector" investments, even though they are much needed.

In any case, financing priority should be given to projects promoting commitment to change and to projects empowering people in decision-making positions to bring change about. Therefore it is important to identify the right actors who can initiate reforms. The EU suffers from the limitation, that it has to act through governments and rely on the recipient state administration in order to implement its projects. When the recipient state's government is not co-operating well and suffers from lack of commitment, incompetence or outright corruption, there is often no other way for the EU than to send warnings and eventually to withdraw funding.

Soft-sector reform projects should be therefore focused on the following priorities:

• Enhancing quality and effectiveness of government services
• Improving access to information
• Strengthening the capacity and legal standing of non-governmental actors
• Bringing people and organizations together, facilitating exchange of information
• Increasing economic activity, skill-building and investment into human resources

Many of these issues have been at the forefront of economic and social reforms in the countries of Central Europe. Here some of the key problems, which are comparable to countries in SEE have been already well identified:

• Minimize bureaucratic procedures, i.e. limiting the administrative delay of projects
• Improve information flows, access to the Internet, open provision of documents
• Co-ordination of government policies and active involvement of public administration

In CEE countries, a number of problems still prevail:

• Legal insecurity hindering investment, weak system of courts
• Lack of organisation and competent officials in state administration
• Lack of political will to focus on reform priorities

Many of these issues have been addressed with various degrees of success. The knowledge of what can and what cannot be done, about factors which influence success of projects, is very important and should be used in the context of EU aid to future countries preparing for accession.

CEE-SEE Programme. A proposed course of action should include funding mechanisms, which allow exchange of experience between the accession countries of Central and Eastern Europe and those countries of South-East Europe which are yet outside the enlargement process. Often such networks are able to provide much more value added than exchanges with older EU member states, which have not experienced political and economic transformation processes.

Team Europe. Identify and support groups of actors interested in economic reform and systematically support their efforts through exchange of know-how and a regular, open dialogue with partners from other EU and CEE countries. This group should identify and support potential future leaders and provide a platform for debate and information about the economic and political transformation processes. It should also cooperate with schools and universities to create awareness.

Civil Society Fund. EU policies cutting back on small-scale civil society projects should be reconsidered. A long-term financing of civil society actors is a guarantee for growing commitment to reform. It is also the best way to invest into people in the region willing to address burning social problems resulting from post-conflict situations. In order to function successfully a Fund should be set up, which will finance projects independently of government institutions (modelled on the Czech CSDF/NROS)

Public Policy Scoreboard. Projects supporting step-by-step improvements of public services should receive special result-oriented funding. The introduction of information chanels, new technology and customer oriented services should be encouraged and employees trained especially for pro-active delivery of information. An information monopoly of the civil service should be broken up by legislation enabling open access to information. Eu funding should focus on pilot projects.