HOW TO ADVANCE THE FINANCING OF TRANSPORT INFRASTRUCTURE IN THE REGION The Formation of a Unified Southern European Fund-An Expedient Solution

Za kašnjenja i neefikasnost u izgrađivanju regionalnih saobraćajnih kapaciteta, uglavnom se navode dva razloga. Nedostatak sredstava, a zatim nedostatak adekvatnog nivoa organizovanosti učesnika u procesu izgradnje i finansiranja. To sve poskupljuje investiciju. Uz to, skupi su i penali zbog neblagovremenog povlačenja već odobrenih kreditnih sredstava, a i povećani troškovi gradnje saobraćajnica zbog pojedinačnih napora svake zemlje da sama rešava pitanja obezbeđivanja sredstava za finansiranje izgradnje saobraćajne infrastrukture na svojoj teritoriji. Očigledno, vreme je da se razmotre nove, inovirane, napredne i organizovane zajedničke akcije. Naime, prva i ključna aktivnost bi mogla biti konstituisanje novog finansijskog mehanizma (Fonda), koji bi na principima logističke platforme javno-privatnog partnerstva, objedinio sve lokalne i međunarodne resurse potencijalno raspoložive i usmerene za finansiranje saobraćajne infrastrukture. Ovaj mehanizam bi svojom poslovnom strategijom objedinjavao sredstva i resurse regionalnog i međunarodnog finansijskog potencijala koji su namenjeni izgradnji saobraćajnica, i na taj način moćno ojačao odgovornost za povećanje efikasnosti investicija i održivi razvoj u regionu kao celini.


Introductory Premise
The construction of transport infrastructure has an undoubtedly high priority in the composite and complex processes of developing national and regional economies. In other words, construction is directly and vitally interdependent with the improvement of integration strategies and the development of democratic structures. However, this economic and social issue, so significant both for each individual country in the region and for all the countries of the region together, has not been organised and strategically analysed in the long run. Every country, as well as all commercial and corporate transport companies, partially (successfully or unsuccessfully) looked for investors, i.e. solved or postponed the resolution of the issue of financing certain transport infrastructure projects. In these circumstances, the financing of transport infrastructure is becoming increasingly difficult, more expensive and uncertain.
At the same time, the delays in this sector dramatically slow down the positive development of human rights, the attainment of integral human freedom, and the overall development of social and democratic structures. Simply, they cause serious damages and new uncertainties, while straying away from many of the economic, political and moral values, i.e. from the benefits that road construction brings to every country and region as a whole. Therefore, it is necessary to be warned: it is time for things to be taken more seriously than they have been so far.

Some Structural Differentiations in the Approach to this Issue
The problem of the transport infrastructure financing strategy is, in reality, an extremely complex issue. The changes in the economic and social environment are becoming more and more dynamic. Globalisation, liberalisation, specialisation, urbanisation, changes in the demographic structure and migration trends, internationalisation of supply chains and consumption development, and especially a shorter shelf life of products imperatively imply the need to reduce the construction time of transport programs and projects. Simply, the region of Southern Europe must as soon as possible achieve the conditions for positive economic development, development of modern democratic structures, and the overall social, technological and ecological development.
Meanwhile, it should be considered that international competitiveness research shows that all countries in the region, by indicators of competitiveness and infrastructure quality, rank significantly lower than the one hundredth place among all countries in the world. This is confirmed by the latest World Bank's Doing Business list, as well as the OECD Competitiveness Study.
To this end, we need fresh measures and the creation of some new time saving mechanisms as a special value in transport, which would facilitate faster spatial interconnection of the region and its market integration potentials. The world is changing rapidly, and only those countries and those regions that adapt to the demands of the inevitable changes and save time will be able to valorise their market competitiveness potentials, products and benefits.
Transport has at least three very distinct characteristics that predetermine the strategy and the organisational method for financing its development. Namely, the table of crosssectoral relations shows that the transport infrastructure delivers its products to all other economic units and social subjects, i.e. all other socially organised and unorganised units of the social structure (economy, ecology, culture, education, health, personal consumption), and especially to the sectors dedicated to strengthening information and knowledge. In fact, this par excellence infrastructure is a prerequisite for the development of all other economic activities. Consequently, all existing and potential units of the social structure are responsible for financing the development of transport infrastructure. It is, therefore, clear that the issue cannot be limited by the number of some partial agreements, but that the strategies for financing regional transport infrastructure must rely on multi-layered property, capital and money blocks of the financial market. Of course, the strategic and operational support of How to Advance the Financing of Transport Infrastructure in the Region logističku strukturu. Međutim, taj sistem se ne može realizovati prostim agregiranjem delova, niti delovi mogu normalno funkcionisati ako sistem nije logistički koncipiran. Zapravo, sistem finansiranja saobraćajne infrastrukture, te njegova funkcionalna međuzavisnost zahteva jedinstvenu integrativnu ulogu filozofije logistike pri formiranju i upotrebi sredstava.
3. Zemlje u regionu bezmalo funkcionišu bez razvojnih banaka (samo Hrvatska i Slovenija imaju svoje razvojne banke). U regionu uglavnom sve investicije i privlačenja stranih strateških partnera rešavaju Vlade uz ozbiljne budžetske subvencije. Transnacionalne bankarske strukture, koje prema podacima BIS-a iz 2016. godine drže oko 90% tržišta u regionu, uglavnom ulažu u državne i evropske obveznice, te prate stanovništvo i malo i srednje preduzetništvo uz različite Ognjanović V. Kako unaprediti finansiranje saobraćajne infrastrukture u regionu the competent state authorities -ministries and governments is implied. The strategy of transport infrastructure financing as a total of functionally connected and mutually-conditioned content represents a serious economic, technological and financial logistical structure. However, this system cannot be realised by the simple aggregation of its parts, nor can these parts function normally if the system is not logistically conceived. In fact, the system of transport infrastructure financing and its functional interdependence require a unique integrative role of the philosophy of logistics in the formation and use of resources.
Finally, transport is a highly capitalintensive complex and, together with the electric power industry, represents the most intensive economic group in terms of capital, in all three blocks of capital intensity: (1) the capital coefficient is about three times higher than the economic average, (2) each, and even the average program, especially for key infrastructure facilities, requires a large amount of capital, (3) the construction deadlines and the activation period are very long.
To conclude, the long activation period and high capital intensity, as well as the characteristics of transport as a public service, condition that the structural blocks in the financing concepts must be modelled on the principles of logistics on one hand, and softened and subsidised by budgetary supports, on the other. This aspect of the problem directly demands very careful planning and design of the strategy itself, as well as the concept of financing. The dismissal of these principles, along with the lack of organisation and innovation of the competent public-state entities, contributed to the expensive crisis in the complex of the system of the transport infrastructure financing in the region.

What are the Current Limitations?
A serious analysis of the problem of transport infrastructure financing suggests some relevant indications of current and serious restrictions in the field.
1. First of all, in all countries and the region as a whole, the financial market is not developed in the conception of contemporary content and treatment of potential arsenal of relations and instruments in the money and capital markets. This is especially noticeable in the projection of the arrangements and models of public-private partnership, i.e. the engagement of private capital that does not suffer from incompetence and inefficiency in the construction and activation of invested funds. In addition, all the countries in the region, due to the "shallow" financial market, as well as other similar, unfortunate transition related reasons, are characterised by their lack of organisation and the absence of mechanisms for activating serious amounts of "runaway" domestic capital.
2. A serious constraint is also the fact that the countries of the region do not have their national long-term (15 or 20 years) strategy of social and economic development. They would, among other things, have to promote the important values that the construction of transport infrastructure brings to the quality of life and sustainable development in the region.
It is precisely these circumstances that demobilise the banking system and defer other investors from entering these ventures. Moreover, there is no adequate monitoring for the purpose of overcoming the inefficiency in investing in development. Hence, there is a lot of stagnation, uncertainty and dilemmas within the domestic and foreign entrepreneurial and investment public. Foreign investments in the countries of Southern Europe are mainly based on the estimates of transnational corporate societies and the political affiliations of their countries of origin.
In this context, the resources that could objectively form the balance of funds for financing the transport infrastructure in the region (EIB, EBRD, IBRD and its agencies, BRICS, EU funds, and other international development banks and financial institutions) are objectively more difficult to coordinate and organise in order to finance transport infrastructure. In addition, a process is starting up in which these banks, as done by EBRD, form their own bank branches in the countries of the region.
Ognjanović V. Kako unaprediti finansiranje saobraćajne infrastrukture u regionu budgetary subsidies policies in the region, i.e. the integral economic policy of these countries towards their partners, in financing the transport infrastructure projects.
3. The countries in the region are almost functioning without development banks (only Croatia and Slovenia have their development banks). In the region, when it comes to investments and attracting foreign strategic partners, things are mostly solved by the governments resorting to serious budget subsidies. Transnational banking structures, which, according to the BIS data from 2016, hold about 90% of the region's markets, mainly invest in state and European bonds, followed by the population and small and medium-sized enterprises with different models of mortgage debentures. This situation is clearly illustrated by the fact that in the long run there was not a single banking consortium that would process and monitor any significant infrastructure investment in the region.
4. The role of the EU and its bodies and resources is extremely important for the development of the transport infrastructure in the region. The fact is, however, that its competent bodies are analysing the problems of regional development slowly and selectively, in particular the construction of regional transport infrastructure. Consequently, there is no promotion of the region in solving the serious and large issues faced by Europe and the contemporary civilization in general. In fact, the situation in the field of vital transport infrastructure best illustrates the extent to which we have abandoned the issues of complex and sustainable regional development, i.e. the rational use of available resources, and the pursuit of an active policy of overcoming poverty and the attainment of human rights and human freedom. And that is happening here, in the most vulnerable and potentially conflict-prone parts of the European continent.
However, it should be considered that neither the "joint commitment to European values" nor the standard support of the "European perspective of the region" can help. It should be understood that today the EU and its structures are mainly preoccupied by its stability and its identity, i.e. the survival of the EU at the top of the contemporary world and its global processes. The extension and concern for the problems of its "periphery" and regional development seem to be postponed.
It is necessary, however, to point out that the EU, while appreciating the value of transport due to cross-borders, at the very beginning of its existence promoted the so-called trans-European network of infrastructure across the continent, which it was, in principle, ready to finance. This concept implied connecting the existing Union network and the existing networks in other countries that were at its borders, i.e. improving the core -periphery connection. And it is precisely this valuable European heritage that should be used in new ideas to support the construction of mechanisms for financing the regional transport infrastructure.
Due to many other internal problems, the EU has not dealt with the problems of the "periphery" to a large extent. The EU strategic documents, the so-called White Paper (1985) and the Maastricht Treaty (1992), focus on establishing the free market (without quantitative restrictions), increasing bilateral contingents and communitarian quotas, and fostering competition. In fact, the EU has insisted on adapting the infrastructure to its interests, simplifying border crossing formalities, and increasing traffic safety. It should be noted that the EU, by evaluating the economic aspects of transport (which generates revenues of about 1,200 billion euros or about 12% of the GNP and employs more than 10 million people), foresaw by the Treaty of Rome that the common transport policy should be resolved, as well as the issues of its financing. In this context, some individual projects were financed by the EU, and the EIB had a positive attitude, but a comprehensive, coherent policy from the perspective of the European "periphery" development was lacking.
Ognjanović V. Kako unaprediti finansiranje saobraćajne infrastrukture u regionu infrastructure. In fact, there are unique interests at all levels of local and state communities, as well as in all sectors of domestic and international, globalised and regional economy and culture. Simply put, today, more than ever, the Balkan region needs organised and politically mediated communion in financing the launched and (in principle) agreed joint projects of transport infrastructure. 1. The development of transport infrastructure rationally kick-starts the overall development, which, in turn, strengthens the demand for financial services. And so it will always be. Therefore, the understanding of the potential investors is also necessary in order to build and launch the transport infrastructure, i.e. to improve the operability and efficiency of the financing system as a whole.
The perspective of current and relevant aspects of the transport infrastructure financing in the region can be assessed as favourable. Namely, in 2018, at least two important positive assumptions appeared that suggest the reality of consolidating regional resources for transport infrastructure financing. First of all, the Balkan and South European countries, i.e. their state structures, strengthened the conscience and awareness that political stability is a basic precondition for the integral development of the r e g i o n .
Secondly, they increased the responsibility for spatial and regulatory plans, as well as the negotiation of strategic projects for the construction of regional -joint transport infrastructure, i.e. the management of borders and land registers, the effectiveness of market surveillance, the training of local community bodies, etc. Bearing in mind these premises, while valuing the time (especially the delayed effects and multiple "bottlenecks" in the development of the region), i.e. the bitter experiences and lessons learned, there seems to be ripe opportunities to form the South European Fund for Financing the Development of Transport Infrastructure. Namely, by creating an efficient regional financial-banking mechanism, an adequate concept for pooling resources for financing the regional transport infrastructure would be provided. At the same time, this would be a serious breakthrough from the existing and generally neglected situation in the transport infrastructure financing sector. In fact, it would be both rational and justified to give high priority to the construction of roads in the region.
The establishment of this financial-banking mechanism would form a strategic alliance of the Balkan and South European countries for spatial financial planning and a unique logistic platform of property and equity capital as an optimal solution for the transport infrastructure financing with joint and high importance and priority. In addition, it would be a mechanism of a multi-ethnic How to Advance the Financing of Transport Infrastructure in the Region Ključni kontingenti sredstava u Fondu formirali bi se u duhu spremnosti i podrške Evropske investicione banke. Ona bi podsticala, a u dogovoru s Fondom, i objedinjavala kredite: Evropske banke za razvoj, Svetske banke i njenih agencija, BRIKS-a, Fondova EU, te drugih međunarodnih razvojnih banaka, fondova i međunarodnih finansijskih institucija. Uostalom, činjenica je da svi ovi izvori do sada nisu adekvatno i koordinirano organizovani i korišćeni za finansiranje programa izgradnje saobraćajne infrastrukture u regionu.
Ognjanović V. Kako unaprediti finansiranje saobraćajne infrastrukture u regionu economy and culture which would, among other things, demonstrate the character and strength of a unique regional identity. 2. The Fund's potential resources -an analytical overview of opportunities? The financial potential of the public and private sector in the region is objectively able to form a serious balance of funds for financing transport infrastructure, the concept of forming account funds and traditional and alternative sources of capital. In addition, the special value of forming potentials would undoubtedly be the purposeful, worthwhile mobilisation and active participation of private capital in the model of public-private partnerships. In fact, this could be an example of the affirmation of publicprivate partnerships and coordination of the integrated interests of the countries concerned in the construction of transport infrastructure facilities.
The founders of the Fund would be all the countries that have already expressed their interests in certain projects and programmes for the construction of transport infrastructure: Serbia, Montenegro, Albania, Bosnia and Herzegovina, Slovenia, Croatia, Macedonia, Hungary, Bulgaria, Moldova, Romania, and potentially the countries of Central Europe. Moreover, the EU Investment Commission for South Eastern Europe, i.e. the Regional Cooperation Council recently adopted in Sarajevo the South East Europe Development Strategy, which envisages the creation of one million new jobs by 2020.
The Fund would be run by the Executive Board, the voting mechanism of which would be based on the representation of each country directly, and on the "one country -one voice" principle (as a common principle of all international forums and institutions). Of course, the representatives of private capital would also be part of this body. The member states' participation in the Fund's founding capital should not be higher than their current budget allocations for subsidies, i.e. for other budget supports and the allocations for the construction of transport infrastructure.
The key contingents of the Fund's assets would be formed in the spirit of preparedness and support from the European Investment Bank. It would encourage, and in agreement with the Fund, merge loans from: the European Development Bank, the World Bank and its agencies, the BRICS, the EU funds, and other international development banks, funds and international financial institutions. After all, the fact is that all these sources have not been adequately organised and coordinated so far and were not used to finance the transport infrastructure construction program in the region.
In order to strengthen the balance of funds, it will be worthwhile to implement two special and specific measures, i.e. to rationally coordinate the budgetary subsidies policies of the member states, on the one hand, and to publish (for the Fund members) all of the consolidated economic policies and informative bases for cooperation and the commitments of the countries of the region towards the strategic partners in financing the transport infrastructure projects.
Therefore, the analysis of the formation of a fair credit balance of the Fund indicates at least three serious and real types of potential. First, based on the founding roles of the member states and other interested associations, secondly, based on the purposeful activation and mobilisation of resources and financial operations with securities, through an organised, respectable concept of publicprivate partnership, the instruments and sophisticated issuing of growth in equity capital at the international financial markets (issuing of convertible and project bonds, i.e. project financing activation by combining equity investment and borrowing according to specific performance and values of a certain transport infrastructure project), and thirdly, based on the credit support of the European Investment Bank, and its organisational, credit and moral support aimed at activating the co-financing models with international development banks and agencies, in particular with the IBRD and its development branches, the European Bank for Reconstruction and Development, BRICS Bank, Development Arab Funds, etc.
In addition, the EU funds have a special role in the context of the Fund's potentials. Namely, starting from the ideas and obligations of the project for the construction of the Transnational European Network, as well as the Treaty of Ognjanović V. How to Advance the Financing of Transport Infrastructure in the Region Najzad, ovim povodom, vredna je poštovanja i pažnje principijelna i rezolutna podrška Evropske bankarske federacije, za formiranje regionalnih finansijskih mehanizama. Ova ugledna institucija snažno promoviše integraciju finansijskih resursa, odnosno integraciju i kooperaciju tržišta finansijskih usluga i to pre svega u funkciji jačanja lokalnih i regionalnih finansijskih snaga za produktivnu komunikaciju s glavnim finanijskim centrima, što u našem slučaju znači s Evropskom investicionom bankom.
Two more blocks of activities in the formation of the Fund's potential should be evaluated separately. First of all, in the strategy of creating productive capital, i.e. in cooperation with the governments of the member states, the Fund, through its public-private commercial programmes, had the real opportunities to organise a legal return of the capital, which was taken outside of the region in various controversial ways, i.e. the so-called "runaway" capital. Obviously, this capital, as has been shown by the experience of many countries in the world, had, under certain conditions, been in the function of strengthening credit arrangements for financing regional transport infrastructure.
Likewise, through public-private commercial arrangements, the Fund is able to create conditions for unifying and using the potential of remittances from the diaspora and the migrants, i.e. for their more productive investment and development engagement. Moreover, in the strategy of creating the Fund's capital, one should not overlook and underestimate the contribution that the Fund would bring serious and purposeful programmed cooperation with the institutions and agencies of the European and the international financial marketing.
Also, in the process of creating the Fund's strategy, i.e. organising and managing investment and business policies, the positive experiences from the East Asian development, experiences of similar solutions of funds and other successful financial institutions and investment funds in the world would be used. Good examples are, for example, the INFRA Fund Programme of the US Department of Transport, the development funds in South America, Africa, or the experiences of the Arab Fund for Economic and Social Development, the Abu Dhabi Fund for Arab Economic Development and other similar financial mechanisms in the world.
Finally, on this occasion, it is worth paying attention to the principled and resolute support of the European Banking Federation, for the formation of regional financial mechanisms. This prominent institution strongly promotes the integration of financial resources, i.e. the integration and cooperation of the financial services market, primarily in the function of strengthening local and regional financial forces for productive communication with the main financial centres, which in our case means with the European Investment Bank.

What Can Be Concluded?
In order to activate this Project, brave decisions and inventive actions of the competent state bodies, i.e. the regional and local communities, are needed. The task is definitely not easy, nor can it be finalised without serious difficulty. However, we should have faith that it can be achieved.
The countries of the region are paying a high cost due to their own lack of organisation and delays in the construction of the transport infrastructure. The fact that the Corridors have been in the process of construction for more than thirty years produces multi-layered and multi-dimensional, practically immeasurable, losses. All the countries of the region, together, and individually, have delays and breaks in their economic and financial development, i.e. in the development of democratic structures and human rights, in the development of culture and education.
The establishment of a joint Fund for the financing of transport infrastructure would, in essence, be a key basis for the efforts of the current Balkan political and state structures to ensure that political stability in the region is treated as the highest value priority. In fact, the Fund would, in the right stage of its strategy for formulating the balance of funds and investment policy, be a functional block for the integration of the countries of the region Ognjanović V. How to Advance the Financing of Transport Infrastructure in the Region Literatura / References and a serious cohesion factor for entering the European economic area.
At the same time, the faster completion of transport infrastructure construction will undoubtedly improve, strengthen and expand the complex possibilities of using the total natural and economic resources of the region. Therefore, the positive development of the land (rail, road, highway), air, maritime and river transport would bring a much higher international rating and better maritime and Danube positions of the region with regards to the West and the East, as well as the North and the South. In fact, the conditions would, thus, be created to greatly appreciate the comparative advantages of the region in relation to most European countries (especially in relation to those that do not have access to the Danube and the sea).
The formation of the Fund would, therefore, greatly contribute to saving time required to complete the construction and implement joint projects, as well as to promote the projects for exploitation and maintenance. In addition, the development strategy of the region would be significantly revitalized. Simply put, through its specific strategy and coordination of the member states' policies concerning the formation of potential, the Fund would, among other things, implement the logistics in training the society and economy in this region, for the purpose of developing the realistic bases for cooperation in terms of the European integration, as soon as possible, rationally, efficiently and timely. At the same time, it would accelerate the promotion of the increased participation of the region in the European programs and systems of economic, ecological and technological development.
Ognjanović V. How to Advance the Financing of Transport Infrastructure in the Region