Assistant Secretary Gordon: Thank you, Vesna, for that very nice introduction and for giving me the opportunity to make the opening remarks at this important forum. I am, for obvious reasons, delighted to be back in Dubrovnik. I’m also pleased to be joined by a large U.S. delegation including several congressmen -- Gallegly, Green and Long. I’m delighted to see them here. As well as a number of colleagues from the State Department and the White House. I’m honored to be in the room with so many leaders from throughout the region.

I arrived here last night from Paris where I accompanied Secretary Clinton to the third meeting of the Friends of the Syrian People. She is now on her way to Tokyo for the Afghanistan Assistance Conference and then on to Vietnam, Cambodia, Laos, Mongolia, Egypt and possibly elsewhere. But she did ask me to send her warmest regards to all her counterparts in the room this morning and to carry a strong message of support from the United States for all of your efforts to advance stability, democracy and prosperity in this region.

As all of you are well aware, and as I think Secretary Clinton’s travel schedule suggests, we are facing a world of incredibly diverse and complex challenges. In addition to Syria we’re preparing for transition in Afghanistan; we’re working to hold Iran accountable to its international commitments; we’re working on ongoing efforts in North Africa; and of course wrestling with the greatest financial crisis since the Great Depression.

I want to say this morning this doesn’t lessen the U.S. interest in the Balkans, a part of the world where the United States has invested so much and where we have so many friends and interests. Indeed this weekend’s summit is an opportunity for me to reaffirm the American commitment to ensuring the full integration of this region into Europe. But these global challenges do mean that regional leaders here will have to do even more to ensure that the Balkans do not fall behind and that the Balkans do not fall off of our radar screens.

The United States wants strong, stable, democratic and prosperous partners who can help us address these global challenges. That means overcoming the divisions, the narrow nationalism, and the inflexible economies that have no place in the 21^st Century.

I first attended this Dubrovnik Summit in 2009, in the summer of 2009 along with then Deputy Secretary of State Jim Steinberg. In the three years since then I think we can say that the countries of Southeastern Europe have made tangible progress in a number of key areas.

Croatia completed its membership negotiations with the European Union. Congratulations for that. We are really delighted that Croatia will become the EU’s newest member next year, and we hope for timely ratification by all EU members before July 2013.

Serbia and Montenegro have since then become EU candidate countries. Montenegro only six years after independence was just invited to begin EU accession negotiations and has joined NATO’s Membership Action Plan.

Bosnia-Herzegovina was also invited to join MAP with strong U.S. support and now needs only to register defense property under state ownership in order to activate that membership.

NATO, of course, at the Chicago Summit six weeks ago reaffirmed that Macedonia can join the alliance as soon as the name dispute is resolved. As you all noted, Secretary Clinton in Chicago reaffirmed her conviction that NATO’s door must remain open to those aspirants, including several who are represented here this morning, who make needed reforms and are in a position to contribute to our common security.

Another indicator of progress is the extent to which Balkan countries have joined with our EU and NATO partners to become providers rather than consumers of security. Albania, Bosnia, Croatia, Macedonia and Montenegro all have troops serving alongside American and other European soldiers in Afghanistan, and we’re very grateful for that. Last fall a small group of Adriatic charter countries, trainers deployed together exhibiting a degree of military-to-military cooperation that would have been unimaginable a decade ago. We appreciate these countries’ commitments to help sustain the Afghan National Security Forces after NATO concludes its combat mission in 2014.

I also want to acknowledge the progress made between Kosovo and Serbia. While clearly more needs to be done, and I’ll have a bit more to say about that later in my remarks, the very fact that the two countries began sitting down together across the negotiating table is itself a step towards recognition that the only way forward is reconciliation.

Agreements were reached in a number of important issues including cross-border freedom of movement, the customs stamp, recognition of university diplomas, and a range of other issues. We look forward to the full implementation of these agreements.

Now while we applaud the considerable efforts across the region to overcome past enmity and reform dysfunctional institutions, we have also seen disappointing setbacks and frustrating intransigents. Clearly more must be done before the whole of Southeastern Europe can be considered fully integrated into the Euro-Atlantic community.

Just to be clear again, that is the ultimate vision of the United States. We have said many times that Europe will not be complete until all of Southeastern Europe is fully integrated.

Let me just briefly but also frankly say how the United States sees the current challenges and opportunities in the countries in this region, starting with Croatia.

Croatia has become a true leader in the region as its rapid political reform process led to early membership in Euro-Atlantic institutions. Its success we think demonstrates that the possibility of progress along with hard work and sacrifice to advance the interests of its citizens. As Secretary Clinton said last June following the completion of the accession talks, Croatia has shown by example that European and Euro-Atlantic integration is not only a worthy goal, it is also attainable for all Western Balkan countries. The momentum resulting from Croatia’s transition should be cultivated as a model throughout the region.

Croatia’s success after many years should demonstrate to other candidate countries that for all of the talk of enlargement fatigue, the EU’s open door really is open. Reform your economies, reconcile with your neighbors, meet democracy and human rights standards, and you will ultimately join the Union.

Despite these achievements, we trust that Croatia will not rest on its laurels but continue its efforts to strengthen the rule of law, especially on prosecution of official corruption and remaining war crimes cases, and make necessary reforms to the business and investment climate.

Montenegro has made solid progress towards NATO membership and as I noted recently opened EU accession negotiations. The country has also made important improvements in the areas of democratic governance, the rule of law, and media freedom. However, the fight against corruption and organized crime at all levels of society must continue to be addressed by Podgorica.

Albania quickly adopted necessary reforms to join NATO, however, the two year political stalemate in the parliament after the 2009 elections has delayed progress towards EU candidacy status. While the opposition’s boycott of parliament has formally ended, lack of political will has prevented the conclusion of parliamentary and electoral reforms. The process by which the parliament elected a new president was a lost opportunity to demonstrate the sort of political consensus that helped Albania gain NATO membership. Such a zero sum approach to politics is hindering progress on EU integration as well as internal stability and economic development. After this lengthy period of stasis, it is time for political leaders to move past personal squabbles and brinksmanship in order to make tangible progress on the reform agenda.

Macedonia’s name dispute with Greece continues to thwart its aspirations for NATO membership and the start of EU accession talks. We were disappointed that NATO was unable to welcome Macedonia at the Chicago Summit as we had hoped, but as NATO is a consensus organization, Macedonia and Greece must first resolve their bilateral disagreement before the alliance can fulfill the membership offer extended at the Bucharest Summit. The United States supports the ongoing UN process on this issue and we will embrace any mutually acceptable solution that emerges and we encourage the parties to move forward. We’ve heavily invested in Macedonia’s success, supporting the growth of civil society and strong democratic institutions as well as efforts to institutionalize principles of diversity and inclusion throughout government and society. Although Macedonia has made progress in inter-ethnic relations, we are alarmed by signs of growing tension between communities. We also remain troubled by developments that affect the independence of the judiciary and the media. We have encouraged the government to redouble its efforts and implement the letter and the spirit of the Ohrid Framework Agreement.

Let me say a word about Bosnia and Herzegovina. When I spoke at a conference in Sarajevo last June I said that Bosnia and Herzegovina could only move forward if leaders there made progress in three areas: government formation, respect for state institutions and the Dayton Framework, and government reform.

The country appeared to be getting back on track earlier this year after a 16 month political stalemate with the formation of a government and adoption of key laws needed to advance its Euro-Atlantic integration. However there have been troubling signs of regression in recent weeks. Narrow personal and political agendas as well as attempts to stoke ethnic fears are again impeding progress on needed reforms. Ongoing efforts to reshuffle the state and federation governments are an unwelcome distraction from the economic and political priorities, including EU and NATO membership, that all of the main political parties profess to support. Work needs to resume immediately on meeting the requirements necessary for submitting a credible EU candidacy application and beginning NATO’s Membership Action Plan this year.

In order for Bosnia to keep pace with positive developments elsewhere in the region, it must also be able to function as a state that can deliver results for all its citizens. Rhetoric challenging Bosnia’s sovereignty and territorial integrity continues to raise doubts about whether Republika Srpska’s leaders are truly committed to the Dayton Agreement and EU integration.

The U.S. strongly supports a framework of one state, two entities, and three constitute peoples. Republika Srpska is and must remain a constituent part of Bosnia and Herzegovina.

As we approach the 17^th anniversary of Srebrenica, let me be clear. Given the well documented record of atrocities and war crimes, historical revisionism where the victims are to blame will not succeed and cannot be tolerated. Regardless of ethnicity, whoever wins Srebrenica’s election in October will have an obligation to respect the memories of the victims and promote reconciliation for all of Srebrenica’s current residents.

Finally, let me turn back to Kosovo and Serbia. The United States strongly supports the Euro-Atlantic aspirations of both countries. We were encouraged by the EU’s decision earlier this year to grant candidate status to Serbia as well as the decision to give Kosovo a road map towards visa liberalization and to undertake a feasibility study for a Stabilization and Association Agreement. In addition, we welcome the progress made by the two sides as part of the EU-facilitated dialogue.

Despite significant domestic political criticism on both sides, leaders reached agreements on a range of issues affecting people’s daily lives. As I said before, we now must see full implementation of these agreements. Our position on the way forward which has been developed in very close cooperation with the EU and NATO is clear. We expect to see Kosovo and Serbia continue to move towards normalizing relations with each other. Neither we nor the EU expect Serbia to recognize Kosovo at this point. It won’t do that. However, Serbia will have to come to terms with the reality of a democratic, sovereign, independent, and multi-ethnic Kosovo within its current borders. We can and will help with this process.

To that end, Belgrade must end its support for the illegal parallel security and judicial structures in northern Kosovo and ensure freedom of movement for all. In addition, Belgrade should not block efforts by Kosovo to implement decentralization measures that will give people living there a normal life for the first time in 13 years. Partition is not an option, neither for Serbia nor Kosovo nor for any other country represented here today.

We welcome the statements by Serbian President Nikolic regarding his desire to maintain Serbia’s path towards the EU and implement in full the agreements reached in the dialogue. We hope to build a constructive relationship with the new President and his new administration.

Turning to Kosovo specifically, the country has considerably strengthened its political institutions over the last four years. Having weathered a series of tests to the stability and constitutional order, Kosovo needs to continue the hard work of building a cohesive state and developing its multi-ethnic, democratic institutions. A vital part of this process includes ensuring respect for the rights of all of Kosovo’s communities including Kosovo Serbs and the preservation of their culture and religious heritage. In addition, Kosovo should continue improving its governance while also tackling unemployment, barriers to investment, corruption, and organized crime. We look forward to Kosovo fulfilling the final steps needed to end supervised independence later this year and I look forward to my visits to both Belgrade and Pristina tomorrow.

In closing let me just mention a final overarching challenge that affects all of us, which is the global financial crisis. We all know that economic forces are transforming foreign policy realities everywhere. Political reforms of the Arab Spring were sparked by the desperate act of a fruit seller. Governments across Europe have been toppled by the negative impact of the downturn on voters, and countries are gaining influence due to the growth of their economies rather than the size of their militaries.

There is no doubt that the outstanding political issues that I’ve outlined here are exacerbated by the poor economic situation that is affecting the entire Euro-Atlantic community. But rather than motivating Balkan leaders to concentrate on these domestic challenges, the crisis has led to a worrying increase in nationalist rhetoric and the reemergence of chauvinism as a political rallying point.

Instead of wasting time on pan-nationalist pursuits and inflammatory speechifying, political leaders should be focused on explaining the necessity of hard reforms and then making those reforms, particularly on rule of law issues, promote a stable investment climate.

Foreign investors have a wide range of options and will continue to bypass countries plagued by corruption, weak state structures and political instability. By strengthening their economies as well as their political institutions Western Balkan countries will become the kind of democratic, prosperous and capable allies that we need in the Euro-Atlantic community to confront today’s pressing global challenges.

The United States, in close partnership with the European Union, still has an important role to play in completing the unfinished business of Europe. We remain committed to staying the course. Ultimately, however, the responsibility falls on regional actors. Local political leaders must be willing to move past ethnic divisions and personal interests and focus on delivering the genuine reforms demanded by their citizens. We need partners who share this vision, who are prepared to put the interests of the people ahead of their own, and who are willing to compromise for the greater good. The international community cannot want progress and reform more than the leaders of this region do.

Thank you all very much for your attention this morning.