The London-based financial institution whose job is promoting the development of market economies in Eastern Europe reports the economies in the region are growing, especially in the southeast.

The European Bank for Reconstruction and Development (EBRD) says in its report economic growth in seven countries in South-eastern Europe accelerated to five percent this year. Albania's economy grew the fastest, at 6.2 percent, followed by Romania (5.8 percent) and Bulgaria (5.5 percent).

Willem Buiter, the EBRD chief economist, told a forum at Johns Hopkins University Thursday that the Balkans are finally reaping the benefits of peace in the former Yugoslavia. He says Bulgaria and Romania are implementing tough reforms, in large part to meet the European Union's membership requirements by 2007.

Mr. Buiter says Serbia is doing less well. "Serbia is in the fourth year of its transition and its progress has virtually stalled in these past two years. Now a two-year transition is too short a time to afford your self a holiday," he said. "And the reasons (for the slowdown) are clear. Public attention is diverted by the constitutional issue (with Montenegro), Kosovo, and the reformers have fallen out among themselves."

Mr. Buiter says reform has also slowed in the eight Central and East European countries that joined the E.U. this past May. "In all these countries it is either reform or stagnate and decline. And at some point I think political reality will dawn and this populist interlude will pass. But it could be a few years," he said.

Mr. Buiter mentions Poland, the Czech Republic and Hungary where the reform process has fallen back.

In the former Soviet Union, the oil boom in Russia has fueled a pick up in growth. But the EBRD says it is concerned about the investment climate in Russia. Mr. Buiter says while foreign investors - particularly in the oil sector - invest in Russia, domestic investors are pulling their money out of the country.