President Clinton is going to Sarajevo tomorrow to a summit meeting inaugurating the Stability Pact for Southeast Europe. The pact was inspired by the recognition that, having intervened in Kosovo, the NATO countries now have a responsibility to ensure a lasting peace. The problems of the Balkans cannot be resolved piecemeal; a more comprehensive approach is needed. But the Stability Pact is only an empty frame: It needs to be filled with content.

The problems of the region are best understood in terms of a conflict between two concepts of citizenship: an ethnic or tribal concept that gives rise to a closed society, and a civic concept that is the foundation of an open society. (The distinction was first made by Henry Bergson and elaborated by Karl Popper.) We have seen a struggle between the ethnic and civic concepts of citizenship. In Yugoslavia, the civic concept lost out and Yugoslavia disintegrated. In Western Europe, the civic concept prevailed: The integration of Europe stands in stark contrast to the disintegration of Yugoslavia. The European Union must now extend its protective umbrella over the region.

The various nationalities in the Balkans could live together in peace as long as there was an overarching authority to preserve law and order. In the past the authority was provided by the Ottoman and Austro-Hungarian empires. Tito's Yugoslavia played a similar role. The days of empires and authoritarian regimes are now over. But the European Union, if it is willing to reach out, is in a position to ensure lasting peace for the region.

The region itself must be seen to be larger than the former Yugoslavia, because Humpty Dumpty cannot be put together again. It must include Albania and Bulgaria and ought to be open to Romania and Moldova. We must not repeat the mistakes we made in Bosnia. The reconstruction in Bosnia failed to generate momentum because the territory is too small and the various governmental entities, from federal to local, insist on having their not-so-clean fingers in every pie. This time our engagement must extend to the entire region and foster private enterprise.

Any plan for the region must have the enthusiastic support of the people in the region. My foundation network organized a workshop of 25 policy institutes from the region that elaborated a proposal originally put forward by the Centre for European Policy Studies in Brussels. It envisages creating a free-trade area almost immediately and uniting the whole of southeast Europe with the existing customs union of the European Union and Turkey by 2003. The euro could serve as the common currency.

The European Union would allocate 5 billion euros, less than 5 percent of its annual budget, for a variety of programs. The World Bank and the European Investment Bank may lend $3 billion to $4 billion annually, but as in the case of the Marshall Plan, most of the investment will come from private sources if a suitable investment climate is created. Financial aid, admission to associated membership and eventual candidacy for full membership of the EU would be conditional on political and economic progress.

I fully endorse all the proposals with one exception: The document proposes that all sanctions against Serbia should be lifted immediately except for arms and the assets of named individuals. I believe that access to the international financial institutions should also be conditional on a change of regime. If Serbia is denied the financial assistance that neighboring countries receive, Milosevic cannot last long.

We could achieve with carrots what we could not achieve with sticks.

This plan for building an open society in southeast Europe would impose some costs on EU members, but the amounts are small because the whole region is smaller in economic terms than the Netherlands. The costs would hardly exceed those of humanitarian intervention, but the benefits would be incomparably greater. The plan has received widespread support both in the region and in the West but is in danger of dissipating without leadership. The Sarajevo summit must not content itself with empty words but set the goals for the Stability Pact; otherwise the process will get bogged down in bureaucratic infighting. President Clinton has a historic opportunity in Sarajevo to ensure that our intervention in Kosovo will not have been in vain.

The writer is an international financier and philanthropist.