"The Security Council expresses its concern at the Croatian Government's lack of compliance with obligations assumed under the Basic Agreement on the Region of Eastern Slavonia, Baranja and Western Sirmium (S/1995/951), the Croatian Government's letter of 13 January 1997 (S/1997/27, annex) and the agreement of 23 April 1997 between the United Nations Transitional Administration for Eastern Slavonia, Baranja and Western Sirmium (UNTAES), the United Nations High Commissioner for Refugees (UNHCR) and the Croatian Government concerning the return of refugees and displaced persons. The Council notes that the overall security situation in the Danube region remains relatively stable, but is particularly concerned about increasing incidence of harassment and intimidation of the local Serb community in the region and the failure of the Croatian Government to apply the process of national reconciliation in an effective way at the local level. This worrying situation, together with recent statements by the Croatian authorities, cast doubt upon the Republic of Croatia's commitment to include ethnic Serbs and persons from other minorities as full and equal members of Croatian society.