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  BOSNIA
HERZEGOVINA


REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,835,777

Capital
Sarajevo

Currency
Dinar

President
Mr Alija Izetbegovic

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Background:
Bosnia and Herzegovina's declaration of sovereignty in October 1991, was followed by a referendum for independence from the former Yugoslavia in February 1992. The Bosnian Serbs - supported by neighboring Serbia - responded with armed resistance aimed at partitioning the republic along ethnic lines and joining Serb-held areas to form a "greater Serbia." In March 1994, Bosniaks and Croats reduced the number of warring factions from three to two by signing an agreement creating a joint Bosniak/Croat Federation of Bosnia and Herzegovina. On 21 November 1995, in Dayton, Ohio, the warring parties signed a peace agreement that brought to a halt the three years of interethnic civil strife (the final agreement was signed in Paris on 14 December 1995). The Dayton Agreement retained Bosnia and Herzegovina's international boundaries and created a joint multi-ethnic and democratic government. This national government is charged with conducting foreign, economic, and fiscal policy. Also recognized was a second tier of government comprised of two entities roughly equal in size: the Bosniak/Croat Federation of Bosnia and Herzegovina and the Bosnian Serb-led Republika Srpska (RS). The Federation and RS governments are charged with overseeing internal functions. In 1995-96, a NATO-led international peacekeeping force (IFOR) of 60,000 troops served in Bosnia to implement and monitor the military aspects of the agreement. IFOR was succeeded by a smaller, NATO-led Stabilization Force (SFOR) whose mission is to deter renewed hostilities. SFOR remains in place at a level of approximately 21,000 troops.

Update No: 058

The new policy of the Bush Administration in the wake of 9:11 is now clear and could have a profound effect on Bosnia. The US should intervene in troubled countries as the Clinton Administration did with decisive success to end the republic's 1992-95 civil war, but it should then disengage, leaving others, notably the Europeans, to do the peace-keeping and the bulk of the financial assistance.
This is the opposite of the previous strategy, largely forged by Richard Holbrooke, the US negotiator of the Dayton Agreement, who is married to an Hungarian. She doubtless persuaded him to keep the US engaged, which is what happened in the post-1995 period
Some five years after deploying 32,000 troops in Bosnia to keep Serbians, Croatians and Bosnian Muslims from fighting each other, there are still 18,000 international troops on the ground in Bosnia-Herzegovina. Few doubt that without them the fragile peace could well crumble into discord and dissension again.
Bosnia is still a very divided country, ethnic animosities that brought 200,000 deaths and created millions of refugees are just below the surface. The international aid workers and officials on the ground are convinced that the troops are still needed to keep a lid on things and to buy more time to create a valid civil society. That is becoming more difficult to persuade the Americans of, keen to devote more attention and troops to the anti-terrorist campaign.
Donald Rumsfeld, US defence secretary, said in mid December that the troops should be reduced by a third in 2002; doubtless he had in mind that many of those going should be among the 3,500 American troops. The Bosnia Mission, he told a NATO meeting, was straining the US and others "when they face growing demands from critical missions in the war on terrorism."
A new division of labour can be expected in which the Americans are the peace- makers and the Europeans are the peace-keepers and nation-builders, as in Afghanistan. This is likely to involve fewer troops in all, who will act as a centralised force ready to be transported at a moment's notice, if trouble brews up. It will in all likelihood involve less aid too. There will be many in the aid movement who think this will be no bad thing. The US$5bn extended to Bosnia since 1995 has often found its way into the wrong hands.
There is no longer any need to bribe the Bosnians to stay together. "In Bosnia four years of fighting led to a kind of exhaustion and realisation on all sides that war is not going to help them," says Wolfgang Petritsch., the International High Representative in Sarajevo, the top international official in the Balkans, The Afghan developments have massively underscored that.
But Mr Petritsch warns strongly against pulling out forces too soon in Bosnia, The troops are still needed to rebuild the country, ravaged by war. Petritsch and his colleagues are trying to create an independent judiciary and a legal framework for economic development, including clear rules on the recovery of property by refugees.
What the Bosnians need to do to keep the West interested is to set up legislation to attract foreign investment; not least because this is where the Americans could come back in force again. A new law on foreign investments was passed in the federation's lower house in late December, already adopted in the upper house. But it will take time to assess its full significance.

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ENERGY

Bosnian Serb energy minister announces plans to increase electricity generation


Energy balance in the Serb Republic [RS] should increase three to six per cent this year from 2001, said RS Minister for Energy Bosko Lemez on 7th February, Onasa News Agency web site, has reported.
Lemez confirmed after the session of the steering board of RS power utility (EPRS) of the RS government that the evaluation of offers for export has already been implemented and that certain activities on reducing losses of 7 to 8 per cent will be taken this year. 
Speaking about the debts of Serbia's power grid to the EPRS, Lemez said the 36 million [convertible] marks debt has been lowered to 20 million marks. 
He said that besides debts of ex-Yugoslav republics, the EPRS claims about 140 million marks from economic subjects and households.

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FINANCIAL NEWS

Federation government adopts draft budget for 2002


On 13th February the government of the Bosnia-Herzegovina Federation adopted a draft budget for 2002 amounting to 549,8m convertible marks, which is 29,8 per cent increase in comparison to last year's budget, a statement issued by the Federation government says, SRNA News Agency has reported.
The draft budget includes 118m convertible marks, a part of the succession assets of the SFRY [Socialist Federative Republic of Yugoslavia], which will be earmarked exclusively for development programmes.
The budget increase in comparison to the last year is based on extra tax-free revenues amounting to 196m convertible marks and extra revenues raised from taxation of luxury goods, amounting to 156m convertible marks.
When drafting the budget, the government started with the assumption that a minimum monthly revenue would be 100m convertible marks...

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FOREIGN ECONOMIC RELATIONS

BiH business forum to attract new investors


Despite efforts by Bosnia-Herzegovina's (BiH) central bank governor and the international community's high representative, investment activities in the small Balkan country have in the last two years have been stagnant and foreign investment almost non-existent, the Croatian News Centre announced recently.
The local population is under the impression that its nation is subject to silent sanctions of the West, disillusioned about successfully undergoing structural reforms and fulfilling the wealth of prerequisites necessary for admittance to the Council of Europe, of which BiH is still not a member. 
An upcoming annual international business forum will address investment issues, Bluebull reported. Entitled 'How to invest in Bosnia-Herzegovina," the gathering will attract some 250 local and foreign participants.

Bosnian, Yugoslav ministers to sign free trade accord in Belgrade

Bosnia-Herzegovina Minister of Foreign Trade and Economic Relations, Azra Hadziahmetovic, and Yugoslav Minister for Economic Relations with Abroad, Miroljub Labus, will on 1st February in Belgrade sign an agreement on free trade between the two countries, the Bosnia-Herzegovina Ministry said in 28th January press release, Onasa news agency web site has reported. 
Teams of experts from Bosnia-Herzegovina and Yugoslav on 13th December 2001, ratified the text of the agreement. 
The agreement is based on the asymmetric model, according to which Yugoslavia will, when the agreement becomes valid, abolish customs fees on all goods imported from Bosnia-Herzegovina, except oil products and protected and used rubber. 
On the other side, Bosnia-Herzegovina will, in the next two years, be gradually reducing the customs fees on the goods imported from Yugoslavia. 
The agreement contains 35 articles and four annexes.

Bosnian company wins tender to build part of water-supply system in Libya

An investor from Libya has informed the Sarajevo-based Energoinvest company about its decision to award this Bosnia-Herzegovina company with a tender worth US$50m, Energoinvest says in a press release, reported by Bosnia-Herzegovina Federation TV.
This is the so-called Great River project, i.e. bringing fresh water from underground lakes in the desert to the Mediterranean coast to solve water-supply problems. According to the director of Energoinvest's Energetika engineering department, Dzemail Vlahuljak, the company will be working on the protection of metal parts for the 204-kilometre long Great River. The whole project should be completed within 26 months.

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TRANSPORT

Bosnian Serbs to receive World Bank loan for road reconstruction


Negotiations on a loan for the reconstruction of roads and traffic safety in Bosnia-Hercegovina, which were held at the World Bank in Washington, have been completed, and the Serb Republic [RS] should receive 22.6 million convertible marks, said Branko Dokic, RS minister of transport and communications, Bosnian Serb Radio has reported. 
Dokic, who spoke to representatives of Nathan and Associates, a major consultancy in Washington, said that the road loan would be made available after approval by the World Bank committee and the [Bosnian] entities' governments should agree by 25th February. 
The RS Ministry of Transport and Communications has reported that Minister Dokic also talked to representatives of a consultancy from New York about the modernization of Banja Luka airport and the Banja Luka-Gradiska [Bosanska Gradiska] road project and financing of its construction.

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