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BOSNIA AND
HERZEGOVINA


  
   

REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,922,205

Capital
Sarajevo

Currency
Convertible Mark 

President 
Zivko Radisic

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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: 069 - (28/01/03)

The Bosnians are no longer in the news; and that is in itself a good thing. For the news coming out of Bosnia in the early 1990s was dire in the extreme. A conflict leaving 240,000 dead, as many again mutilated and over one and a half million refugees was an awful warning of the ravages of war.
As the US and the UK ready themselves for war in Iraq, they could do worse than learn the lessons of Bosnia. In both cases there is a three-way split, which is being contained in Bosnia by the complex structure of a confederation. The Bosnian Serb republic might seem an anomaly, next door to Serbia with which it could be conjoined. Indeed, the idea occurred to many, setting off the civil war in the early 1990s, just as Croats in the Muslim-Croat republic began to form a similar yen to join up with Croatia, their own neighbour, leaving the Moslems on their own.
Such a division of territory was never acceptable to the international community. For it was bound to come with a terrible price - that of ethnic cleansing, the hundreds of thousands of dead and mutilated in the 1990s early on.
The Dayton Accord of 1995 belatedly brought the war to an end. The international community has subsequently borne a big responsibility, sustaining troops on the ground to keep the peace and a ready flow of aid and credit to turn the economy around from disruption on a tragic scale. The carrot - and - stick strategy has continued ever since; and it has at least brought nearly eight years peace, something not possible to predict at that time.

EUPM replaces UN 10-yr peacekeeping mission
The United Nations completed its 10-year mission in Bosnia-Herzegovina on New Year's Day and was replaced by the European Union Police Mission (EUPM). Bosnians have remained grateful to the UN's efforts to heal the wounds of the war and end the ethnic hatred among the three ethnic groups in the country. However, a bitter feeling has remained after the UN role in the 1995 tragedy of the former eastern Moslem enclave of Srebrenica, when Bosnian Serb troops massacred around 8,000 Bosnian Moslem men after UN troops surrendered their weapons and left the town they were supposed to protect.
The first 100 UN peace monitors arrived in Bosnia in February 1992, on the eve of the country's 1992-1995 war. The number was constantly increasing during the war when the UN monitoring mission became the UN Protection Force (UNPRO-FOR) and reached a 21,000-strong force in December 1995, with the Dayton Peace Agreement.
Following the peace implementation in Bosnia, the first post-war task of the UN mission, representing 96 nations, was to supervise transformation of the wartime police to a regular civil police in two Bosnian entities - the Serb-run Srpska Republic and the Moslem-Croat Federation.
The international community's high representative to Bosnia-Herzegovina, Paddy Ashdown, in December called on the new state parliament to effect the necessary reforms to bring Bosnia closer to Europe. "Nothing now worries me more than this country's economy," Ashdown was quoted as telling the parliament, established after the general elections on October 5th.
He said the newly elected Bosnian authorities have to do their best to restart the economy, completely destroyed during the country's 1992-1995 war, and badly managed in the post-war period when the country was dependent on international funds. However, he warned that foreign aid "is already declining dramatically." Fighting corruption and fraud should be the first step in the recovery process.
Bosnia currently loses more than 1.2bn convertible marks (0.6bn Euro) to criminals every year.

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AVIATION

Sarajevo airport is placed under Bosnian air traffic control

On 1st January of this year, Sfor [Stabilization Force] returned air traffic control over Sarajevo international airport to Bosnia-Herzegovina, reads a statement issued by the Bosnia-Herzegovina Civil Aviation Department, Croat Radio Herzeg-Bosnia has reported. The statement adds that for more than 10 years after the beginning of the war, air traffic control services to civil and military users were rendered by French aviation forces within Sfor, Ifor [Implementation Force] and Unprofor [UN Protection Force]. The Federation Direction for Civil Aviation, under observation by the Bosnia-Herzegovina Civil Aviation Department, took over airport and airspace control on 2nd January 2003.

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FOREIGN LOANS

EU, Bosnia sign memorandum on financial assistance worth up to 60m euros

The European commissioner for economic and monetary affairs, Pedro Solbes, and BiH [Bosnia-Herzegovina] representatives on 6th January signed a memorandum of understanding providing macro-financial assistance of up to 60m euros, comprising a 40m grant and a 20m loan, said a press release issued by the EU delegation to BiH, Onasa News Agency web site has reported. 
This assistance is to help finance reform processes towards a closer association with the EU and is conditional on the implementation of reforms in public finances and administration, financial sector, private sector development and improvement of the business environment. BiH is also expected to fully comply with the requirement of the present International Monetary Fund stand-by arrangement. 
"The implementation of the second tranche is conditional upon a clear progress in carrying out reforms of public finances and administration, most notably customs and taxes. This will include the creation of an overall implementation strategy for the unification of the two entity and Brcko District customs administrations," the release read. 
The programme implementation also foresees close cooperation with CAFAO [Customs and Fiscal Assistance Office] in order to create an efficient customs and tax administration, combat fraud and tax evasion, and increase harmonization of the entity tax systems in order to enhance revenue collection and promote the creation of a single economic space. 
Stimulating private sector development and business environment will require fast adoption of laws on bankruptcy and liquidation, and a removal of obstructions to the privatisation of strategic companies. 
BiH will have to implement the Competition Law and create the Competition Council, thereby fostering the development of a single economic space. 
The completion of reforms in the banking sector will entail privatisation of the remaining state-owned banks according to the timetable prescribed by the law, and strengthening of banking supervision by enforcing the existing regulations. Additionally, the draft law on insurance must be submitted to the BiH parliament and entity legislation harmonized. 
This assistance is provided to ease the external financing constraints, support a sustainable balance of payment situation, and secure the country's foreign exchange reserve, and in general support efforts to maintain political and economic stabilization. 
The EU recognizes that BiH has achieved some progress in economic stabilization and reforms and has made steps towards a well-functioning market economy.

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TELECOMMUNICATIONS

30 million loan to make operator more attractive to private investors

A €30 million loan from the EBRD to Telekom Srpske, the state-owned telecoms operator in Republika Srpska, will help the company increase its number of fixed and mobile networks in the region, and generally improve its level of services. The government of Republika Srpska, one of two entities of Bosnia and Herzegovina, has at the same time re-affirmed its commitment to go ahead with the privatisation process.
The loan - the EBRD's first in Republika Srpska and the largest in BiH without a guarantee from the government - will also help the region's second-largest telecoms operator ensure that the steps leading up to the company's privatisation, are taken transparently and in accordance with international procurement practices.
Jean-Marc Peterschmitt, Director for the Western Balkans at the EBRD, said the loan is a direct response to the commitment of the Government of Republika Srpska to continue the country's privatisation process. He emphasised it will help the company become more attractive to foreign investors ahead of its privatisation, expected within two years, improving its competitiveness on the market and that the increased competition will benefit the whole sector, as well as telephone customers.
The loan builds on an €18 million loan signed in 1998 to support the reconstruction of three telecoms operators in Bosnia and Herzegovina, including Telekom Srpska, following the regional conflict in the early-1990s. That loan was supported by more than €15 million in donor funds from countries including Germany, Italy, Japan, Switzerland and the United Kingdom.
Dr. Mladen Ivanic, the Prime Minister of Republika Srpska, said the loan from the EBRD will push forward Telekom Srpske's privatisation, which will bring fresh capital to support other development projects that ultimately benefit many of the country's residents. Mr Ivanic added that the government is committed to go ahead with the privatisation of other infrastructure companies in the near future
Zeljko Jungic, General Manager of Telekom Srpske, emphasised that this support will help accelerate development plans that should enable Telekom Srpske to maintain a leading position in Republika Srpska and achieve a leading position in BiH. He said projects financed by this loan will offer new telecommunications services to the people of the region. 
Telekom Srpske, founded in 1996, with its headquarters in Banja Luka, is 80 per cent owned by Republika Srpska and public funds. As a leading telecoms operator in the region, the company offers services to clients that include fixed and mobile telephony, and as of this year is also the national internet provider. 
To date the Bank has invested €240 million in 27 projects in Bosnia and Herzegovina, and more than €1.7 billion in 64 projects in the telecoms sector across central and eastern Europe and the CIS. For further information contact Jazz Singh, EBRD, Tel: +44 20 7338 7931; E-mail: singhja@ebrd.com.

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