Nations in Transit - Bosnia-Herzegovina (2006)

Capital: Sarajevo
Population: 3,800,000
Status: Partly Free
PPP: $1,530
Private Sector as % of GNI: na
Life Expectancy: 74
Religious Groups: Muslim (40 percent), Orthodox (31 percent), Roman Catholic (15 percent), other (14 percent)
Ethnic Groups: Serb (37.1 percent), Bosniak (48 percent), Croat (14.3 percent), other (0.6 percent)

Executive Summary

During 2005,10 years after the war's end following the dissolution of Yugoslavia, Bosnia-Herzegovina made marked progress toward closer integration into Euro-Atlantic structures even as democratic governance and the reform agenda continued to be designed and driven by international actors. The two entities – the Croat-Bosniak-dominated Federation of Bosnia-Herzegovina (FBiH) and the almost exclusively Serb Republika Srpska (RS) – have been progressively weakened as central state structures have been put in place. The Office of the High Representative (OHR), the primary civilian authority established at Dayton, continues to be the main engine driving reform, though the use of the so-called Bonn Powers continues to decline as competences are transferred to local institutions to encourage local ownership.

The key development of 2005 was the announcement in November of negotiations opening on a Stabilization and Association Agreement (SAA) with the European Union (EU). Though Bosnia-Herzegovina now has a contractual relationship with the EU, it does not yet enjoy the same status with NATO. However, there has been progress on many of the NATO Partnership for Peace benchmarks, particularly on defense reform and cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY), even though NATO has not formally considered an application from Bosnia-Herzegovina since the last rejection in December 2004.

During 2005, central state strengthening structures were consolidated and embedded in a number of key areas, most notably on police and defense reform. This was also the year that many reforms reached the legislative phase, after having been discussed in commission and working-group formats for several years. However, lower-level state strengthening reforms had less international engagement and fell victim to more obstruction by both entities. The FBiH and the RS resisted various components of competency and material transfer to the state level; only with key international interventions were a number of reforms pushed through. Yet incidents during 2005, such as the oath swearing of army recruits at Manjaca in the RS, the attempt to rename the airport in Sarajevo, and the aggressive pursuit of the policy known as "two curricula under one roof," demonstrate that political representatives of all three constituent peoples continue to seize opportunities to make political gain from interethnic fear.

Bosnia-Herzegovina also made fiscal centralization progress, though the impact will not be felt until 2006, when the implementation of a value-added tax (VAT) occurs. In 2005, a single (state-level) account was operable from the beginning of the year in preparation for the move from sales tax to VAT.

National Democratic Governance. Despite a challenging start to the year with the resignation in January 2005 of the RS government, the state was stable overall. The functionality and productivity of the executive branch were markedly greater in the latter half of 2005 than in the first. By early March, the crisis appeared to have passed and a new government took office in the RS. However, the prime minister's attempt in June to remove the minister of foreign affairs proved unsuccessful and led to a worsening of relations at the cabinet level. By summer's end, the Council of Ministers (CoM: the government) was functioning again, although the OHR had to intervene to make key appointments to two state security agencies. In the fall, the CoM met frequently and regularly, and the prime minister can be credited with brokering a deal on police reform that ultimately proved sufficient for the European Commission to approve opening negotiations toward an SAA.

The path to Euro-Atlantic structures had been well signposted through the EU's feasibility study, the standard post-Council of Europe EU accession requirements, and the NATO Partnership for Peace benchmarks. The key areas of reform related to defense, intelligence services, public broadcasting, state government, and cooperation with the ICTY. In 2005, after the EU clarified the security components of the feasibility study requirements, police restructuring dovetailed with the question of entry into SAA negotiations, and it consumed major energy on behalf of local and international actors throughout the year. The OHR kicked off the process of introducing the tenets of the Police Restructuring Commission Report in the domestic theater. Unexpectedly, toward the end of September the prime minister and the president of the RS brokered a deal that was subsequently passed in October at a stormy session of the RS National Assembly, thus paving the way for the start of SAA negotiations. Though government activity was underscored by trenchant nationalism and petty personality rows, it remained stable and, moreover, achieved a major goal in securing a contractual relationship with the EU. But none of this would have been achieved without the direct and sustained assistance of the international community, so the national democratic governance rating remains at 4.75.

Electoral Process. No countrywide elections took place in 2005, but several mayoral by-elections were conducted, owing to either the death of the incumbent or, in one case, the recall of the incumbent via a referendum. These all passed peacefully and were conducted properly by the Election Commission. The international members withdrew from the Election Commission in June, though they did stay on as observers. The Election Commission also made a substantial start on or completed several big projects, not least of which was the implementation of the Law on Conflict of Interest, with the production of several party audits for the first time. It also conducted a review of the Law on Elections and liaised and contributed to a Parliamentary Working Group on the same topic. The work started in late 2005 and was performed largely by domestic actors, with only light intervention from the international community. The political scene continued to be dominated mainly by ethnic parties as all began gearing up for the 2006 elections. The electoral process rating improves from 3.25 to 3.00 because the Election Commission demonstrated that it had the capacity to apply the laws for which it is responsible and to plan for improvement of the election process in the long term.

Civil Society. The legal framework and overall state of civil society remained generally unchanged in 2005 compared with the situation the previous year. Civil society action took the form primarily of strikes in reaction to nonpayment or late payment of salaries; and teachers, other public sector workers, and private sector workers were all on strike in 2005. However, their actions were generally ignored by decision makers. Nongovernmental organizations (NGOs) are still perceived largely as service providers, and it is rare that they are included in any kind of policy formulation. The Farmers Association was the only significant body engaged in any kind of direct action during the year, staging a protest outside the Parliament for approximately six months (from July to December), but the government refused to meet their demands. The rating for civil society remains unchanged at 3.75

Independent Media. There is a growing awareness in Bosnia-Herzegovina that pressure on the media and individual journalists is unacceptable. Yet politics continues to have a hand in the world of Bosnian media – many titles and broadcasters unabashedly take editorial and reportage positions that reflect both ethnicity and political parties. In 2005, all Croatian, Bosnian, and Serbian press outlets were generally available across the country. In addition, the Journalists Union formed a single association in 2005, whereas previously there had been entity bodies. Alongside police reform, reform of the public broadcasting system and service was the second touchstone issue for SAA negotiations, and although it began the year in the drafting stage, its parliamentary adoption was extremely difficult. The Communications Regulatory Agency (CRA) was active throughout the year, though it was criticized by the minister of communications and transport, and the CoM attempted to reallocate funds belonging to the CRA. A more serious development occurred at the very end of the year, when on December 29 the State Investigative and Protection Agency raided CRA premises on a warrant from the Bosnia-Herzegovina prosecutor, who demanded statements and evidence related to the CRA audit report of 2004. This was surprising given that the Bosnia-Herzegovina auditor's report for 2004 had rated the CRA among the top 10 most transparent state agencies in Bosnia-Herzegovina. The Press Council, a self-regulatory body formed in summer 2000, remains an institution without teeth. The CRA vulnerability to both government and judicial threats, requiring continued protection of the international community, offsets the achievement of the passage of public broadcasting system legislation; thus the rating for independent media remains at 4.00.

Local Democratic Governance. Among the manifold layers of government in Bosnia and Herzegovina, municipal government is where citizens have the most interaction and is generally the level of governance for which citizens have the most regard. However, municipalities in the FBiH still struggle with competences that overlap with those of the cantons, and although the RS did pass a Law on Local Self-Governance in 2005, it remains to be implemented. Similarly, a Law on Local Self-Governance was drafted in the FBiH, but by the end of 2005 neither it nor an associated Law on Revenue Allocation had been passed by the FBiH Parliament. As the legal framework remains largely the same, with foot-dragging from the FBiH on introducing clarity between municipalities and cantons, the local democratic governance rating remains at 4.75.

Judicial Framework and Independence. In 2005, international community actors continued to disengage from this sector at policy and infrastructure levels, although a number of international judges and prosecutors remain. Domestic and international movement on war crimes cooperation and prosecution showed an increase in 2005. The War Crimes Chamber became fully functional by March, although by year's end it had not concluded any trials. Other judicial reform projects continued. The Law on Courts in both entities has now been passed. The reappointment of judges and prosecutors continued through 2005, through the High Judicial and Prosecutorial Council, which contributed to the independence and ethnic balance (to better reflect the population at large) of the judiciary. A number of important trials took place during the year, with perhaps the most significant verdict delivered in the Ante Jelavic case. In many other trials, prosecutors report that the judiciary began to use the criminal procedures code much more vigorously than before, so that plea bargaining began to take root as part of the judicial culture. While the judiciary continued to make gains in terms of independence, efficiency remains a challenge: There are huge case backlogs. And despite a few new donor-supported courtrooms, the majority of the buildings and infrastructure are in disrepair. The judicial framework and independence rating improves from 4.25 to 4.00 because, although requiring some assistance from the international community, the organs of the judiciary functioned independently and the local judiciary began to use the criminal procedures code more vigorously.

Corruption. Corruption remains endemic as a way of life in Bosnia. It is normal to expect to pay bribes for basic services like health care or to offer police officers small bribes for minor traffic offenses. This culture extends and expands upward through business and politics. In 2005, several prominent politicians were indicted or put on trial. The international community intervened on several occasions, most notably to remove one of the central government presidents, Dragan Covic, after his indictment. In another important development, the chief auditor of the RS examined several public companies for lack of transparency. When the companies complained, the state apparatus supported the auditor. The rating for corruption improved slightly from 4.50 to 4.25 because the checks and balances established have been allowed to conduct their work and point to the exposure and prosecution of corruption.

Outlook for 2006. Politics in Bosnia-Herzegovina in 2006 will be dominated by four issues: continuing SAA negotiations and the associated reform agenda; the general elections; the future role of the international community; and constitutional reform. While the actual SAA negotiations are largely technical, the explicit conditionality of their success on police restructuring and completed reform of the public broadcasting sector will continue to be politically problematic. Public participation in elections in Bosnia-Herzegovina continues to decline, with an expected low turnout of around 40-45 percent. Most polling data indicate that there will be a change of government in the RS. However, there is little evidence to suggest that there will be any significant changes in the FBiH. While this will be the background context, the international community – principally the OHR, but also other international agencies that depend on the OHR for political advice and muscle – will have to determine its future course. Christian Schwarz-Schilling, who will replace Paddy Ashdown as high representative in January 2006, has already signaled his intent to reduce the use of the Bonn Powers. By the end of 2006, the OHR should have a transition plan, with a timetable detailing when it will shift exclusively to the Office of the EU Special Representative. In tandem, this should involve a prescription for the future use (if any) of the Bonn Powers.

Electoral Process (Score: 3.00)

No countrywide elections took place in 2005, but several mayoral by-elections were conducted, owing to either the death of the incumbent or, in one case, the recall of the incumbent via a referendum. These all passed off peacefully and were conducted properly by the Election Commission. The international members withdrew from the Election Commission in June, following an HR announcement in March, though they did stay on as observers.

The Election Commission also made a substantial start on or completed several large projects. These included the implementation of the Law on Conflict of Interest, which featured (for the first time) the production of several party audits. The Election Commission was able to conduct these audits primarily because of funds sequestered by the HR from the SDS because of its continued failure to arrest persons indicted for war crimes – namely, Radovan Karadzic and Ratko Mladic. Thus in March, the Law on Conflict of Interest transformed its Audit Department into an Audit Office and belatedly began implementation of the Law on Political Party Financing. The Audit Office started off by auditing two medium-size political parties, finished with that in September, and moved on to audit four larger parties [Party for Democratic Action (SDA), SDS, Croatian Democratic Community (HDZ), and SDP] by the end of the year.

It also conducted a review of the Law on Elections and liaised and contributed to a Parliamentary Working Group on the same topic. The Working Group on Election Law Amendments (WGELA) began its work in May. The WGELA consisted of representatives from the BiH House of Representatives (HoR) House of Peoples (HoP), CoM, and Law on Conflict of Interest national members. The Organization for Security and Cooperation in Europe (OSCE), OHR, and Council of Europe participated as observers. And though it aimed to finish its work in the fall of 2005, by the end of the year the final report was not yet complete.

However, enough work had been completed by December to lead the international community (primarily the OHR and OSCE) to write to the WGELA expressing concern about suggested amendments. These proposed to abolish the system of "compensatory mandates," or at least to reduce the number of seats determined by compensatory mandate; to increase the threshold from 3 to 4 percent; to move to a closed-list system from the current open-list system; and to lower the requirement of minority gender representation on candidate lists. The latter two points particularly exercised the international community: Both represented rollbacks of international community reform efforts, effectively putting more power into the central party boards on the selection of candidates and further weakening the link between citizens and their elected representatives. Even though the Election Commission no longer had internationals as members, their presence as observers ensured that these proposals were dropped; but it is instructive that as soon as there was opportunity to reverse international community-introduced reform, political parties seized the chance.

The political scene was relatively stable, although nationalism remained barely suppressed in much of the political discourse during the year. Two parties in particular – the SDS and the HDZ – experienced ongoing internal turbulence amid strong signals all around that the general election campaign for 2006 had kicked off around September 2005.

On May 26,2005, the SDA held its congress and reelected Sulejman Tihic as president despite speculation to the contrary. The SDA presented a new profile at the congress, focusing on Europe and the Bosnian identity and expressing commitment to reforms, the EU, the OHR, and an overall strong international community presence in Bosnia-Herzegovina. There were no extremist chants, no religious flag-waving, no representatives of the Islamic community, and no hate speeches at the event. Subsequent election of multiethnic representatives to its main board and a commitment to multiethnic candidate lists at the next general elections were also seen as indicators of a more moderate SDA.

However, the actions of President Tihic later in the year, particularly his attempt to change the name of Sarajevo International Airport to Alija Izetbegovic (the wartime leader of Bosnia, much loved by Bosniaks as a "father of the nation" figure but not held in the same esteem by either Serbs or Croats), would suggest that although the SDA was assertively trying to be modernist, it had not yet addressed its own nationalism.

Among the other Bosniak and multiethnic parties, the Party for BiH (SBiH) continued to threaten to bring down the FBiH government by withdrawing, but all proved to be empty threats. The SDP did not lose any more elected members and enjoyed some public success by leading the charge against the introduction of a single-rate VAT, with its opinion poll position buoyed a little as a result. But there were no significant personnel changes at the leadership level, which might have warranted renewed public appeal for the SDP.

In June, the HDZ held its party congress, which (in contrast with the SDA congress) took place in a hostile and tense atmosphere, pointing to division in the party. In a disputed (and close) election, Dragan Covic was elected party president. Covic immediately began the process of consolidating his win, but though he made some personal appointments to the party main board, expected replacements at the ministerial level did not materialize.

The bad blood generated at the congress underscored all party activities until the end of the year. Covic found himself having to quash general dissent and specific doubt over his election as party president by eventually having the chief internal opponents – Martin Raguz, Josip Merdo, and Bozo Ljubic – expelled from the party. These circumstances were so dubious that the European People's Party, in which the HDZ enjoyed associate membership until the end of the year, threatened to suspend the HDZ's associate status with the body. However, the HDZ continued to be well positioned in most polls – no Croat prefix party poses any serious alternative to it.

The SDS did not hold its party congress until November, and here President Cavic seemed to assert and consolidate his control of the party. Many new main board members were known Cavic supporters, so the event seemed more to demonstrate to the RS and the international community that Cavic is in control of a unified SDS than to present a new party reform platform. Cavic does have the support of the majority of SDS leaders at present; however, it is likely that this support hinges on continued international community backing.

In December, the PDP announced its "withdrawal" from the RS government – that is to say, the government could no longer rely on its support. This did not have a great impact in terms of the stability of the state-level government, but it did make the SDS government more vulnerable to no-confidence motions and certainly rendered inoperable its capacity to pass a 2006 budget for the RS. However, in terms of the PDP, this is nothing new – its party leader is a maestro at deflecting attention from the party's own difficulties by exposing the weaknesses of others.

While the leader of the Independent Party of Social Democrats (SNSD), Milorad Dodik, continued to enjoy high popularity ratings in opinion polls, his party did not win the mayoral by-election in Bijeljina in October as expected. His widely forecast victory in next year's general elections is thus not a foregone conclusion.

Civil Society (Score: 3.75)

The legal framework and overall state of civil society remain generally unchanged relative to 2004. Nongovernmental organizations are still perceived largely as service providers, and it is rare that they are included in any kind of policy formulation. In 2005, the main development in the NGO sector was a lobby to implement the goals of To Work and Succeed Together, an NGO coalition of 200 member groups that presented a program to the CoM in December 2004. The key document of this program proposed an agreement on how the state and the NGO sector will interact. Discussions have been ongoing throughout the year, mainly refining the criteria of who represents the NGO (and informally organized coalitions) and how its representatives interact with the key state ministries of justice and civil affairs. Other programs related to how the NGO sector regulates itself in terms of transparency.

However, the sector as a whole is still finding its way and role in the maze of complicated state and local governmental structures. Individual parts of the sector did raise their profile unilaterally during the year, most notably the Farmers Association. This was the only significant body engaged in any kind of direct action during the year, staging a protest outside the Parliament for approximately six months; but the government refused to meet their demands. There were also instances of direct action protests from individual social groupings not normally classified as NGOs, such as pensioners protesting outside government offices over not having received their pensions. Additionally, teachers went on strike because they had not received their salaries; prisoners went on hunger strikes over prison conditions; and even schoolchildren (though manipulated by both parental and political parties) went on strike over the "two curricula under one roof" issue. This actually delayed the start of the school year for many children until October.

Independent Media (Score: 4.00)

In terms of press freedom, the 2005 Reporters Without Borders annual report on world media freedom places Bosnia-Herzegovina 33rd in the world and second to Slovenia among countries of the former Yugoslavia. The Free Media Helpline, originally established by the OHR and the OSCE but now independently run and funded, reported very low numbers of calls about threats or other violations of media freedom from journalists, and there was only one reported physical attack in 2005.

This is not to say that there are no politics in the world of Bosnian media. Many titles unabashedly take editorial and reportage positions that reflect both ethnicity and political parties. For example, Avaz switched its allegiance from the SDP in 2002 to the SDA and the SBiH at various times since. And in the latter half of 2005, it was supportive of the policies of SBiH founder Haris Silajdic, particularly his views on constitutional reform. Oslobejdenje, reflecting its Communist roots and Socialist outlook, still tends to support the SDP, giving it much more space than other parties. Vecerniji List is associated with the HDZ, and its editorial policy promotes Croat national interests. While Nesavisne Novine is generally supportive of the SNSD, it does tend to be truly independent where matters of corruption or criminality are involved. Glas Sprske remains the voice of the RS government. All these titles are daily newspapers.

There are also relationships between broadcasters and political parties. Federal Television (FTV) is perceived as having some SDP bias, and Radio Television Republika Sprska (RTRS) is seen as having some sympathy for the SNSD. These perceptions provide a platform for other parties to put pressure on the Public Broadcasting Service (PBS) governing boards, and this will intensify when the time comes to appoint new governing boards under the newly adopted PBS legislation.

While there is a dearth of investigative reporting and quality comment columns, the Sarajevo weeklies Slobodna Bosna and BH Dani generally publish corruption-based stories that have resulted in prosecutions. In 2005, all Croatian, Bosnian, and Serbian press outlets were available across the country. In addition, the Journalists Union formed a single association in 2005, where previously there had been only entity-based associations.

Alongside police reform, reform of the public broadcasting system and the PBS was the second touchstone issue for SAA negotiations, and although legislation began the year in the drafting stage, its parliamentary adoption was extremely difficult. The international community, principally the European Commission and the OHR, engaged heavily in the lobby for this reform, exerting pressure publicly from both Sarajevo and Brussels. But the HDZ resisted it every step of the way, using substantive arguments against the reform. And when those failed, it took advantage of procedural rules to delay the law further. Throughout, the HDZ maintained its position in demanding three ethnic channels, and ultimately the law was the subject of a rare invocation of vital national interest (VNI) by the Croat delegates (HDZ) in the BiH House of Peoples in June. The case was sent to the Constitutional Court of the BiH, which ruled in July that there were no grounds for invoking VNI. The Croat caucus drew out further consideration of the law when it returned to the Parliament, but it was eventually passed in October.

The Communications Regulatory Agency was active throughout the year, though it sustained criticism from a group of U.S. congressmen for its investigation of BNTV, a private station from Bijeljina. On this occasion, SDA president Tihic wrote in the CRA's defense. However, politicians did not always act in support of the CRA. The minister of communications and transport, Branko Dokic, publicly criticized the CRA and its director for being "biased" and overly "independent" in its regulation of state resources. In addition, the CoM attempted to reallocate funds that belonged to the CRA (collected through the licensing process) without the CRA's consent. The CRA had to lobby the CoM to reverse its decision, which it did, albeit reluctantly. A more serious development occurred at the end of the year, when on December 29 the State Investigation and Protection Agency raided CRA premises on a warrant from the BiH prosecutor, who demanded receipt of statements and evidence related to the CRA audit report of 2004. This was surprising given that the BiH auditor's report for 2004 had ranked the CRA among the top 10 most transparent state agencies in Bosnia-Herzegovina. The Press Council, a self-regulatory body, remains an institution without teeth.

Judicial Framework and Independence (Score: 4.00)

International community actors continued to disengage from this sector at policy and infrastructure levels in 2005, though a number of international judges and prosecutors remain out of necessity. The War Crimes Chamber became fully functional in March, with the appointment of the first group of judges and prosecutors. But by the end of the year, it had not yet concluded any trials.

In 2003, the BiH Human Rights Chamber ordered the RS to conduct an in-depth investigation into the fates of those persons still counted as missing following the massacres in and around Srebrenica in July 1995. The Srebrenica commission finally began work in January 2004 and produced a report, adopted by the RS government, that for the first time acknowledged the magnitude and nature of the atrocities committed following the fall of the Srebrenica "safe area." The report provided new details on mass grave sites.

However, the OHR was not satisfied that the RS authorities had processed and provided all the data actually in their possession and thus extended the deadline for the Srebrenica Working Group to March 2005. The foot-dragging displayed in other areas was also in evidence with this issue. In the run-up to the 10th-anniversary commemoration of the massacre (and burials) at Srebrenica in July, the HR extended the deadline again to June and, when that still did not prove adequate, to September.

Finally, the RS Defense Ministry and Ministry of the Interior complied and provided further information, but only after the OHR established a subgroup that had full access and authority to conduct spot checks of ministry archives. The information was then passed to the BiH chief prosecutor in October. The ceremonies commemorating the Srebrenica massacre of July 1995 passed peacefully, although tensions had been raised by the much televised amateur video of the Scorpions special military unit executing bound Bosniak soldiers – footage that had been submitted as evidence in the Milosevic trial.

In terms of international cooperation in 2005, there was a flood of arrests of persons indicted for war crimes for whom the RS is responsible. The flow began in January when RS Ministry of Internal Affairs authorities transferred ICTY indictee Savo Todorovic to The Hague in January, after his surrender. The RS minister of internal affairs, Darko Matijasevic, who accompanied Todorovic personally to The Hague, proclaimed that there would be more voluntary surrenders and extraditions but said little about operations and involuntary arrests, and indeed this proved to be the template for further transfers during the rest of the year.

The international community welcomed this as a significant step forward but highlighted that this was part of a process it believed could be accelerated through greater international community engagement, based on active monitoring. In this context, the OHR and Prime Minister Terzic discussed and established an ICTY Cooperation Monitoring Group whose mandate stemmed from the 12 tasks set for the BiH authorities by the ICTY.

The Cooperation Monitoring Group did have some success. It met from January through April and focused on correcting the obvious structural deficiencies in the BiH's approach to ICTY cooperation. Its results were seen not only in the numbers of indictees being handed over or surrendering, but also in terms of attitudinal change, connoted by the RS government-fronted public campaign. This was a hard-hitting TV and billboard campaign based on a "them or us" theme. The campaign helped raise awareness among RS citizens of the economic and political damage done by indictees at large. Furthermore, assets connected to the various networks of persons indicted for war crimes, including bank accounts, insurance policies, and properties, were frozen in line with decisions by the EU council.

Ten persons indicted for war crimes were arrested by or surrendered to Bosnian authorities in 2005. Of those who were still at large at the end of 2005, only four are held to be the responsibility jointly or singly of Banja Luka or Belgrade.

Other judicial reform projects continued. The Law on Courts in both entities was passed and provides (more or less) for the court structure, which was proposed by the Independent Judicial Council, which acted as secretariat to the body responsible for the appointment and discipline of judges. . However, the FBiH provided for the opening of an additional four court branches. In the RS, seven additional court branches were opened in late 2005 by way of amendments to the Law on Courts. Opening additional branches is problematic because of the precarious financial position of the courts; their debt was 16 million KM (US$10.2 million) at the end of 2004. In addition, the restructuring of the basic and municipal courts was hampered by entity-level parliaments dragging their feet on the amalgamation of minor offense courts. This was for fear that they would lose certain facilities in their own constituencies.

The process of reappointing judges and prosecutors continued through 2005. As the candidates were subject to a rigorous vetting procedure and extensive scrutiny, this contributed not only to the independence of the judiciary, but also to a reflection of the population at large in the ethnicity of the judiciary. Amendments in December to the Law on the High Judicial and Prosecutorial Council will make it possible to appoint judges in 2006 to deal with minor offenses.

A number of important trials took place during the year, with perhaps the most significant verdict delivered in the Ante Jelavic case. Jelavic was successfully convicted and sentenced to 10 years in prison for office abuse related to the illegal redistribution/redirection of Croatia-donated funds while he was FBiH defense minister. In many other trials, prosecutors reported that the judiciary began to use the criminal procedures code much more vigorously than before, so that plea bargaining began to take root as part of the judicial culture.

There was little international community intervention in this area, with the notable exception of the HR imposing a law in December that acted as a one-off corrective for judicial salaries that were hugely out of line with those of the average citizen. Additionally, the judicial salary legislation provided for uniformity of compensation across the judicial sector, so that there is now equal pay for work of equal value, regardless of which entity judges and prosecutors reside or work in. While the judiciary continued to gain more independence, there remains a real question of efficiency: There are huge backlogs, and despite one or two new donor-supported courtrooms, the majority of the buildings are in disrepair.

Corruption (Score: 4.25)

Corruption remains endemic as a way of life in Bosnia. It is normal to expect to pay bribes for basic services like health care or to offer police officers small bribes for minor traffic offenses. And this culture of corruption extends and expands upward through business and politics.

There were indictments and trials of several prominent politicians in 2005. To insert and strengthen the principle of standards in public life, the international community intervened on several occasions, most notably in the Covic case. While acknowledging Covic's right of presumption of innocence, the HR, flanked by the steering board ambassadors of the Peace Implementation Council, directed that he be removed from public office, though he could continue to hold leadership positions in his party. Covic was indicted in March for abuse of office or official authority in his capacity as former FBiH minister of finance in relation to the issuance of decisions in June 2000. That indictment was confirmed by the state court, and the hearing of his testimony began in September.

In a case that was more than tangentially connected with the Covic trial, proceedings began on the trial for tax evasion of Mladen Ivankovic Ljianovici another party leader. The leader of the SNSD, Milorad Dodik, also went to trial in the fall following an indictment on charges of abuse of office delivered in late 2004. As Dodik did not at the time of the indictment hold high executive office, the international community did not intervene, and he was acquitted. In the case of Minister Branko Dokic, also indicted, the OHR negotiated his voluntary resignation for the period of his trial, at which he was convicted. But the sentence was under the threshold for running as a candidate or holding office, so Dokic returned to office.

The notion of endemic corruption and special favors for the political elite, their families, and their friends came to light again in September. In November 2004, the BiH Parliament removed one of its members who had been pardoned by the FBiH president, and the HR intervened to curtail the powers of entity presidents in this regard. Despite this, in September 2005 the HR was again forced to intervene in response to another case, that of Miroslav Prce, a former FBiH Minister of Defence whom the FBiH pardoned, a clear abuse of the pardon system. Both the FBiH and the RS routinely granted pardons. The FBiH granted them virtually on a monthly basis. In fact, the statistics were such that one was more likely to be granted a pardon than to pass a driving test. The HR thus suspended the right to give pardons. The BiH Parliament subsequently received for consideration a state-level Law on Pardons designed to prevent such abuses and ensure that any future pardons will be made in a transparent manner.

The RS chief auditor delivered several damning reports on the running of RS public companies, citing political interference and bad management. In retaliation, Elektroprivreda RS filed a lawsuit against the chief auditor in September for "damaging the reputation and honor" of the company. However, shortly thereafter the RS Law on Audits was adopted to extend the mandate of the chief auditor for an additional seven years. The RS government threatened to dismiss the management of Elektroprivreda if it did not drop the lawsuit. The next day, the suit was dropped.

Notes

1. Decisions are taken by what is popularly termed the "Bonn Powers," whereby the HR can intervene directly in the body politic, filling lacunae left by domestic authorities either by removing politicians from office, imposing laws, or making appointments that domestic authorities have proved politically unable to make because of ethnonational reasons.
2. Final Report of the Work and Recommendations of the Police Restructuring Commission of Bosnia and Herzegovina, December 2004, p. 8. The commission provided further clarification on these three principles at various times over 2005.

Author

Kate Fearon is a political analyst who has lived and worked in Bosnia and Herzegovina since 2001. Mirsada Muzur is the managing director of the Center for Policy Studies and Prism Research in Sarajevo.

Local Governance (Score: 4.75)

There is a legislative framework for regular local elections and government at the municipal level, but functions remain problematic owing to dual competences with other administrative levels and insufficient resources. Public utilities, communal services, tourism, concessions, culture, sport, local financing , local land use, housing policy, urbanism, and property relations are just some of the areas in which there is overlap and confusion, especially in the FBiH. New laws on local self-government, not yet adopted in the FBiH, seek to clarify the order and interrelationship of responsibilities. The RS did pass a Law on Local Self-Governance in December 2005, but it remains to be implemented. Although a Law on Local Self-Governance was drafted in the FBiH, by the end of 2005 neither it nor an associated Law on Revenue Allocation had been passed by the FBiH Parliament.

Yet despite the confusion, this is the level at which citizens are most likely to interact with government. There are examples of municipalities that do deliver services to citizens in an effective and efficient manner, but the formula for revenue allocation in the FBiH means that many municipalities are starved of cash by the cantonal layer of government. In the RS, municipalities are also dependent on funding from a higher level, in this case the entity.

Examples of effective municipal governance would include Zenica and Ljubinje. Zenica has successfully obtained an International Standards Organization (ISO) 9001 certificate, meaning that it has set in place the structures to deliver efficient services. It is also widely recognized as working with other levels of government and investors to attract new capital and create jobs. Ljubinje, in east Herzegovina, faces practical challenges related to its relative remoteness and paucity of economic assets. The municipality has introduced modest financial incentives, including a "baby bonus," to persuade residents not to move away and has taken steps to make it easier and cheaper to build in the municipality. The mayor has also introduced performance-related salaries in the administration.

An issue with municipalities is that service delivery is not party political. Ilidza is run by the same party that runs Zenica, for example. But poor urban planning and use of the budget means infrastructure has not been improved, nor has one of the greatest assets of the municipality – Vrelo Bosna Park – been developed: It remains badly managed and does not serve the community to its full potential.

In Bijeljina, run by the same party as Ljubinje, bureaucracy has expanded. The budget for cabinet salaries has tripled since the new mayor was elected in October. The municipal assembly also increased its members' monthly allowance to higher than the average salary in the RS. In both entities, public meetings are rare, as is the promotion of active citizen participation. In 2005, there was no political change at the local level, such as in party representation, that would be significant in comparison with the situation at the canton or federation level.

National Governance (Score: 4.75)

Despite a challenging start to the year with the resignation in January of the Republika Srpska government subsequent to sanctions issued by the Office of the High Representative in December 2004, the state was stable overall. In the RS, the Serb Democratic Party (SDS) nominated a government that did not include any card-carrying SDS members, so in February Pero Bukejlovic took over as RS prime minister. His inaugural address was a relatively robust policy speech focused on the need to adhere to the Dayton peace accords in order to secure its protections – that is, the guaranteed existence of the RS as an entity. Specifically, he noted the need for cooperation with the International Criminal Tribunal for the Former Yugoslavia and stressed his dedication to preserving RS institutions. He also stated his government's commitment to economic and social issues. His speech further recognized that his is the first government in the RS to have two female ministers. However, the functionality and productivity of the executive branch were markedly greater in the latter half of 2005 than in the first.

In February, it looked as if the RS crisis would escalate to the state level owing to resignations submitted by two Serb state-level ministers: Mladen Ivanic, foreign affairs minister, and Branko Dokic, who briefly held the position of minister of communications and transport. The resignation of these two ministers from the Progressive Democratic Party (PDP) brought enormous pressure on the remaining two Serb ministers to also resign. If only one of the remaining two had done so, the government could not have maintained a quorum and thus would have fallen. Though it asked for resignations, the SDS did not force its ministers to resign, thus averting the crisis. The prime minister adopted an ostrichlike attitude and did not convene any cabinet meetings.

By June, when the crisis appeared to have passed, the state prime minister Adnan Terzic motivated by personal animosity, dusted off the (earlier tendered, never accepted) resignation of the minister of foreign affairs and attempted to remove him. The prime minister explained that he had to make such a move: The foreign minister's obstruction of the Council of Ministers' appointment of the director of the State Investigation and Protection Agency had forced him to ask for the intervention of the high representative (HR).

Prime Minister Terzic went before the Parliament to explain his plans, but Minister Ivanic simply continued to come to work. This humiliated the prime minister somewhat and led to a worsening of relations at the cabinet level. It also came to the attention of EU High Representative Javier Solana and Commissioner for Enlargement Oli Rehn, who met with Terzic to discuss the deadlock in the implementation of reforms and pending requirements for the EU feasibility study, especially in the context of the CoM situation.

Between April and June, the CoM met only three times and adopted two pieces of legislation (the Law Establishing the Information Society Agency of Bosnia and Herzegovina (BiH) and amendments to the criminal procedures code of BiH). However, on a more positive note, the CoM for the first time adopted a constitutional amendment that would ensure the fiscal sustainability of state building by securing wage flexibility for state employees. While the amendments ultimately did not pass through the Parliament in 2005, the very fact that the CoM passed them demonstrated that indigenous actors could contemplate change to the BiH Constitution (Annex 4 of the Dayton accords).

The OHR characterized the artificial crisis as "summer madness" but did not intervene further except to make the senior appointment of the State Border Service director owing to the inability of the CoM to do so. But in the fall, as focus turned to the announcement of Stabilization and Association Agreement negotiations, the CoM became much more cohesive and productive, and Minister Ivanic did not instigate any further turbulence at the state level. He announced his withdrawal from the RS government in December 2005.

Despite the entity- and state-level resignations, business in the BiH Parliament continued apace. In early January 2005, it passed laws enacting a state-level, single-rate value-added tax system scheduled to be in force by January 2006. Throughout the year, the Parliament proved keen to pass other supplementary legislation necessary for the successful introduction of the VAT, even as opposition parties put forward amendments against the notion of a single rate. This basket of laws marked a major step toward the creation of a true single economic space. Additionally, the 2005 state budget proposed by Finance and Treasury Minister Ljerka Maric in late December 2004 was passed by the Parliament in January 2005. This was the quickest that the government and the Parliament had ever passed a state budget.

The number of decisions issued by the HR continued to decline. Indeed, the HR introduced a program that sought to arrest and reverse many prior decisions. In part a response to a report of the Venice Commission published in March, this "rehabilitation" process began in the same month, when it was announced that there would be a review of some cases where people had previously been removed from political or public life by HR decisions. The legal basis for all removals was that they were never intended to be permanent but would be kept under review and, when the HR decided, could be rescinded. The HR declared that he believed the BiH's present state of development compelled him to make this principle a reality.

After careful internal review and several investigations of the individuals concerned, the HR decided to lift the ban on participating in public life for three individuals in May. This was followed by another decision concerning two more individuals in June. Altogether, five persons were "rehabilitated" in this first phase, none of whom were assessed to be a continuing threat to peace implementation. In November, a further extension to this process was announced: All those who had been removed by the HR for obstructing peace implementation (not those who were removed for protecting persons indicted for war crimes) would henceforth be able to apply for nonmanagerial positions in public companies through open competition. This was a matter of recognizing the Venice Commission's opinion and the development of the country over time. Individuals removed for obstructing returns in a municipality in 1996, even if under political pressure from their own ethnic group to do so, could not at that time take a job as a teacher or in a public company such as the postal service. This new decision meant that these individuals could now at least apply for public sector jobs.

Taking account of increased cooperation with the ICTY, the HR in November lifted the ban on 23 individuals prohibited from participating in public and political life. Thirteen of those individuals had been removed in June and December 2004 for obstructing RS fulfillment of ICTY obligations. In line with passing accountability to domestic authorities, the OHR prepared amendments to existing legislation that would effectively move the process of vetting, currently undertaken by the OHR, to a special committee of the Parliament, somewhat akin to U.S. confirmation hearings. The Parliament will consider these cases in early 2006.

Thus, many of the HR interventions in 2005 were taken to stop and reverse previous decisions – made by the incumbent and his predecessors – taking into account the improved political context and acknowledging the impermanence of HR removal decisions and the transience of the HR office.

With negotiations on police reform taking center stage for most of the year, other areas of reform received less attention and, accordingly, greater chances for obstruction. For example, the RS government put forward opposition to a European Commission (EC)-supported agreement to improve the work of the single statistics structure in the BiH, was uncooperative in finalizing the transfer agreement on defense, blocked an agreement on guidelines for writing history and geography textbooks, and resisted proposals for a state-level Law on Higher Education.

And at the BiH level, the RS authorities intervened directly or through instructions to state-level officials from the RS to obstruct or delay progress on reforms, including the BiH Law on Obligations (to ensure equity in business contracts across the country and thus contributing to the EU feasibility study requirement of creating a single economic space), the BiH Pharmacy Law, amendments to the Law on the High Judicial and Prosecutorial Council, the Law on the Prevention and Suspension of Abuse of Narcotics, the Consumer Protection Law, and the State Debt Settlement Law.

The RS government was also found wanting in leadership after the Manjaca oath incidents (when new army recruits refused to take an oath to the BiH, instead taking one to the RS) and on revealing all the information they could about the Srebrenica massacre. On Manjaca, the recruits did eventually retake the oath, but only after sustained international community pressure and the removal of the chief of staff of the army of the RS by NATO and the EU Force in Bosnia and Herzegovina (EUFOR). EUFOR closed the training camp until they were satisfied that the correct professional and constitutional procedures were respected.

This systemic obstructionism from the RS government on finalizing passage of many reform-related laws was the subject of an OHR démarche in November, followed by a press conference in December. In the latter half of the month, the RS government did start to move positively on many of these issues, but only because the OHR continued to exert pressure on the RS authorities.

FBiH authorities continued to meet regularly, adopting key legislation in July concerning budgets and linked to the EU feasibility study. In the same month, the ruling coalition saw off a Social Democratic Party (SDP)-initiated no-confidence vote without any difficulty. However, the government was brought to the brink of crisis in August and September owing to disagreements concerning the appointment of two replacement ministers.

Privatization of entity assets was problematic, and government-brokered deals on key companies like Aluminijum Mostar and Energopetrol were stymied by the failure, respectively, to pass privatization legislation and to get the Parliament's endorsement.

Europe – as a broad and amorphous concept – is generally viewed by both citizens and politicians as a positive thing, if not a panacea for BiH's problems. There is public consensus that joining the EU is the most important policy goal for BiH, though there remain political questions over the acceptability of some of the changes BiH is required to make in order to "join the club."

The path to Euro-Atlantic structures had been well signposted through the EU feasibility study, the standard post-Council of Europe accession requirements, and the NATO Partnership for Peace benchmarks. The key areas of reform related to defense, intelligence, public broadcasting, state government, and cooperation with the ICTY. In 2005, after the EU clarified the security components of the feasibility study requirements, police restructuring dovetailed with the question of entry to SAA negotiations, and it consumed major energy on behalf of local and international actors throughout the year.

However, when the Consultative Task Force (CTF), a bodyof the European Commission established to assess BiH's compliance with feasibility study requirements, met in Sarajevo in May, the prospects were less than bright, and Bosnia-Herzegovina did not receive an invitation to begin SAA negotiations. As well as those areas listed earlier, the CTF noted that legislation on the ombudsman, auditing and accounting, and the Information Society Agency still needed to be passed by the Parliament.

In addition, laws ensuring that the legal infrastructure of the Indirect Tax Authority, the independent agency charged with tax administration and revenue collection is appropriately completed prior to VAT implementation were still pending adoption by the CoM (including the Law on Customs Violations, Law on Procedures of Indirect Taxation, Law on Procedures of Forced Payment, and Law Establishing the Data Protection Commission of BiH). Small wonder no invitation was issued.

By the time the CTF came in May, though, much energy had been devoted to the thorny issue of police reform. The OHR had kicked off the process of introducing the tenets of the Police Restructuring Commission Report in the domestic theater. The commission finished its work in December 2004 but did not present its findings publicly until January 2005 at a press conference attended by the report's author, Chairman Wilfried Martens Prime Minister Terzic, and the HR.

The commission's report emphasized three firm tenets that the European Commission stated also represented its minimal requirement for successful police restructuring in Bosnia and Herzegovina. First, the institutions of the BiH must be invested with all competences for police matters in Bosnia and Bosnia-Herzegovina. Second, this includes legislation and budgeting for police matters exclusively at the state level. Third, political oversight should be exercised by the Ministry of Security at the state level, and the size and shape of local policing regions should be determined according to the criteria of effective policing rather than by political considerations.

Initially, action to implement these principles took the form of a grassroots campaign; this effort extolled the benefits of police restructuring, deployed various international community actors, and lasted from February until April, when the first serious round of political negotiations took place at Mount Vlasic. This multiparty event, held over three days, produced a partial political agreement by all parties that the state should be exclusively competent for legislative and budgetary issues in all matters related to policing. Although maps were discussed on Vlasic, nothing was decided – a Maps Commission was established to attempt to reach consensus on that issue. This was a crunch issue: Establishing police regions that crossed the Inter-Entity Boundary Line (IEBL) would automatically decouple political control from policing.

Despite these positive events, the SDS began to renege on the spirit of accommodation commented on by many at Vlasic. The RS delegation at the Maps Commission refused to negotiate on the maps, relying instead on their proposal, which strictly followed the IEBL. In brief, instead of preparing the population for an EU-endorsed reform, the SDS and other parties preached another apocalyptic vision that would allegedly abolish the RS. Preparations continued nonetheless for a second round of negotiations held in Sarajevo. It soon became clear, however, that the Serbs were not willing – or not able – to negotiate the IEBL. They asked that talks be suspended while they sought a mandate from the RS National Assembly (RSNA) to negotiate further.

At the RSNA session, which took place in May, President Dragan Cavic failed to request from the assembly an open mandate for negotiators; consequently, the RSNA unanimously adopted a resolution that called for police reform along the lines of the three EU principles but adhering to the administrative structures delineated by the IEBL. The international community held a firm line on not diluting the principles and publicly assigned blame – but no sanctions – to the SDS. However, it reiterated its willingness to start SAA negotiations with the need to restructure police along the three EU principles.

A series of meetings then took place throughout the summer at various locations across the BiH, under the auspices of the local authorities and not attended by high-level international community officials. Despite a commitment from domestic authorities to focus all political energy on this process, the talks did not start in Banja Luka until July 28 and ended in the same city on September 12 – with meetings in Mrakovica, Hutovo Blato, Bjelasnica, and Sarajevo in between – but ultimately these did not produce anything by mid-September. This was the date by which the international community said agreement had to be reached in order for preparatory work to be done to allow SAA negotiations to be announced on the 10th anniversary of the Dayton accords. Unexpectedly, toward the end of September the prime minister Terzic and the RS president Cavic brokered a deal that was subsequently passed at a stormy session of the RSNA in October. After being passed by the other two legislatures – the FBiH Parliament and the BiH Parliamentary Assembly – the CoM passed a decision in November establishing the implementation organs contained therein, to the satisfaction of the EU.

The Agreement on Policing called for the establishment of a Directorate for Police Restructuring Implementation by December 31,2005; the preparation of an implementation plan by September 30,2006; entity and state government approval of the plan by December 31,2006; and entity and state parliamentary adoption of the plan by end of February 2007. The Policing Directorate was established within the deadline on December 28,2005.

In 2005, the mandate of the Defense Reform Commission (DRC) was adjusted to take into account the accelerated timetable for defense reform announced by the HR in December 2004. In early 2005, the defense minister (as one co-chair of the DRC) initiated a defense review. By midyear, a general consensus appeared to have been achieved that encompassed the elimination of entity competences, a transfer to the state of all defense responsibilities and personnel, the abolition of conscription, and a restructured, smaller reserve force.

However, at the last DRC meeting in June, Bosniaks showed signs of shying away from the general package; they tabled proposals to retain conscription and a reserve force. The RS, on the other hand, and particularly the SDS, showed signs that they were ready to cooperate and support defense reform. This was most likely because President Cavic was personally interested and knowledgeable about it. He had an understanding that command and control of defense forces had to be located at the state level, assessing that the army of the RS had already been reduced to a symbolic level and, further, that if he conceded on defense, he could hold a firmer line on police reform. Croats seemed to support the DRC general recommendations but continued to push for stock items, especially those that guaranteed them their own parts of the structures, in particular retaining the then current brigade or brigadelike characteristics of the armed forces.

Bosniak members of the DRC did ultimately sign the final document despite opposition from the party president, and the summer months were spent adapting the political agreement into legislative drafts and, in the fall, parliamentary adoption. Even after the state Parliament adopted the laws – in record time for such a complex package of legislation – and after the entities had adopted constitutional amendments to reflect the concomitant changes required, the RS prime minister dug in his heels over the signing of an explicit transfer agreement, as stated in the BiH Constitution. After much lobbying by the OHR, NATO, and the minister of defense, Bukejlovic finally agreed to sign the agreement on New Year's Eve 2005. All defense reform legislation was scheduled to enter into force on January 1,2006. This was no small achievement, especially as it meant that the entities lost not only their ministers of defense (who became obsolete on December 31,2005), but also much of their property previously in military use by the respective entity armies.

State functionality continues to be seriously impeded by the lack of basic premises and an independent and merit-based civil service. In the "Joint Action Plan – Staff and Premises for the Council of Ministers," which was presented by Prime Minister Terzic to the Peace Implementation Council in September 2004, the CoM was asked to create a body that would find long-term solutions to the state's premises problems. It would also be charged to look into issues of ownership at all levels of government, as well as the state's rights to acquire/expropriate property pursuant to its needs, not least of which would be those stemming from the SAA process. To this end, the State Property Commission was tasked with drafting a Law on State Property for the BiH and its entities and to identify state property that could house state institutions.

However, as nothing had materialized from the domestic authorities by March 2005, the HR issued a decision whereby the State Property Commission was given a deadline of the end of November 2005 to come up with a report of its work and/or draft state and entity laws. Unfortunately, the RS failed to appoint its members to the State Property Commission for months, and even with much negotiation and lobbying on the part of the OHR, the commission did not commence its work until November. Separate negotiations with FBiH prime minister Ahmet Hadzipasic fared little better, with the collapse of a deal midyear that would have resulted in the FBiH government vacating significant space it occupied in the presidency building, thus making space available for several state ministries.

As part of the March decision, and aimed particularly at the FBiH, the HR also imposed a law that froze the sale of any state assets for which usage and occupation rights were held by the entities. The RS had sold off a large number of assets that the state could have potentially laid claim to, but significant property portfolios still existed in the FBiH. Indeed, if the OHR had not intervened, the State Property Commission's work would have been much simpler: There would have been no property left to determine ownership over, never mind allocating anything to state use or ownership.

The situation with the civil service fared somewhat better. The first package of amendments to the BiH Law on the Civil Service were adopted by the CoM in February and sent to the Parliament. But several ministers had added to the amendments that had been recommended by the Civil Service Agency (CSA), the independent body for recruiting, training and administering all civil servants, rejecting two particular clauses. These spoke to the principles of merit and independence in the selection process by reducing ministerial powers to stymie appointments (by simply failing to sign off on them) and to make the recruitment exercise itself more open, transparent, and efficient. In a welcome move, the CSA itself agreed to spearhead the lobbying strategy, supported by the OHR. Happily, parliamentarians disagreed with the CoM on this occasion, and the CSA amendments were adopted unanimously by the Parliamentary Assembly in April.