Ensuring Bosnia’s future

 Event details

CONFERENCE: ENSURING BOSNIA’S FUTURE
Center for Strategic & International Studies (CSIS)
Washington, DC, 15 January 2009

Panel 2: Bosnia’s Trans-Atlantic Solutions

Key points and main messages of the presentation by

Angelos Pangratis, Minister and Deputy Head of Delegation,
Delegation of the European Commission to the United States of America

I. The principles are simple

 The BiH has its place in the EU, provided that it meets the necessary requirements. The accession process requires that the strict condition and criteria be met. They cannot be discounted and it is not in the interest of the EU nor in the interest of acceding countries to do so.

 There seems to be a consensus among leaders and citizens in BiH that the country’s future is in the EU. However, this consensus is often not translated into the concrete reforms. The weight of domestic political interest is still considerable and limits the EU “pull effect”.

 BiH needs to agree on a common vision and on a common future. European spirit is a spirit of compromise based on:
a. solving differences through democratic process and rule of law,
b. respect of individual, respect of human rights, and respect for all forms of linguistic, cultural, ethnic, and other diversity.

 BiH can choose to bicker about EU reforms (and risk delays), or get on with reforms and move ahead. The vast majority of BiH citizens expect progress on the EU road.

 The perspective of EU future for BiH and other countries of the region:
– has the legitimacy of the support for millions of people, the huge majority of the population aspiring to peace and a better life within the EU;
– is the best opportunity for those countries as it is supported by a clear EU commitment despite some enlargement fatigue in the EU.

II. 2009 will be a key year

The opportunities that the EU is offering to BiH should not be wasted. BiH needs to take up the challenge so as to make sure that it can join the European family to which it belongs. 2009 will be a key year with challenges and opportunities. The EU will remain focused and ready to assist.

 BiH has the opportunity to demonstrate that it has got sufficient political maturity and implement the requirements for OHR closure.

 It can re-launch the reform process and convince the EU that it is ready for the next steps in the EU integration process.

 It can make meaningful progress towards visa liberalisation. But this requires sufficient political will and determination.

 While the EU is ready to help, BiH needs to do its part.

III. Situation on the ground: Extracts of the EU Progress report 2008 (issued in November):

Strong points, particularly during the first half of 2008:

• Progress in the four key areas set out by the Commission and the Council in 2005 (police reform, ICTY cooperation, reform of public broadcasting and public administration), has allowed the signature of the Stabilisation and Association Agreement and the entry into force of the Interim Agreement.

• The public administration reform strategy is being implemented. The public administration reform co-ordinator’s office has been strengthened and the public administration reform fund has become operational.

• A National Strategy for Development of the Justice Sector has been adopted. The State court has continued the prosecution of war crimes. At State level, trials have been generally held within reasonable time and in compliance with internationally recognised standards.

• The economy has continued to expand rapidly. Inter-entity cooperation in economic policy areas has improved. The National Fiscal Council was established and an agreement was reached for the allocation of the indirect taxes collected to the State, the Entities and Brcko District.

• Regarding European standards, progress has been made in the fields of customs, taxation, agriculture, transport, visa administration, border management, asylum and migration.

Weak points:

• Lack of consensus on the main features of state building and inflammatory rhetoric have adversely affected the functioning of institutions and slowed down reform. The authorities have not yet demonstrated sufficient capacity to take the necessary political ownership and responsibility.

• The role played by ethnic identity in politics hampers the functioning of the democratic institutions (executive, legislative, judiciary) and the country’s overall governance.

• No progress has been made as regards constitutional reform.

• Corruption remains widespread and is a serious problem.

• Economic challenges: Risks to fiscal sustainability persist. Imbalances in the trade and current accounts have increased. Unemployment remains very high. Continued efforts are necessary to achieve a single economic space within Bosnia and Herzegovina.

• As regards European standards, the country needs to intensify its efforts in many areas, including free movement of goods, persons and services, employment and social policies, state aids, energy, environment and statistics. Improved results as regards the fight against organised crime, drugs trafficking and money laundering are also necessary.

IV. Some of the current instrument of EU action

The EU has been providing considerable guidance and support to BiH since the end of the war (€ 2 billion in financial assistance – currently approx. € 80 million/year under IPA, very favourable trade regime, political and technical dialogue, contractual relations/SAA, visa liberalisation process, EU accession perspective). It is willing to further increase its efforts – the EU is preparing for a reinforced EUSR presence on the ground, should the Peace Implementation Council decide to close the Office of the High Representative. But political will from the BiH authorities will remain necessary if the country is to make significant progress towards the EU.

The SAA between the EC and BiH was concluded on 16 June 2008. The agreement has been ratified by BiH and by Estonia, Hungary and Slovenia (09/01/09). Overall, the ratification process by all EU MS is expected to last for some 2 years (until mid-2010).

As long as the SAA has not entered into force, the so-called Reform Process Monitoring mechanism is applied by the EU together with BiH, which means that the Commission monitors progress achieved by BiH on the reform agenda and the fulfilment of the European Partnership priorities through plenary RPM and sectoral RPM meetings. The findings of the last Progress Report are fully taken into account in this exercise.

Trade and trade-related matters (including issues such as customs, agriculture, transit traffic, intellectual property rights, competition and State aid policy) governed in the SAA are already applied. The EC and BiH concluded an Interim Agreement (IA) to this effect on 16 June 2008. This agreement provides for gradual abolition of customs duties and trade restrictions over a period of 5 years for EU products to be imported into BiH and for an immediate abolition of these restrictions and customs duties for almost all products of BiH origin for their export to the EU.

No major problems have been identified so far in the implementation of the IA, at least from a legislative point of view. Regarding the concrete application of the agreement and the implementing national laws and by-laws, some minor deficiencies have been discovered recently which will be addressed to BiH in the framework of the committees under the IA. Examples are the lack of training strategies in Customs and Taxation, the lack of auditors and equipment in the Directorate of the VAT unit, absence of legal sanctions (VAT-relevance), if a business is not registered, low level of communication between the Indirect Taxation Authority and Direct Tax Authorities.

Financial assistance: At the junction between external assistance and internal policies, IPA (Instrument for Pre-accession Assistance) aim at providing targeted assistance to countries which are candidates or potential candidates for membership.

2 billion since the end of the war, +/- 80 million per year

Indicative budget table IPA 2008 part I

Priority Axis Political Requirements 32,063,000
Priority Axis 2 – Socio-Economic Requirements 15,778,800
Priority Axis 3 – European Standards 51,443,997
Priority Axis 4 – Supporting Programmes: participation in Community programmes and Agencies 1,500,000

Some million are allocated to “horizontal programmes” such as Tempus (education), Erasmus Mundus (education), Nuclear Safety, etc. There will be a slight increase in the allocations in the coming years, reaching approximately 100 million in 2011.

V. OHR closure

The Peace Implementation Council Steering Board in February this year set five objectives that will need to be delivered by the BiH authorities:
1. Acceptable and sustainable resolution on state property;
2. Acceptable and sustainable resolution of defence property;
3. Completion of the Brcko Final Award;
4. Fiscal Sustainability of the State;
5. Entrenchment of the Rule of Law.

In addition to these objectives, the Peace Implementation Council Steering Board agreed, that two conditions need to be met: the signing of the Stabilisation and Association Agreement and a positive assessment of the Political situation in Bosnia and Herzegovina by the PIC.

VI. Reinforced EUSR following OHR closure

 The meeting of the Peace Implementation Council (PIC) [19/20 Nov] was a good opportunity to exchange ideas and agree on the way forward in BiH.

 The EU is building on the Rehn/Solana Report (of 31 October) to prepare in more detail the future arrangements for a reinforced EUSR presence upon OHR’s closure. The objective is to achieve a transition from OHR to local ownership, duly supported by a reinforced EUSR.

 EU integration is one of the few policy areas on which all the country’s leaders agree. The EU intends to build on this basic consensus by encouraging leaders to work together.

 Following a decision by the PIC to close the OHR, the EU envisages to adjust the EUSR mandate to needs on the ground. It is expected that the focus of the mandate will remain on political and security-related issues. It might include limited/residual responsibilities deriving from the Dayton Peace Agreement.

 The EUSR would be based on “soft power” (i.e. no executive powers). The possibility of combining the functions of the future EUSR and the Commission Head of Delegation in the form of a “double-hatting” arrangement is being explored. This would mean a single “EU face” on the ground and would allow placing all EU instruments, including ESDP missions, under the same umbrella.

 The EU attaches great importance to keeping its International Community partners on board after OHR closure, and intends to propose new coordination mechanisms.

 The EU intends to maintain its efforts to promote constitutional reform. It considers that evolution of the constitutional framework is essential to ensure a functional and efficient state. The ownership and responsibility to decide on the actual shape of any constitutional evolution should remain with the BiH authorities, but the EU is ready to help with expertise and funds.

Questions and answers

During that session, Angelos Pangratis answering questions referred to:

– EU’s transformational power during the enlargement process based on the aspirations of the people to accede to the EU and become part of the European family. Transformations “from within” happened through the adoption of the acquis. Aspirations and public support create the national consensus that accelerate reforms.

– There is no real alternative to EU membership for BiH and other countries of the region if we believe in a future of peace, stability, democracy and prosperity. This perspective should be actively supported by all players in the region.

– “Unity in diversity”, the motto of the EU integration is particularly relevant to BiH.

– The closure of the OHR should above all mark a decisive step towards local ownership supported by EUSR. The EU does not have the ambition/intention to try to dictate solutions but facilitate them. Progress towards the EU requires amongst others a functioning state, rule of law and overall an acceptable level of governance.