[House Document 108-91]
[From the U.S. Government Publishing Office]




108th Congress, 1st Session - - - - - - - - - - - - - House Document 
108-91
 
 REPORT ON BOSNIA AND UNITED STATES FORCES IN NATO-LED STABILIZATION 
                                 FORCE

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              TRANSMITTING

A REPORT ON PROGRESS MADE TOWARD ACHIEVING BENCHMARKS FOR A SUSTAINABLE 
                PEACE PROCESS IN BOSNIA AND HERZEGOVINA




   July 7, 2003.--Referred jointly to the Committee on International 
Relations, Armed Services, and Appropriations and ordered to be printed
                                           The White House,
                                          Washington, July 3, 2003.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: Consistent with the Levin Amendment to 
the 1998 Supplemental Appropriations and Rescissions Act 
(section 7(b) of Public Law 105-174) and section 1203(a) of the 
Strom Thurmond National Defense Authorization Act for Fiscal 
Year 1999 (Public Law 105-261), I am providing a report 
prepared by my Administration on progress made toward achieving 
benchmarks for a sustainable peace process in Bosnia and 
Herzegovina.
    This eighth report, which also includes supplemental 
reporting consistent with section 1203(a) of Public Law 105-
261, provides an updated assessment of progress on the 
benchmarks covering the period January 1 to June 30, 2003.
             Sincerely,
                                                    George W. Bush.
   Report on Bosnia and U.S. Forces in NATO-Led Stabilization, Force

    This document is divided into two parts, consistent with 
two separate Congressional reporting provisions concerning 
NATO-led Stabilization Force (SFOR) operations and developments 
in Bosnia and Herzegovina (BiH). Part I addresses the 
provisions of section 7 of Public Law 105-174 and outlines the 
latest developments in our continuing efforts to achieve a 
sustainable peace in BiH. Part II addresses the supplementary 
reporting provisions contained in section 1203(a) of the 
National Defense Authorization Act for Fiscal Year 1999. These 
two reports are submitted in a single document to afford 
Congress a broad and comprehensive assessment of developments 
in BiH from January through June 2003.

                                 Part I

                           MILITARY STABILITY

    Aim: Maintain Dayton cease-fire and strengthen state-level 
defense apparatus.
    The military security situation in Bosnia and Herzegovina 
(BiH) remains calm. Breaches in the Dayton cease-fire or the 
resumption of war are unlikely. During the reporting period, 
BiH and Serbia and Montenegro (SAM) continued to build upon 
normal diplomatic relations. Belgrade stopped salary payments 
to officers of the Army of the Republika Srpska (VRS) in March 
2002. A handful of VRS officers continue their studies at 
military academies of the Army of Serbia and Montenegro (VSCG). 
No new students have been accepted in at least 2 years and all 
remaining VRS students are expected to complete their studies 
soon. Serbia and Montenegro have honored its pledge to 
substantially end salary and other payments to the VRS. The 
cultural affinity that the VJ/VSCG once felt for the VRS has 
weakened over time. The United States has no reason to believe 
that illicit support will resume on an institutional level. The 
United States continues to encourage the two separate armies to 
support and advance the full implementation of the Dayton 
Accords.
    Following revelations of illicit transfers of military 
equipment from the Bosnian Serb firm ORAQ to Iraq and VRS 
espionage against SFOR and other members of the international 
community, the Serb member of the BiH Presidency resigned on 
April 2 under pressure from the international community.
    As a result of the ORAO revelation, the High Representative 
also mandated a series of defense reforms, which are to be 
implemented by December 31, 2003. The reforms required include: 
establishment of a Defense Reform Commission (DRC) to bring 
about state-level, civilian command and control of the military 
in BiH; significant downsizing of troops and armaments in both 
entities; a comprehensive state-level defense law; greater 
state-level control over arms production and export; and, 
eventually, a state-level army. Initial meeting of the DRC, 
chaired by former United States Assistant Secretary of Defense 
James R. Locher, surpassed expectations. Representatives of all 
three ethnic groups agreed on the need for a phased approach to 
establish democratic, civilian command and control at the state 
level. In particular, the RS has moved its position 
considerably on these issues, likely a result of recent policy 
changes in Belgrade following Serbian Prime Minister Djindjic's 
assassination. For the first time since Dayton, BiH is on the 
threshold of developing a state-wide defense structure that 
will lead to increased security for the country as a whole, 
rather than the existing construct of two mutually opposing 
armies in one state. The constructive atmosphere of the first 
DRC meeting suggests a high degree of local support for the 
reforms, even from several key leaders of the RS. The Bosnians 
will probably need assistance to implement many of the defense 
reforms being discussed, such as a state-level defense-type 
ministry and general staff. However, if fully implemented, 
these reforms will greatly enhance BiH's ability to meet its 
own goal of joining NATO's Partnership for Peace in July 2004--
a goal that seemed unrealistic in 2002.

                  PUBLIC SECURITY AND LAW ENFORCEMENT

    Aim: Restructured and democratic police forces.
    The European Union Police Mission (EUPM) replaced the U.N. 
International Police Task Force (IPTF) on January 1, 2003, with 
a 3-year mandate to ``monitor, mentor and inspect'' police in 
Bosnia and Herzegovina. With about 500 police monitors and 70 
civilian personnel, the EUPM is more limited in scope and 
mandate than was its predecessor. Monitors are co-located with 
senior officers at state and entity levels, as well as canton 
headquarters in the Federation and major Public Security 
Centers in the RS. Although, the EUPM Commissioner does not 
have the authority to certify or remove officials for 
noncompliance,the High Representative established a mechanism 
to remove officials at the recommendation of the EUPM commissioner. The 
EUPM has taken some initiatives to strengthen local capacity to combat 
organized crime, including human trafficking, as well as to develop law 
enforcement institutions.
    With the full deployment of the State Border Service (SBS) 
in October 2002, illegal migration to and through Bosnia has 
continued to fall. Figures released in early 2003 show that the 
number of arriving passengers ``unaccounted for'' at the 
country's airports has fallen to less than five percent of what 
it was 2 years ago. A computerized watch-list, established with 
United States Government assistance, is now operational at all 
airports and has resulted in over 50 interdictions of criminal 
suspects. The system is now being extended to key overland 
crossings.
    Since its establishment in 2002, the State Information and 
Protection Agency (SIPA) has thus far failed to deploy. 
Responsible for both dignitary protection and coordination of 
nationwide information-gathering on criminal activity, it lacks 
funds, adequate facilities and trained staff. Less than 50 of 
572 positions had been filled as of June, and the organization 
still had no headquarters building. The current state-level 
government is more receptive to the idea of giving SIPA greater 
executive authority, but has thus far not provided the 
necessary funds and other support needed for even limited 
operations. The Office of the High Representative (OHR), EUPM 
and the United States Mission in BiH have pressed the 
government to act quickly to transform SIPA into a robust 
State-level investigative agency to back up the newly formed 
State Court and Prosecutor's Office.
    An OHR-mandated reorganization of the state government 
included creation of a Ministry of Security. The exact role of 
this ministry has yet to be defined clearly, particularly the 
degree of influence it might have over operations of the 
independent, state-level law enforcement agencies, SBS and 
SIPA. The ministry recently formed a counterterrorism working 
group, consisting primarily of state and entity ministers or 
their representatives, but has otherwise focused on its 
internal organization and procedures.
    Police forces in both entities are consolidating rules and 
procedures adopted in 2002 as a condition for receiving U.N. 
certification from the IPTF. These include measures for 
personnel evaluation and discipline, greater coordination with 
state and entity counterparts and standard operating 
procedures. Senior police officials have also pressed 
government leaders to redress salary imbalances between 
different police forces. While coordination and performance at 
the top level has improved in recent months, continued 
incidents of violence in certain areas--particularly returnee 
communities--point to the need to improve standards at the 
local level. Continued reports of official misconduct also 
showed the need for greater attention by professional standard 
units. RS police acted professionally to deter public security 
threats before and during a large burial ceremony conducted in 
March by relatives of victims of the 1995 massacre in 
Srebrenica. The Federal Interior Ministry took significant 
steps to integrate operations among all canton police, 
including those controlled by hard-line nationalist governments 
in western Herzegovina.

                            JUDICIAL REFORM

    Aim: An effective judicial reform program.
    The High Representative's reform program to review all 
judicial and prosecutorial positions subject to open 
competition, supervised by the newly created High Judicial and 
Prosecutorial Councils (HJPCs), continued during the reporting 
period. The HJPCs began work in September 2002 and consist of 
Bosnians and internationals. They conduct the reappointment 
process and oversee the restructuring and training requirements 
of the justice system.
    The judicial reform process should take approximately 
another year to complete, with the aim of creating a truly 
independent judicial and prosecutorial system by mid-2004. The 
Independent Judicial Commission (IJC) continues to focus on its 
core tasks of restructuring and rationalizing the court system 
and providing to the HJPCs detailed background information on 
all candidates for the judicial positions. The OHR Rule of Law 
Department is assisting in the development of new legislation, 
coordinating legal training provided by the international 
community in BiH, monitoring returns, and coordinating with 
other programs by non-governmental organizations.
    Successful execution of judicial reforms is critical to 
establishing the rule of law and the confidence of all citizens 
of BiH, regardless of ethnicity, in the domestic court system. 
Additional focus must be concentrated on the local financing of 
the judiciary. The legislative and executive branches of 
government must provide necessary funding without delay or 
obstruction. The restructuring of the courts and prosecutors' 
offices is designed to reduce costs and rationalize them 
inaccordance with European and international norms. Currently, 
financing of the judiciary occurs at a cantonal or entity level and is 
inconsistent.
    In January, the High Representative imposed new state-level 
criminal procedure and criminal codes, which were subsequently 
passed by the BiH parliament. The codes will take effect in the 
RS on July 1, but the Federation has not yet adopted the new 
codes. The United States Government has taken the lead in an 
international effort to train judges, prosecutors and police in 
use of the new criminal procedure code.
    On March 1, 2003 the state-level ``Law on Protection of 
Witnesses Under Threat and Vulnerable Witnesses'' entered into 
force throughout BiH. The law defines which witnesses are 
entitled to protection, outlines procedures the State Court and 
the State Prosecutors Office must take to ensure witness 
anonymity, and sets down the defense's options for appealing 
the status of a protected witness.
    The newly established State Court and State Prosecutors 
Office are fully operational. In May, the State Court 
pronounced its first verdicts. Judge Salem Miso sentenced Tea 
Tanovic to 1 year imprisonment, and Iva Misic received 6 months 
imprisonment, both for bank fraud, after both pleaded guilty 
during pre-trial hearings.

         ILLEGAL INSTITUTIONS, ORGANIZED CRIME, AND CORRUPTION

    Aim: Building up local capacity to combat organized crime 
and corruption and the dissolution of illegal pre-Dayton 
instructions.
    The bellwether event during the reporting period was the 
first utilization of the new state-level criminal justice 
system to prosecute suspected kingpins of a major organized 
crime network. RS police arrested four persons in the Prijedor 
area, all of whom were arraigned on May 10 at the State Court 
in Saraevo for violations of the human trafficking provision in 
the recently enacted state criminal code. These four remain in 
custody at a State Court holding facility, while arrest 
warrants are outstanding for three others. The country's first 
nation-wide investigative task force--focusing on human 
trafficking--has continued its work, now with guidance from the 
State Prosecutor's Office. Until the State Information and 
Protection Agency becomes fully operational, with increased 
authority, coordination of this type of investigative work will 
remain the responsibility of entity law enforcement agencies.
    One long-running organized crime case, involving the head 
of a family who diverted funds from the BH Banka and other 
local enterprises, reached a denouement in February. A Sarajevo 
court convicted Alija Delimustafic of planning and organizing 
the kidnapping of another Bosnian citizen in Germany in October 
1996. Delimustafic was sentenced to 4 years in prison. The 
maximum sentence under Federation law is 10 years.

                              MEDIA REFORM

    Aim: Politically independent media and an apolitical 
telecommunications regulatory authority.
    Media outlets continued their attempts to achieve economic 
viability in an oversaturated media market with limited 
success. Again, media experienced a mix of positive and 
negative developments in 2003.
    On the positive side, the Mreza Plus network of independent 
commercial television stations has made donor requested 
management revisions that should allow it to operate more 
efficiently. Mreza Plus is also scaling back its joint news 
project proposal to meet donor funding limits; the first phase 
of the project should begin by the end of this year.
    The Communications Regulatory Agency (CRA) continues to 
establish itself and develop the abilities of its local board 
members despite political controversy and financial 
interference. For 2 years running the previous government 
attempted drastic cuts in CRA's budget spending authority, 
including line item closeouts in program expenses. OHR, with 
the United States mission, is currently examining legal and 
constitutional options to reverse this year's decision and 
protect CRA against future politically motivated interference.
    OHR has accepted a British Broadcasting Cooperation (BBC) 
Consultancy recommendation that CRA's authority be extended to 
include the licensing authority for public broadcasters. CRA is 
prepared to accept these additional responsibilities once its 
financial issues are settled. With CRA input, OHR has begun 
drafting the necessary changes to the public broadcasting law 
and plans to have them in effect by September 2003. These 
changes would include authority to regulate both advertising 
terms and time limits for public broadcasters.
    The BBC Consultancy reports that PBS has made little or no 
progress in the management restructuring and reform 
recommendations from the OHR broadcasting agent. The PBS 
broadcasters continue to accumulate mounting debt in excess of 
their revenue. OHR is now requiring each broadcaster to develop 
a stringent cost cutting plan that will allow it to break even. 
Despite its costs, PBS has made no progress this year in 
developing expected educational and children's programming.
    There has been little change in implementation of either 
the Freedom of Information laws or the Defamation law.
    In print journalism, the personal attack on the Alliance 
for Change coalition leader begun during the 2002 election 
campaign continues despite the fact that the candidate lost the 
election. Attacks have expanded to include many other moderate, 
non-nationalist leaders and public figures. These slurs have 
occasionally provoked similarly unprofessional responses from 
broadcast journalists who have been fined by CRA for their more 
extreme outbursts. Since the print media is self-regulating, 
the original offender has received no such sanction. The United 
States is encouraging the responsible media community to 
express their disapproval at this behavior and call on the 
public to demand more professional standards.
    The Press Council now has a capable local director and is 
becoming more active among the print media. The Council is 
working to assure that it will be completely self-sustainable 
in 2004 and no longer dependent on donor assistance.

                  ELECTIONS AND DEMOCRATIC GOVERNANCE

    Aim: National democratic institutions and practices.
    Following the October 5, 2002, general elections, new 
governments formed in both entities and at the state level in 
January. These are the first post-Dayton governments to be 
elected for 4-year terms. The governments are dominated by the 
three ethnically-based nationalist parties, the Bosniak Party 
for Democratic Action (SDA), the Serb Democratic Party (SDS), 
and the Croat Democratic Union (HDZ). Two swing parties that 
participated in the previous Alliance for Change government--
the Party for Democratic Progress (PDP) and the Party for BiH 
(SBiH)--switched over and joined the nationalist coalition, 
giving it majorities in the parliaments of both entities and 
the state.
    During the reporting period, state-level institutions have 
grown stronger in a few respects, but continue to fall short of 
coherent, self-sustaining government. In December 2002, the 
High Representative strengthened the state-level government by 
imposing changes to the Law on the Council of Ministers, which 
created two new ministries: the BiH Ministry of Justice and the 
BiH Ministry of Security. The amendments also ended the 
mandatory rotation every 8 months of the Chairman of the 
Council of Ministers. An individual of any ethnicity now may 
hold the position of Chairman of the Council of Ministers for 
the full term of the government.
    The first important act of the incoming state government 
was to adopt the OHR-drafted Law on BiH Ministries, which 
delineated the competencies and responsibilities of each 
ministry in the expanded Council of Ministers. The law was 
adopted largely as drafted by OHR, but the Council of Ministers 
made a number of amendments that weakened the authority of some 
state ministries and independent agencies. These amendments 
demonstrate that some of the nationalist parties have not 
abandoned their policy of trying to keep the state-level 
government weak in order to retain power at the entity level.
    In its first 6 months, the new Council of Ministers had 
only a modest record of accomplishment. In addition to the Law 
on BiH Ministries, the Council has approved amendments to the 
Law on Citizenship regarding denaturalization, which provide 
important authorities that can be applied to counterterrorism. 
The Council, the BiH Parliament, the entity parliaments, and 
the Brcko District Assembly quickly passed legislation 
recommended by the OHR-established ``Bulldozer Commission'' 
designed to remove administrative barriers to business in BiH. 
The Council also adopted the Law on Primary and Secondary 
Education. While the Council of Ministers has worked at a slow 
pace, meeting only 12 times in the last 6 months, the new BiH 
Parliament has met twice as frequently as its predecessor in 
order to clear a backlog of pending legislation and act 
relatively quickly on newly proposed laws.
    The development of central government institutions remains 
constrained by inadequate funds. The central government relies 
upon transfers from the entities for the vast majority of its 
budget, since its only independent sources of revenue are fees 
from issuance of the new joint passport, overflight fees, and 
international donations. In February, the High Representative 
created the Indirect Tax Policy Commission and tasked it 
withdrafting legislation unifying entity customs administrations and 
establishing a single, state-wide value added tax (VAT) and an Indirect 
Tax Administration. The Commission is scheduled to implement a unified 
customs regime on July 1. The state-administered VAT is scheduled to be 
inaugurated on January 1, 2005, replacing the differing entity sales 
and excise tax systems and ending the State's dependence on the 
entities for revenue.
    The BiH Civil Service Agency, which is charged with 
developing a professional, apolitical, merit-based civil 
service, declared itself fully operational on February 6. The 
Agency is tasked with implementing the BiH Civil Service Law, 
imposed in May 2002, through transparent recruitment of state-
level civil servants and by vetting current civil servants to 
ensure they meet minimum qualifications. The new government 
violated several provisions of the Civil Service Law in 
appointing senior level civil servants and has attempted to 
assert political control over Civil Service appointments. 
Strong intervention by the High Representative in insisting 
that the Civil Service Law be respected has largely succeeded 
in forcing the new government to conform to the law.
    On May 29, 2003, the High Representative established the 
Expert Commission on Intelligence Reform, charged with 
producing a proposal for setting up a single intelligence 
structure in BiH. The Commission, which is led by former 
Hungarian Ambassador to BiH and former head of the Hungarian 
intelligence service Kalman Kocsis, began work in June with the 
aim of producing draft legislation to Parliament by August 1. 
Currently, each entity has its own intelligence service, which 
operate outside proper parliamentary and state control. In some 
cases, aspects of these services have been implicated in ethnic 
cleansing during the war. The High Representative has set the 
goal of an operational, single intelligence service by January 
2004, provided the BiH Government promptly accepts and adopts 
the draft legislation to be produced by the Commission.
    Following the April 2, 2003 resignation of Mirko Sarovic as 
the Serb member of the BiH Joint Presidency, fellow SDS member 
Borislav Paravac was elected by the BiH House of 
Representatives to replace him in accordance with the Law on 
Presidential Succession.

                          ECONOMIC DEVELOPMENT

    Aim: Free-market reform.
    BiH has made progress in its transition to a market 
economy, but more reforms are urgently needed. The private 
sector, which is critical to that transition, accounts for less 
than 40 percent of the country's GDP. Trade and investment will 
benefit from such steps as bureaucratic streamlining and 
downsizing, accelerated privatization, and accession to the 
World Trade Organization, all of which are stated objectives of 
the BiH government. Currently the multiple layers of 
government, the co-existence of three economic spaces (two 
entities and the Brcko District), corruption, and the perceived 
absence of rule of law all contribute to an environment 
unfriendly to business. According to recent OHR polling data, 
the public continues to view the three most important problems 
facing the country as unemployment, criminality and rebuilding 
the economy. So far, despite their public pledges to tackle 
these problems and more, nationalist government authorities 
have done little to convince a frustrated public that they take 
these problems seriously.
    Bosnia's economic indicators confirm that the country has 
made some improvements, but more are required. According to 
World Bank data, real GDP growth has declined steadily from 
1999 (9.6 percent) to an estimated 3.8 percent in 2002, 
although growth exceeded projections. Foreign Direct Investment 
(FDI) doubled in 2002, despite the Europe-wide slowdown, but it 
remains among the lowest in the region at less than 3 percent 
of GDP. Particularly worrisome is the current account deficit, 
which has steadily eroded from about 8 percent of GDP in 1999 
to 19 percent at the end of 2002. The trade deficit has 
continued to widen in 2003 as significant expansion of consumer 
credit has financed more purchases of imported goods. Data 
indicate that building materials were a significant portion of 
the imports as citizens built homes and businesses--a 
potentially welcome signal of confidence. Unemployment 
continues at unacceptably high levels, with official figures 
showing rates in excess of 40 percent. If the gray economy is 
factored in, the actual figure is probably closer to 15-20 
percent. Even so, the figure is still far too high in a country 
where the World Bank estimates that nearly half the population 
lives at or below the poverty line.
    On the positive side, BiH continues to maintain 
macroeconomic stability--low inflation and a stable 
currency.Those positives are largely the result of strict adherence to 
the Central Bank's currency board, which fixes the exchange rate of the 
konvertibilna marka (KM) to the euro. Inflation was a negligible 0.2 
percent at the end of 2002 and has continued at a low level so far in 
2003. Strong public confidence in the KM and the banking system has 
allowed BiH to build up its official hard currency reserves from about 
2 months of imports at the end of 2000 to 5 months in early 2003. The 
banking sector continues to be the star performer in the Bosnian 
economy, garnering a full 75 percent of the total FDI in the country. 
The banks have ample short-term liquidity and a new deposit insurance 
program insures savings deposits up to KM 5,000 (approximately USD 
3,000). BiH is moving forward on fiscal consolidation by strengthening 
tax administration and harmonizing indirect taxes; imposing improved 
expenditure controls; and continuing the process of military 
demobilization to reduce government expenditures. Recently the 
International Monetary Fund (IMF) noted that BiH had met or exceeded 
tax revenue and budget reduction targets.
    These measures, while positive, have so far not been 
sufficient to wean BiH from foreign assistance. If BiH is to 
develop a self-sustaining market economy independent of outside 
aid, it must implement structural reforms more aggressively to 
remove the barriers that currently discourage domestic and 
foreign investment. BiH authorities are working with the 
international community to address the most urgent economic 
needs--improving the investment climate, accelerating the pace 
of privatization and increasing exports. Progress has been made 
on the investment climate. Since the beginning of 2003, the 
authorities have either adopted, or will soon adopt, laws on 
bankruptcy and liquidation, land registry, business 
registration, registered pledges, accounting and auditing. All 
of these laws are intended to establish a legal and regulatory 
framework more conducive for investment.
    Privatization, particularly of strategic companies in the 
power and telecommunications sectors, has lagged as 
privatization authorities have struggled to cope with the 
challenges of creating a more transparent process responsive to 
the requirements of potential investors. Similarly, major 
hurdles still stand in the way of reviving the export sector. 
Policymakers are beginning to map out a comprehensive strategy 
to stimulate exports, identifying sectors where BiH has a 
comparative advantage and then providing financing to support 
the growth and development of those sectors.
    In addition to these structural reforms, BiH is also facing 
serious challenges in addressing fiscal sustainability and 
domestic debt. Fiscal sustainability, particularly in an 
environment where international assistance is on the decline, 
will depend on whether authorities can muster the political 
will to reduce the size of government. World Bank data indicate 
the public sector accounts for more than 60 percent of the 
country's GDP, with wages and salaries alone comprising nearly 
20 percent of GDP. The huge and looming domestic debt includes 
payment arrears, war-time frozen currency deposits and war-
related damage claims that together total an estimated KM 10 
billion (approximately USD 6.02 billion), or roughly the entire 
GDP of the country. If BiH is to develop a viable, self-
sustaining economy, it must necessarily develop more effective 
strategies for dealing with these twin challenges in the months 
ahead. In February and March the High Representative responded 
to successive Organization for Security and Cooperation in 
Europe (OSCE) audit reports charging gross mismanagement, theft 
and neglect at the three Elektroprivreda (EP) power utilities, 
notably in the RS. Ashdown removed top officials, imposed a law 
on public appointments, and called for further remedial actions 
by local governments. The audit reports were authorized by OHR, 
financed by the USG and carried out by OSCE to expose the 
reasons behind the ongoing obstruction of essential energy 
sector reforms. The Elektroprivreda RS (EP RS) audit showed a 
leakage of at least USD 80 million. The audits of EP Mostar and 
EP Sarajevo confirmed mismanagement, but at less serious levels 
than EP RS. Follow-up work by OHR indicated that EP Mostar and 
EP Sarajevo had implemented the changes OHR had sought, but EP 
RS had obstructed some. OHR sought and obtained additional 
reforms.

              DISPLACED PERSON AND REFUGEE (DPRE) RETURNS

    Aim: A self-sustaining, orderly minority return process.
    Although returns are occurring throughout Bosnia, even in 
some of the most hard line areas, this reporting period has 
seen a marked decrease in DPRE returns. While property law 
implementation that had been the driving force behind the surge 
in returns and the accelerated eviction rate of the previous 
reporting period continues, numerous incidents of violence and 
intimidation since the October 2002 elections are a likely 
cause of the reduced pace of returns. The lack of economic 
opportunities also remains a significant obstacle to returns.
    In addition to incidents of violence and intimidation, an 
increase in land mine incidents (27, nearly half of which 
resulted in fatalities) has marred the environment for returns. 
According to a USAID study, economic factors such as lack of 
adequate shelter, infrastructure, employment, education, and 
health care are the main impediments to sustaining returns.
    UNHCR reports that in the first 4 months of 2003 there were 
17,181 minority returns, 44 percent less than took place in the 
same period in 2002. This decreasing return rate suggests that 
the total in 2003 may not reach the 100,000 minority returns 
that were projected for the year. There were 102,111 minority 
returns in 2002. UNHCR contends that as many as 250,000 
refugees and displaced persons could return to areas throughout 
Bosnia and Herzegovina over the next 2 years. The sudden 
decrease in the rate of return if it were to persist would then 
mean that the return momentum of previous years has decreased 
prematurely.
    According to UNHCR, as of April 30, 2002, some 949,257 
DPREs out of the estimated 2.2 million people displaced by the 
1992-1995 war have returned to their homes in Bosnia. Another 
estimated 720,000 have resettled abroad. Reliable estimates 
place the number of persons internally displaced in Bosnia at 
approximately 350,000 while another 120,000 Bosnians are 
refugees in neighboring Serbia and Montenegro and Croatia. Many 
want to remain in their place of displacement, but others want 
to go home. UNHCR officials believe that previous optimistic 
return projections for 2003 may not occur given the current 
decreased rate of return.
    As international donor funding declines, local actors will 
need to play an increasingly central role in maintaining return 
momentum. Plans to hand over Annex VII responsibilities have 
been created and accepted by the Peace Implementation Council 
(PIC) Steering Board members as of January. The hand over to 
local authorities of international organization 
responsibilities such as OHR-RRTF and the Commission for Real 
Property Claims is currently far behind the original timelines. 
The timeline for the completion of the hand over is December 
2003. The state-level refugee ministry will be the focal point 
for the hand over, but currently does not have an adequate 
budget to meet its increasing responsibilities in 2003. There 
is a need for institutional capacity building and the ministry 
will need to hire staff to handle its new role and provide the 
necessary support to sustain the DPRE return process.
    Previous returns have been largely to rural towns and 
villages, but in the past year perhaps half of the returnees 
have gone back to suburban and urban settings. A major factor 
for this new trend is that local authorities in most areas of 
the country, after considerable prodding by the international 
community, are evicting illegal occupants and reinstating 
rightful owners. However, no studies have yet been done to 
assess how many reinstated owners have actually moved back to 
their repossessed property; anecdotal evidence indicates that 
many repossessed houses go uninhabited and that returns to 
heterogeneous urban centers are far more difficult than returns 
to the more homogeneous rural areas. Property law obstruction 
continues to be a problem in urban areas of the RS such as 
Banja Luka, Bijeljina, Zvornik, and Prijedor. As of the end of 
April 2003, 80 percent of all property claims currently in the 
property law implementation plan (PLIP) had been resolved. A 
minimum of 65,000 claims will be introduced into the PLIP that 
will require increased focus on evictions throughout 2004.
    The formation of new governments ushered in new refugee 
ministers in 2003, and both the RS and the Federation entities 
are devoting increasing portions of their budget to support 
returns; however, it remains to be seen whether they will 
follow through on these commitments. On March 27, High 
Representative Ashdown announced his decision to remove former 
Federation Refugee Minister Mijat Tuka due to the results of 
the special audit of the 2003 Federation Ministry of Social 
Policy, Displaced persons, and Refugees (FMSP). The audit 
estimated that approximately KM 14.3 million (USD 8.6 million) 
was lost through overspending, manipulated tender processes, 
mismanagement, paying staff multiple salaries, and poor project 
controls that resulted in unmet reconstruction commitments. As 
a result, the High Representative removed Tuka from his 
position as the New Croatian Initiative (NHI) Deputy in the BiH 
House of Representatives. The Financial Police are continuing 
their investigation of Tuka and his alleged accomplices. The 
new refugee Minister, Edin Music (SDA), is working to correct 
these problems and is paying close attention to the OHR 
recommendations made in the audit.
    The Federation Refugee Ministry is reorganized and 
preparing to deliver reconstruction material to returnees. The 
RS Refugee Ministry has begun to deliver reconstruction 
material to small numbers of returnees. The state-level refugee 
ministry has a small budget. All three ministries are expected 
to contribute to a joint Fund for Returns that is currently 
being created to support joint reconstruction initiatives, but 
currentdelays may affect local authorities' ability to support 
returns during this reconstruction and return season.

                                 BRCKO

    Aim: Implementation of the Brcko Final Award.
    Retired United States Ambassador Henry Clarke completed his 
second year as Brcko's third Supervisor in April and, in close 
cooperation with the Brcko District Government, continues to 
make significant progress in implementing the Brcko Final 
Award. OHR, with input from the USG, is beginning to 
investigate how to integrate Brcko into BiH affairs in such a 
way that protects its status following eventual completion of 
the Supervisor's mandate.
    The Brcko District Government, fashioned out of three pre-
war municipalities and reorganized under an open, competitive 
process, continues to function much more efficiently than other 
municipalities in BiH. The District Government has the most 
comprehensive and transparent budget in BiH, with all revenues 
and expenditures accounted for. Brcko is also the only 
completely self-financed municipality in Bosnia. The district 
assembly has adopted a five-year capital needs budget plan.
    Ambassador Clarke briefed the PIC Steering Board's June 11-
13, 2003 meeting on the implementation of the Brcko Final 
Award. Recent statements by politicians, particularly from the 
RS, indicated that some had not abandoned their hope that the 
RS would assume administration of Brcko. In its press 
statement, the PIC Steering Board called on both entities to 
respect the Final Award. In addition, with a regulatory dispute 
affecting trade between Brcko and Croatia, the PIC Steering 
Board welcomed the announcement that a solution was imminent.
    Redevelopment of the Arizona Market has continued since the 
June 2002 groundbreaking with minor fits and starts. This 
spring, several squatters (mostly Bosnian Croats) continued 
earlier attempts to delay the project, claiming land they 
``owned'' was taken illegally for the project. The Brcko 
government has given compensation to the few who could prove 
legitimate ownership. In the end, the squatters vacated their 
temporary structures allowing the road widening and permanent 
structure construction to proceed. Phase one of the project is 
scheduled for completion in July. All current business owners 
who either purchased space or signed rental agreements will be 
able to relocate to the new structure following its completion. 
The Arizona Market project foresees investments of KM 250 
million (approximately USD 150 million) over a period of 7 
years and allows the contractor to manage the Market for 20 
years, after which it will be returned to the District.
    The Privatization Office of the Brcko District continued 
operations begun in early 2002, stopping attempts by the RS to 
privatize businesses based in Brcko District. Its mandate is to 
privatize each of the 15 largest state enterprises located in 
the District. As of May, the office had privatized seven public 
companies, four of which have Foreign ownership and plan to 
export products this year. Apartment privatization is underway, 
with over 2000 apartments already sold, and more than 1,500 
applications being processed.
    Refugee returns to the District continue at a steady pace. 
Complementing this, property returns to rightful owners or 
claimants have reached 50 per week. Assuming this pace 
continues, property returns should be completed by the end of 
2003.
    In a sign of continuing movement toward multi-ethnic 
tolerance, re-construction of the 400-year-old White Mosque 
continues. Located in the center of town and completely 
destroyed by Serb and Bosnian Serb paramilitaries at the 
beginning of the Bosnian conflict in 1992, the Mosque remained 
in ruins because Bosnian Serb community leaders had prevented 
its reconstruction, claiming that such a provocation would 
stroke ethnic tensions within the District. The local Brcko 
Muslim community has refused to accept donations from other 
Islamic nations, not wanting to be tainted by association with 
or conditions attached to such money. Instead, they have 
depended on donations received from within their membership 
base.
    Ethnicity continues to play a significant role in Brcko 
politics. Following the recommendation of a combination expert/
independent panel for Brcko's new police chief, nationalist 
Bosnian Serb elements vehemently opposed the nomination on the 
grounds the nominee was not ``the right kind of Serb.'' This 
was taken to mean one they could not control.

                PERSONS INDICTED FOR WAR CRIMES (PIFWCS)

    Aim: Cooperation with the International Criminal Tribunal 
for the Former Yugoslavia (ICTY) leading to the transfer of 
PIFWCs to The Hague for trial.
    As of June 20, a total of 88 PIFWCs (including five who 
have since died) have been transferred to The Hague for Trial. 
Nineteen indicatees remain at large out of a total of 138 
public indictments to date (some indicatees have died or cases 
were withdrawn or dismissed). Acting within its mandate, SFOR 
has intensified its search efforts, assisted in the transfer of 
indicatees to The Hague, and supported ICTY field 
investigations in BiH. At the state and Federation levels, 
cooperation with ICTY was unchanged. Bosniak and Croat leaders 
have generally been more cooperative in apprehending and 
turning over PIFWCs to the ICTY than their Bosnian Serb 
counterparts. The RS remains under ``Lautenberg Amendment'' 
restrictions on United States Government assistance, although 
the Deputy Secretary of State issued a waiver allowing the 
majority of FY2003 United States Government assistance to the 
RS to continue. Three RS municipalities, Foca/Srbinje, 
Trebinje, and Pale, however, are specifically excluded from the 
scope of the waiver for having failed to take adequate steps to 
apprehend PIFWCs.
    During the reporting period, SFOR forces apprehended Naser 
Oric--indicted on charges related to atrocities in Srebrencia 
and Bratunac--on April 10, 2003.
    While RS Prime Minister Dragan Mikerevic publicly called 
for the surrender of PIFWCs, RS law enforcement authorities did 
not cooperate with PIFWC apprehensions and still have not 
arrested any ICTY indictees. Foreign Affairs Minister Mladen 
Ivanic's call for establishment of a multi-agency PIFWC working 
group (with both Bosnian and international representatives) has 
gone unheeded. There has been no increase in cooperation 
efforts between HR and ICTY, and RS authorities have not taken 
any concrete anti-PIFWC actions during the reporting period. In 
January 2003, an ICTY investigative research team was allowed 
to review RS police and intelligence records, but was required 
to give two weeks written notice, and found that the archives 
had been ``cleaned'' of any records from July 1995.
    The international community has stepped up its efforts to 
apprehend PIFWCs. In March, the United States, working with 
SFOR and OHR, initiated a plan to disrupt the financial and 
logistical support network of PIFWCs. On March 7, 2003 the 
United States designated Milovan Bjelica and Momcilo Mandic as 
obstructers of the Dayton Peace Accords on the Western Balkans 
Executive Order (E.O. 13219) for their material and logistical 
support to PIFWC Radovan Karadzic. In a coordinated effort, the 
High Representative imposed legislation on the same day that 
allowed him to block the assets and prohibit future 
transactions of supporters of PIFWCs and obstructers of the 
Dayton Peace Accords. The High Representative also signed a 
notice blocking all of the economic assets of the targets and 
removed them from public office. Action was also taken against 
Mandic's companies, Manco Oil and Privredna Banka Srpsko 
Sarajevo (PBSS). The assets of these companies were blocked in 
the United States, and OHR began investigations of both 
companies in BiH. The investigations of PBSS uncovered a vast 
money-laundering scheme. Momcilo Mandic is currently detained 
in Belgrade in connection with this scheme. The Central Bank of 
BiH has since closed PBSS because it could not meet reserve 
account requirements.
    On May 29, 2003 President Bush signed Executive Order 13304 
on the Western Balkans, superseding Executive Orders 13192 
(Yugoslavia) and 13219 (Western Balkans). The new order blocks 
the assets of those persons involved in destabilizing the 
Western Balkans. The annex to Executive Order 13304 includes 
those family members and other individuals and groups 
designated under the order for providing support to Radovan 
Karadzic, Ratko Mladic, and other PIFWCs who remain at large.
    The United States continues to consider the apprehension, 
detention, and trial of Bosnian Serb PIFWCs Radovan Karadzic 
and Ratko Mladic to be of the highest priority, not only in the 
interest of justice, but also to facilitate Dayton 
implementation in BiH and stabilize the region. Their refusal 
to surrender and ability to avoid apprehension sustains Serb 
extremism, inhibits the establishment of trust among ethnic 
communities, undermines the credibility of the international 
community, and retards the rule of law.

                                Part II

    Pursuant to Section 1203(a) of the Fiscal Year 1999 
National Defense Authorization, this section of the report 
covers events that occurred while United States ground combat 
forces continued to participate in the NATO-led Stabilization 
Force (SFOR) from January through June 2003. This section 
supplements Part I of the report and the two are submitted 
together. When possible and where requirements overlap, this 
section will refer back to elements in Part I in order to avoid 
duplication. The numbered responses that follow correspond to 
specific numbered reporting requirements contained in section 
1203(b).

         1. EXPECTED DURATION OF UNITED STATES FORCES IN BOSNIA

    United States policy remains to ``hasten the day'' that the 
United States and our NATO allies and partners can withdraw our 
military forces from the region while ensuring that the Balkans 
do not return to conflict or become a safe haven or way station 
for terrorists.
    NATO's missions in the strategically important Balkans, 
including SFOR in Bosnia and Herzegovina, are evolving as 
improvements in stability and security continue. The NATO-led 
forces in BiH, including United States personnel, are being, 
and will be, further restructured and reduced in number, as 
progress allows.
    NATO has successfully maintained a safe and secure 
environment for Bosnian authorities and International Community 
representatives to carry out their responsibilities and 
activities under the Dayton Peace Accords. SFOR's successful 
fulfillment of its key military and supporting tasks has 
enabled NATO to reduce its troop presence (including United 
States forces) by a third. This reduction has been implemented 
under NATO's Joint Operations Area (JOA) review and regional 
approach to operational restructuring that encompasses all NATO 
operations in the Balkans.
    Reflecting the significant challenges that remain in BiH 
and the region, an SFOR operational pause was deemed 
appropriate during the reporting period with NATO-led troop 
strength holding at approximately 12,000 (including around 
1,800 United States personnel or about 15 percent of the total 
deployed force).

                 2. PERCENTAGE OF BENCHMARKS COMPLETED

    No benchmark has been fully accomplished to date, although 
in some security areas we are approaching completion. The 
latest Operation Plan revision has reduced the number of SFOR 
key military and supporting tasks. Substantial progress has 
been recorded in other areas, particularly Brcko, but 
completing the benchmarks will require time and continue 
commitment, as described fully in Part I of this report.

              3. STATUS OF THE NATO ``FORCE OF GENDARMES''

    The Multinational Specialized Unit (MSU) continues to be an 
essential component of SFOR, which provides unique capabilities 
in information gathering and crowd control. The MSU carries out 
liaison with the international and local police. It deters 
disruptive civil behavior by demonstrating that SFOR can deal 
effectively with outbreaks and by maintaining a police-like 
professional presence throughout BiH that is less 
confrontational than a military response. These qualities, 
combined with the MSU's continuous patrolling and cooperation 
with local police and community leaders, help to foster an 
atmosphere of security and rule of law. The MSU has completed 
the task of training special indigenous police units in many of 
the same skills as international MSUs. These kinds of forces 
will take on a greater role as NATO continues to draw down.
    The United States and NATO attach particular importance to 
accelerating the development of civil institutions and local 
police in BiH so they can fulfill their responsibilities for 
public security and the rule of law. Since beginning its work 
in January, the EUPM is concentrating on management, 
administration, and professional accountability of indigenous 
police units and managers. It is not structured to focus on 
patrolling and training.

  4. MILITARY AND NON-MILITARY MISSIONS DIRECTED BY THE PRESIDENT FOR 
               UNITED STATES FORCES IN BOSNIA-HERZEGOVINA

    The United States Government supported the June 2002 
decision of the North Atlantic council (NAC) to task the 
Commander, Stabilization Force (COMSFOR), through the Supreme 
allied Commander Europe (SACEUR), with the continued SFOR 
mission according to the revised tasks outlined below:
    Key military tasks:
     Maintain an adequate military presence to ensure 
deterrence and continued compliance with military aspects of 
the General Framework Agreement for Peace (GFAP);
     Contribute, within means and capabilities, and in 
close coordination with the Office of the High Representative 
(OHR) and the Organization for Security and Cooperation in 
Europe (OSCE), to the Armed Forces of Bosnia-Herzegovina 
restructuring, education and training process and to the 
development of state-level defense institutions;
     Contribute, within means and capabilities, to a 
secure environment in which the international civil 
organizations and the parties to the GFAP can carry out their 
responsibilities under the agreement;
     Ensure force protection and freedom of movement;
     Be prepared to coordinate the turnover of 
responsibility for airspace management and control to BiH;
     Pursue, within current mandate and within means 
and capabilities, actions against persons suspected to be 
terrorists.
    Key supporting tasks, within the means and capabilities:
     Provide on a case-by-case basis support to the 
High Representative in his implementation of civil aspects of 
the GFAP, as well as to the other key civil implementation 
organizations;
     Support, in coordination with the OHR, the UNHCR 
and other International Organizations, return of Displaced 
Persons and Refugees (DPREs) to high-risk areas by contributing 
to a safe and secure environment;
     Support the International Tribunal for the Former 
Yugoslavia (ICTY) and efforts against Persons Indicted for War 
Crimes (PIFWCs);
     Support the OHR, the PITF and its follow-on force 
in assisting the local police;
     Provide, on a case by case basis, support to the 
OSCE, if requested, in implementing Annex 1B of the GFAP;
     Provide technical advice on de-mining to the Host 
Nation.
    SFOR has been very successful thus far in accomplishing its 
primary missions of deterring renewed aggression and providing 
a safe and secure environment. While SFOR's continued attention 
is required to maintain this favorable situation, the force 
should now be able to shift its main focus to three narrower 
missions: combating terrorism, reforming and restructuring 
Bosnia's armed forces, and apprehending persons indicted for 
war crimes.
    With regard to specific issues raised under reporting 
requirement 4:
          (A) Persons Indicted for War Crimes (PIFWCs): Primary 
        responsibility for the apprehension and transportation 
        of PIFWCs lies with the parties to the GFAP. During the 
        reporting period, SFOR detained one inductee with 
        little or no support from the parties for a total of 23 
        since 1996. Some nineteen PIFWCs from throughout the 
        region are still at large, including two high profile 
        indictees--Ratko Mladic and Radovan Karadzic. 
        Additionally, SFOR continues to support, as necessary 
        and within means and capabilities, the International 
        Criminal Tribunal for the former Yugoslavia (ICTY) in 
        the exhumation of suspected war crime sites.
          (B) Support to civilian police functions: As long as 
        organized opposition to full implementation of the GFAP 
        continues, OHR, EUPM, and other international 
        organizations involved in civil implementation will 
        expect SFOR to contribute to a secure environment and 
        to provide back-up in the case of civil unrest provoked 
        by Dayton opponents. Indigenous police forces are 
        further hindered by lagging pay, overstaffing, and 
        poorly-equipped personnel and investigative units. 
        There is widespread corruption, political influence 
        from hard-liners, and lack of inter-ethnic credibility. 
        On a positive note, the Police Academies are meeting 
        ethnic quotas, and vetting of potential officers has 
        improved. While the State Border Service has shown 
        substantial progress, it faces severe resource 
        constraints.
          (C) Resettlement and return of refugees: During this 
        reporting period, SFOR continued close cooperation with 
        the OHR and the U.N. High Commission for Refugees 
        (UNHCR) to encourage refugee returns. In its support 
        role, SFOR focused on advanced planning, enhanced 
        information exchange to identify hot spots, and 
        maintaining a secure environment to minimize any 
        efforts to intimidate returnees.
          (D) Support to local and international authorities:
          Elections. No significant elections took place during 
        the reporting period. The last general election took 
        place in October 2002, the first organized and run 
        entirely by BiH authorities. SFOR provided wide-area 
        security, although this requirement was significantly 
        reduced from previous elections due to the improved 
        security environment.
          Crime and Corruption. Crime and corruption remain 
        perhaps the most significant threats to the secure 
        environment in BiH, impeding progress in civil 
        implementation of the GFAP. There is still significant 
        illegitimate political and criminal influence on 
        police, prosecutors, and judges, and links between 
        organized crime and the local officials remain strong. 
        Much needs to be done to reinforce theequitable rule of 
law in BiH. Reform of the criminal justice system remains a major 
priority for the International Community.
          As previously noted, SFOR has an important role in 
        supporting, within means and capabilities, the new EU 
        Police Mission (EUPM) that replaced the IPTF at the 
        beginning of 2003. The EUPM will continue to advise and 
        monitor local police, particularly senior leaders, to 
        enhance their capabilities and professionalism. SFOR 
        also continued to support OHR efforts to develop the 
        State Border Service.
          Brcko. Since the final Brcko Arbitration Award in 
        March 1999, the Brcko District has been completely 
        demilitarized with the full cooperation of the Entity 
        Armed Forces (EAFs).
          Airspace Control. Progress in the work of the OHR 
        with BiH airspace management authorities should permit, 
        at some future time, final transfer of this 
        responsibility to BiH itself. In January 2000, SFOR 
        returned control of the BiH upper airspace (which NATO 
        had controlled since initial implementation of IFOR as 
        provided for in the GFAP) to Bosnian authority. 
        Transfer of ``medium term airspace'' occurred at the 
        end of 2001. At the end of 2002, SFOR transferred full 
        responsibility for the operation of the Sarajevo 
        airport to BiH civilian authorities. During the 
        reporting period, SFOR continued to work with local 
        authorities to develop a state-level approach to other 
        civil aviation issues, including management of the 
        airport at Sarajevo.

           ASSESSMENT OF THREATS TO THE UNITED STATES FORCES

    The security situation in BiH remains stable. The EAFs 
generally comply with the GFAP and cooperate with SFOR, so 
maintenance of public order is normally not a problem. Despite 
actions against PIFWCs and terrorists with alleged links to al-
Qaida, the situation remains generally calm. Initiatives are 
underway to reduce the Entity Armed Forces (EAFs) to a size and 
budget commensurate with Bosnia's population and financial 
capabilities. Cooperation between the EAFs on civil projects 
and demining continues to improve.
    BiH authorities, civil and military, have yet to develop 
fully the legitimate, responsible, and accountable state 
institutions necessary to achieve the ultimate goal of a self-
sustaining force. However, Supreme Headquarters Allied Powers 
Europe (SHAPE) and SFOR estimate the likelihood of an internal 
military threat as remote. There has also been significant 
improvement in the external security situation of BiH, due to 
democratic political change in Serbia and Montenegro, and 
Croatia.
    Bosnia-Herzegovina remains the Balkan country most 
vulnerable to terrorist penetration. Uniquely positioned and 
resourced, SFOR, in cooperation with Bosnian authorities, 
serves as the catalyst to disrupt and counter conditions that 
support terrorism within BiH. The USG has been successful in 
revising the SFOR Operations Plan to reflect counter-terrorism 
as a key task.
    Assessment of costs: Since FY 1996, the projected cost to 
the Department of Defense of the military missions that the 
President has directed in Bosnia and Herzegovina has been about 
USD 13.5 billion (through 2003). Costs are summarized below (in 
millions):

----------------------------------------------------------------------------------------------------------------
                                                   FY 2002  FY 2001  FY 2000  FY 1999  FY 1998  FY 1997  FY 1996
                    OPERATION                       Actual   Actual   Actual   Actual   Actual   Actual   Actual
----------------------------------------------------------------------------------------------------------------
Joint Forge/Guard/SFOR/IFOR......................   1019.4   1292.8   1381.8   1431.2   1792.8   2087.5   2241.0
                                                  --------------------------------------------------------------
Delibrate Forge/Deny Flight......................    (\1\)    (\1\)    101.3    141.4    159.4    183.3    225.9
                                                  --------------------------------------------------------------
Task Force Saber/Able Sentry.....................  .......  .......  .......     14.0     10.5     11.7     30.9
                                                  --------------------------------------------------------------
UNCRO/Provide Promise............................  .......  .......  .......  .......  .......  .......     22.2
                                                  --------------------------------------------------------------
      Total......................................   1019.4   1292.8   1483.1   1586.6   1962.7   2282.5  .......
----------------------------------------------------------------------------------------------------------------
(\1\) Incl. in SFOR.

    Operation Joint Forge (follow-on to IFOR, SFOR, Deliberate 
Force, Joint Endeavor, and Joint Guard) is the NATO operation 
to deter the resumption of hostilities and to contribute to a 
secure environment that promotes the reestablishment of civil 
authority in BiH. Operations financed include continued support 
of a United States Division headquarters by a United States 
Brigade Combat Team Task Force with a force capacity 
ofapproximately 1800 in Bosnia, support of approximately 40 enabling 
soldiers in adjacent countries, four base camps, and two troop 
rotations per year.
    IFOR preparation and IFOR included the costs of preparing 
United States troops for deployment to IFOR.
    Operation Deliberate Forge (follow-on to Deny Flight, 
Decisive Edge, and Deliberate Guard) involves air operations 
for maintaining the no-fly zone over BiH.
    Operation Sharp Guard enforced the United Nations-sanctions 
embargo against the FRY (excluding the enforcement of the arms 
embargo against Bosnia) conducted in conjunction with Western 
European Union forces.
    Task Force Able Sentry was United States participation in 
the United Nations preventive deployment along the Serbian/
Macedonia border (UNPREDEP).
    UNCRO mission entailed support provided to the Zagreb 
hospital in support of the United Nations in Croatia.
    Operation Provide Promise was the military operation that 
airlifted and airdropped humanitarian supplies into Bosnia.

                   STATUS OF FUTURE OPERATIONS PLANS

    As this report indicates, there has been a continued, 
gradual improvement in all aspects of civil implementation and 
in the security situation in Bosnia during the reporting 
period. The EAFs have been cooperative. Flows of returning 
refugees and internationally displaced persons continue, albeit 
at a slower pace. To the extent that Bosnia moves toward 
normalcy and as its leaders and citizens take on greater 
responsibility for implementing all aspects of the agreement, 
the requirement for an overwhelming NATO presence is 
diminishing. The threat of a resumption of hostilities by the 
EAFs remains low. In accordance with OPLAN 10407, revised in 
June 2002, NATO will continue to evaluate its presence and the 
forces required based on these elements.

                                
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