[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.