Bosnia Peace Operation: Progress Toward the Dayton Agreement's Goals--An
Update (Testimony, 07/17/97, GAO/T-NSIAD-97-216).

GAO discussed international efforts to promote an enduring peace in
Bosnia and Herzegovina through the implementation of the 1995 Dayton
Agreement.

GAO noted that: (1) the internationally-supported peace operation in
Bosnia, part of a longer-term peace process, has helped that country
take important first steps toward achieving the Dayton Agreement's
goals; (2) progress has been made in establishing some political and
economic institutions, and economic recovery has started in the
Federation; (3) nevertheless, the transition to a unified, democratic
government that respects the rule of law has not occurred, due
principally to the failure of Bosnia's political leaders to fulfill
their obligations under the Dayton Agreement and to promote political
and social reconciliation; (4) very few refugees and displaced persons
have crossed ethnic lines to return to their prewar homes, primarily due
to resistance from political leaders of all three major ethnic groups;
(5) virtually all of the limited progress on the civil aspects has
resulted from strong international pressure on these often resistant
political leaders; (6) during GAO's June 1997 visit, nearly every
international and U.S. official with whom GAO spoke, including senior
North Atlantic Treaty Organization (NATO) officers, were adamant that
Radovan Karadzic, a Bosnian Serb who was indicted by the war crimes
tribunal, must be arrested or otherwise removed from Bosnia; (7) most
were unequivocal on this matter, and stated that he retains political
power and influence over political figures in Republika Srpska, the
Bosnian Serb entity; (8) so far, according to these officials, he has
seen fit to block every significant move toward reconciliation; (9)
other key issues identified as being critically important to the Dayton
Agreement's success include the municipal elections scheduled for
September 13 and 14, 1997, specifically the potentially contentious
installation of some newly-elected municipal governments, the outcome of
the arbitration decision concerning which ethnic group will control the
strategically important city of Brcko in Republika Srpska, and the issue
of whether an international military force, including the U.S. military,
should remain in Bosnia after the current NATO-led mission ends in June
1998; (10) however, even if President Plavsic wins the political
struggle with more hardline Bosnian Serb political leaders, GAO believes
that full implementation of the Dayton Agreement--in other words, full
political and social reconciliation in Bosnia--will remain a long and
difficult process; and (11) the total estimated cost for U.S.
participation in the operation has risen to $7.8 billion.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-97-216
     TITLE:  Bosnia Peace Operation: Progress Toward the Dayton 
             Agreement's Goals--An Update
      DATE:  07/17/97
   SUBJECT:  International cooperation
             Foreign governments
             NATO military forces
             War crimes
             Elections
             Foreign economic assistance
             Foreign military assistance
             International agreements
IDENTIFIER:  General Framework Agreement for Peace in Bosnia and 
             Herzegovina (Dayton Agreement)
             Bosnia
             Herzegovina
             Bosnian Serb Republic
             UNHCR Open Cities Program
             
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Cover
================================================================ COVER


Before the Subcommittee on European Affairs, Committee on Foreign
Relations, U.S.  Senate

For Release on Delivery
Expected at
2:00 p.m., EDT
Thursday,
July 17, 1997

BOSNIA PEACE OPERATION - PROGRESS
TOWARD THE DAYTON AGREEMENT'S
GOALS--AN UPDATE

Statement of Harold J.  Johnson, Associate Director, International
Relations and Trade Issues, National Security and International
Affairs Division

GAO/T-NSIAD-97-216

GAO/NSIAD-97-216T

Bosnia Peace Operation

(711278)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  IPTF - International Police Task Force
  NATO - North Atlantic Treaty Organization
  OSCE - Organization for Security and Cooperation in Europe
  SFOR - Stabilization Force
  UNHCR - United Nations High Commissioner for Refugees
  USAID - U.S.  Agency for International Development

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

I am pleased to be here today to provide our evaluation of
international efforts to promote an enduring peace in Bosnia and
Herzegovina through the implementation of the 1995 Dayton Agreement. 
My statement is based on (1) our May 1997 report on the Bosnia peace
operation,\1 which provided the results of two visits to Bosnia in
July and December 1996 and (2) information on evolving issues and
progress we obtained during a visit to Bosnia in June 1997. 


--------------------
\1 Bosnia Peace Operation:  Progress Toward Achieving the Dayton
Agreement's Goals (GAO/NSIAD-97-132, May 5, 1997). 


   SUMMARY
---------------------------------------------------------- Chapter 0:1

The internationally-supported peace operation in Bosnia, part of a
longer-term peace process, has helped that country take important
first steps toward achieving the Dayton Agreement's goals.  The North
Atlantic Treaty Organization (NATO)-led forces have sustained an
environment without active military hostilities.  This has provided
time for the peace process to move forward and has allowed the
implementation of the agreement's civil aspects to begin.  Progress
has been made in establishing some political and economic
institutions, and economic recovery has started in the Federation. 
Nevertheless, the transition to a unified, democratic government that
respects the rule of law has not occurred, due principally to the
failure of Bosnia's political leaders to fulfill their obligations
under the Dayton Agreement and to promote political and social
reconciliation.  Despite the Dayton Agreement, many Bosnian Serb and
Croat political leaders still embrace their wartime aims of
controlling their own ethnically pure states separate from Bosnia. 
Bosnian Muslims, known as Bosniaks, continue to support a unified,
multiethnic state, but, according to some analysts, with the Bosniaks
in control. 

Very few refugees and displaced persons have crossed ethnic lines to
return to their prewar homes, primarily due to resistance from
political leaders of all three major ethnic groups.  Further,
according to human rights reports, Bosnians of all three ethnic
groups could not freely cross ethnic lines at will or remain behind
to visit, work, or live without facing harassment, intimidation, or
arrest by police of other ethnic groups.  Essentially, true freedom
of movement across ethnic boundaries does not yet exist.  Similarly,
Bosnia's political leaders from all sides have often blocked efforts
to link their ethnic groups politically or economically.  Virtually
all of the limited progress on the civil aspects has resulted from
strong international pressure on these often resistant political
leaders.  As one international official noted, the Bosnia peace
process remains driven from the outside rather than from within. 

During our June 1997 visit, nearly every international and U.S. 
official with whom we spoke, including senior NATO officers, were
adamant that Radovan Karadzic, a Bosnian Serb who was indicted by the
war crimes tribunal, must be arrested or otherwise removed from
Bosnia.  Most were unequivocal on this matter, and stated that he
retains political power and influence over political figures in
Republika Srpska, the Bosnian Serb entity.  So far, according to
these officials, he has seen fit to block every significant move
toward reconciliation. 

Other key issues identified as being critically important to the
Dayton Agreement's success include the municipal elections scheduled
for September 13 and 14, 1997, specifically the potentially
contentious installation of some newly elected municipal governments;
the outcome of the arbitration decision concerning which ethnic group
will control the strategically important city of Brcko in Republika
Srpska; and the issue of whether an international military force,
including the U.S.  military, should remain in Bosnia after the
current NATO-led mission ends in June 1998. 

I should note that our field work in Bosnia was completed before the
recent political crisis in Republika Srpska, and my statement does
not address this issue.  However, even if President Plavsic wins the
political struggle with more hardline Bosnian Serb political leaders,
we believe that full implementation of the Dayton Agreement--in other
words, full political and social reconciliation in Bosnia--will
remain a long and difficult process. 

The executive branch initially estimated that U.S.  military and
civilian participation in Bosnia would cost about $3.2 billion
through fiscal
year 1997.  The total estimated cost for U.S.  participation in the
operation has since risen to $7.8 billion.  The increase is primarily
due to the December 1996 decision to extend the presence of U.S. 
forces in and around Bosnia until June 1998. 


   PROGRESS TOWARD ACHIEVING THE
   DAYTON AGREEMENT'S GOALS
---------------------------------------------------------- Chapter 0:2

I will briefly review, and in some cases update, our report's
findings on progress made in achieving the Bosnia peace operation's
four key objectives.  These objectives were to (1) provide a secure
environment for the people of Bosnia; (2) create a unified,
democratic Bosnia that respects the rule of law and internationally
recognized human rights, including cooperating with the war crimes
tribunal in arresting and bringing those charged with war crimes to
trial; (3) ensure the rights of refugees and displaced persons to
return to their prewar homes; and (4) rebuild the economy. 


      PROGRESS IN PROVIDING A
      SECURE ENVIRONMENT
-------------------------------------------------------- Chapter 0:2.1

The Bosnian people are more secure today than before the Dayton
Agreement was signed.  Bosnia's Serb, Croat, and Bosniak armies have
observed the cease-fire, allowed NATO's Implementation Force and
later the Stabilization Force, known as SFOR, to monitor their
weapons sites and troop movements, and have reduced their force
levels by a combined total of 300,000.  The U.S.-led "train and
equip" program intended to help stabilize the military balance in the
region and integrate the Bosniak and Bosnian Croat armies into a
unified Federation army is progressing, albeit slower than
anticipated. 

Nonetheless, Bosnian Serb political leaders have not fully lived up
to arms reduction agreements.  According to a State Department
official, the United States could increase assistance under the
Federation train and equip program to provide a military balance if
the Bosnian Serbs do not comply with the arms control agreements. 
Bosnian Croat and Bosniak political leaders have made some progress
in reforming their civilian police so that they provide security for
Bosnians of all ethnic groups and do not commit human rights abuses;
however, Bosnian Serb political leaders have refused to cooperate
with the International Police Task Force (IPTF) in reforming their
police force in accordance with democratic policing standards. 
Moreover, many international observers, including some in the State
Department, believe that keeping an international military force in
place is still the only deterrent to major hostilities in Bosnia. 


      PROGRESS IN DEVELOPING A
      UNIFIED, DEMOCRATIC BOSNIA
-------------------------------------------------------- Chapter 0:2.2

A unified, democratic state that respects the rule of law and adheres
to international standards of human rights has yet to be achieved. 
Elections for institutions of Bosnia's national and two entity
governments (Republika Srpska and the Federation) were held in
September 1996, and many national joint institutions intended to
unify Bosnia's ethnic groups have met at least once.  However, most
of these institutions are not yet functioning; Bosnia's three
separate, ethnically-based armies continue to be controlled by their
wartime political leaders; and many Bosnian Serbs and Croats and
their political leaders retain their wartime goal of establishing
ethnically pure states separate from Bosnia.  Moreover, the human
rights situation worsened in the months after the election,
particularly in Bosnian Serb-controlled areas.  And ethnic
intolerance remains strong throughout Bosnia, in large part because
Bosnia's political leaders control the media and use it to discourage
reconciliation among the ethnic groups. 

Additionally, as of July 10, 1997, 66 of the 74 people\2 publicly
indicted by the war crimes tribunal remained at large, some openly
serving in official positions and/or retaining their political power. 
While the Bosniaks had surrendered all indicted war criminals in
their area of control to the war crimes tribunal, Bosnian Serbs and
Croats had not surrendered to the tribunal any indicted war criminals
in their areas.  U.S.  and other officials view progress on this
issue as central to the achievement of the Dayton Agreement's
objectives. 

On July 10, 1997, NATO-led troops in Bosnia for the first time
attempted to arrest people indicted for war crimes, specifically two
Bosnian Serb suspects who had been charged under a sealed indictment
for complicity with commitment of genocide.  British SFOR soldiers
arrested one suspect and, in self-defense, shot and killed the other
after he fired at them.  U.S.  officials have stated that this action
does not represent a change in policy regarding SFOR's mandate to
apprehend indicted war criminals.  The policy remains that SFOR
troops will arrest indicted war criminals when they come upon them in
the normal course of their duties if the tactical situation allows. 


--------------------
\2 These figures do not include one person who was indicted by and
surrendered to the war crimes tribunal but who was released by the
tribunal for humanitarian reasons and later died.  Also, other people
not included in these figures have been indicted by the war crimes
tribunal under sealed indictments. 


      PROGRESS IN RETURNING
      REFUGEES AND DISPLACED
      PERSONS
-------------------------------------------------------- Chapter 0:2.3

Despite guarantees in the Dayton Agreement and extensive
international efforts to resolve the issue, the return of refugees
and displaced persons to their homes has barely begun in Bosnia.  The
returns that did take place in 1996 and 1997 were mainly people going
back to areas controlled by their own ethnic group because returns
across ethnic lines proved nearly impossible.  Of the estimated 2
million people who were forced or fled from their homes during the
war, in 1996 about 252,000 returned home (88,000 refugees and 164,000
displaced persons), while at the same time over 80,000 others fled or
were driven from their homes.  Almost all of these people returned to
areas in which they would be in the majority ethnic group.  For 1997,
the United Nations High Commissioner for Refugees (UNHCR) decided to
give priority to majority returns and projected that 200,000 refugees
would return to their homes, all to majority areas.\3 As of March
1997, the pace of refugee returns exceeded UNHCR's target as about
17,000 refugees returned to Bosnia.  In mid-June 1997, however, UNHCR
officials in Bosnia told us that this pace had recently fallen off,\4
and, if the current trend continued, the number of refugee returns
for 1997 would be lower than projected. 

A number of factors have combined to hinder returns, such as fear,
stemming from lack of personal security; violence triggered by
attempted cross-ethnic returns; poor economic prospects; and lack of
suitable housing.  Further, political leaders of all ethnic groups
have used nonviolent means to resist returns, including the retention
of existing, discriminatory property laws and continuing other
policies that place insurmountable barriers to returns.  For example,
according to UNHCR officials, Bosnian Croat political leaders, as
directed by Croatia, have moved 5,000 to 6,000 displaced
persons--including Bosnian Croat army members and their
families--into the formerly Serb-populated city of Drvar, a policy
designed to prevent Serbs from returning and to cement the ethnic
separation of Bosnia.  This policy has been implemented by all three
ethnic groups during and after the war. 

Recent efforts to address the return problem involved many aspects of
the Bosnia peace operation.  For example, in spring 1997 UNHCR, with
support from the U.S.  government, announced the "Open Cities"
project that is designed to provide economic incentives to those
areas that welcome and actively integrate refugees and displaced
persons into local communities.  In April, the Federation refugee
minister provided UNHCR with a list of 25 cities and towns for
participation in the project.  As of mid-June 1997, UNHCR was
evaluating the level of commitment of these and other communities
that had indicated an interest in the project.  According to a U.N. 
official, in early June the Republika Srpska Minister of Refugees was
going to submit a list of nine cities in Republika Srpska that wanted
to take part in the project.  At the last minute, however, the
minister was directed not to participate by Radovan Karadzic, who
effectively retains control of Republika Srpska. 

According to a State Department official, the U.S.  embassy and UNHCR
in early July 1997 officially recognized the first three communities
to receive assistance under the "Open Cities" project.  The U.S. 
government is also funding minority return programs in two other
communities.  Of these five communities, three are in
Bosniak-controlled areas, one is in a Bosnian Croat-controlled area,
and one is in Republika Srpska. 


--------------------
\3 According to a UNHCR official, UNHCR has no estimates for returns
of displaced persons in 1997; however, it has an informal target of
20,000-30,000 returns of displaced persons for the year. 

\4 According to a UNHCR official, 23,000 refugees had to returned to
Bosnia from January through May 1997.  This is much lower than
UNHCR's target of about 57,000 refugee returns for that period. 


      PROGRESS IN REBUILDING THE
      ECONOMY
-------------------------------------------------------- Chapter 0:2.4

Economic conditions have improved somewhat since the end of the war,
particularly in the Federation.  Economic reconstruction has begun,
and about $1.1 billion in international assistance was disbursed in
1996 as part of the 3- to 4-year reconstruction program.\5 Most of
this money has gone to the Federation.  The U.S.  government,
primarily through the U.S.  Agency for International Development
(USAID), committed $294.4 million during the program's first year. 
This money went to, among other things, repair municipal
infrastructure and services, provide small business loans, and give
technical assistance for the development of national and Federation
economic institutions.  By the end of 1996, there were many signs of
economic recovery, primarily in the Federation. 

At the end of 1996, however, economic activity was still at a very
low level, and much reconstruction work remained to be done. 
Furthermore, many key national and Federation economic
institutions--such as Bosnia's central bank--were not yet fully
functioning.  The biggest obstacle to progress in economic
reconstruction and economic institution building has been the lack of
cooperation among Bosnia's political leaders in implementing
infrastructure projects and economic institutions that would unite
the ethnic groups within the Federation and across the two entities. 

The international community has made many attempts to use economic
assistance to encourage compliance and discourage noncompliance with
the Dayton Agreement.\6 For example, during 1996, according to a
State Department official, all major bilateral donors had withheld
economic assistance from Bosnian Serb-controlled areas because
Bosnian Serb political leaders failed to comply with key human rights
and other provisions of the Dayton Agreement.  Further, on May 30,
1997, the Steering Board of the Peace Implementation Council, the
organization that provides political guidance for the civilian
aspects of the operation, reiterated previous Council statements on
this issue, tied assistance for housing and local infrastructure to
acceptance of returns, and gave priority to UNHCR's "Open Cities"
project. 

Moreover, an international donors' conference, originally planned to
be held at the end of February 1997, was postponed because Bosnia's
council of ministers had not yet adopted key economic laws.  On June
19, 1997, the donors' conference was again postponed because the
government of Bosnia, although it had made progress in passing
economic laws, had not made sufficient progress toward developing an
economic program with the International Monetary Fund.  As of July
15, 1997, the donors' conference had not been rescheduled.\7

Some international officials in Bosnia have questioned the
effectiveness of threatening to withhold economic assistance from
Bosnian Serb- and Croat-controlled areas in this conditional manner,
partly because these areas have received little international
assistance to date.\8 According to a State Department official, when
the U.S.  government decided on its conditionality policy toward
Republika Srpska, it knew from analysis that there would be no quick
results from the denial of this assistance. 

State now believes there is increasing evidence that elected
officials of Republika Srpska are under mounting political pressure
to make the necessary concessions to qualify for reconstruction
assistance.  In March 1997, State and USAID officials told us that
some Bosnian Serb political leaders, including the President of
Republika Srpska, had shown a willingness to accept economic
assistance that includes conditions such as employing multiethnic
work forces.  These leaders, according to State, are willing to
accept conditional assistance because they see the growing gap in
economic recovery between the Federation and Republika Srpska.  As of
July 1997, there were no tangible results in this area, primarily
because attempts to work with these leaders were blocked by Radovan
Karadzic. 


--------------------
\5 To support these goals, the government of Bosnia, with the
assistance of the World Bank, the European Commission, the European
Bank for Reconstruction and Development, and other international
agencies and organizations, designed a 3- to 4-year, $5.1-billion
Priority Reconstruction Program.  This program provided the
international community with the framework for the economic
reconstruction and integration of Bosnia.  Fifty-nine donors--48
countries and 11 organizations--pledged $1.9 billion for the 1996
economic reconstruction program. 

\6 The Congress has placed conditions on some U.S.  assistance.  See,
for example, Public Laws 104-107, section 584; 104-122; and 104-208,
section 101(c), Title II. 

\7 According to a State Department official, the International
Monetary Fund favors holding the conference the week of July 21,
1997, but the date may slip to July 28 or 29, 1997. 

\8 According to State officials, Bosnian Croat-controlled areas
received little economic assistance to date because they suffered
little war damage. 


   ISSUES EMPHASIZED DURING JUNE
   1997 VISIT TO BOSNIA
---------------------------------------------------------- Chapter 0:3

During our June 1997 visit to Bosnia, numerous U.S.  and
international officials involved in trying to help implement the
Dayton Agreement emphasized four areas as being critically important
to the agreement's success:  (1) the urgent need to arrest Radovan
Karadzic; (2) the upcoming municipal elections, specifically the
potentially contentious installation of municipal governments in
areas that had a different ethnic composition before the war; (3) the
outcome of the arbitration decision over control of Brcko; and (4)
the need for a continued international military force, along with a
U.S.  component, in Bosnia after SFOR's mission ends in June 1998. 


      URGENCY OF ARRESTING RADOVAN
      KARADZIC
-------------------------------------------------------- Chapter 0:3.1

As we previously reported, in 1996 and 1997 the international
community made some attempts to politically isolate Karadzic and
remove him from power.  For example, under pressure from the
Organization for Security and Cooperation in Europe (OSCE) and the
international community, Karadzic stepped down as the head of the
ruling Bosnian Serb political party on July 18, 1996. 

According to international observers, however, these efforts to
remove Karadzic from power did not work; instead, he has effectively
retained his control and grown in popularity among people in
Republika Srpska.  U.S.  Information Agency polls showed that between
April 1996 and January 1997, the percentage of Bosnian Serbs who
viewed Karadzic very favorably increased from 31 percent to 56
percent, and the percentage who viewed him somewhat favorably or very
favorably rose from 68 percent to 85 percent. 

During our June 1997 fieldwork in Bosnia, many officials with whom we
spoke were unequivocal in their opinion that Radovan Karadzic must be
arrested or otherwise removed from the scene in Bosnia as soon as
possible.  They told us that Karadzic, a leader who is not
accountable to the electorate, is blocking international efforts to
work with the more "moderate" Bosnian Serb political leaders in
implementing the Dayton Agreement.  For example, he has not allowed
other political leaders, including elected ones, to abide by
agreements they have made with the international community on
small-scale attempts to link the ethnic groups politically or
economically.  Observers also told us that Karadzic still controls
Republika Srpska police and dominates Bosnian Serb political leaders
through a "reign of terror."

According to a U.S.  embassy official, the arrest of Karadzic is a
necessary--but insufficient--step to allow Dayton institutions to
function effectively and to encourage more moderate Bosnian Serbs to
begin implementing some provisions of the Dayton Agreement.  Although
the arrest alone would not assure full implementation of Dayton,
without the arrest Dayton would have almost no chance to succeed. 


      ISSUES RELATED TO MUNICIPAL
      ELECTIONS
-------------------------------------------------------- Chapter 0:3.2

Bosnia's municipal elections are scheduled to be held on September 13
and 14, 1997.  OSCE and other officials with whom we spoke were
concerned about the volatile environment that will likely surround
the installation of some newly elected municipal governments,
specifically those in municipalities that had a different ethnic
composition before the war.  Because people will be able to vote
where they lived in 1991, the election results in such municipalities
could be very difficult to implement.  For example, it is possible
that a predominantly Bosniak council could be elected to Srebrenica,
a city that had a prewar Bosniak-majority population but was
"ethnically cleansed" by Serbs in 1995; and Bosnian Serbs could win
the majority on the municipal council of Drvar, a town with a
predominantly Serb majority before and during much of the war but now
populated in large part by Bosnian Croats. 

To address these potential "hotspots," an interagency working group
led by OSCE is developing an election implementation plan for the
municipal elections.  An early version of this plan calls for a final
certification that confirms which municipal councils have been duly
installed by the end of 1997.\9 This plan recognizes that candidates
who win office must be able to travel to municipal council meetings
and to move about their municipality without fear of physical attack
or intimidation.  It calls for local police to provide security for
council members and for IPTF and SFOR to supervise the development of
the security plan and, together with OSCE and other organizations,
monitor its implementation. 

According to OSCE and SFOR officials, SFOR's current force level of
33,000 will be augmented by 4,000-5,000 troops in Bosnia around the
time of the municipal elections; it is unclear, however, what SFOR's
force levels will be during the potentially contentious installation
period.  To support the augmentation, as of July 10, 1997, the
Department of Defense (DOD) planned to increase the number of U.S. 
troops in Bosnia from about 8,000\10 to about 10,250 during August
and September 1997.  According to a DOD official, on October 1, 1997,
SFOR troop levels would be drawn down to either the current force
level or a lower number, depending on decisions that may be reached
before that date.  OSCE and other officials in Bosnia told us that a
further drawdown of SFOR below its current force level should not
occur until the end of the installation process. 


--------------------
\9 This plan calls for a two-step certification process for the
election:  a technical certification of the final election numbers
and the final certification, on a municipality-by-municipality basis,
confirming which municipal councils have been duly installed.  The
election process will close by the end of 1997.  It will be followed
by a post-election period during which an interagency monitoring and
reporting structure would continue to monitor the proper functioning
of municipal assemblies to ensure that elected candidates are able to
carry out their duties as envisioned by the Dayton Agreement. 

\10 As of July 6, 1997, an additional 2,600 U.S.  military personnel
were also deployed to Croatia, Italy, and Hungary, in support of
SFOR. 


      OUTCOME OF BRCKO ARBITRATION
-------------------------------------------------------- Chapter 0:3.3

Many international observers in Bosnia told us that the final
arbitration decision on which ethnic group will control Brcko will
likely be a major determinant of the ultimate success or failure of
the Dayton Agreement.  This decision will not be made until March
1998 at the earliest.  Without a final decision, an interim
supervisory administration will remain in Brcko.  In June 1997, the
High Representative, the coordinator of the civilian aspects of the
peace operation, stated that Brcko will signal to the rest of the
world the extent to which progress is being made in the
implementation of the Dayton Agreement. 

First, some background on the Brcko arbitration process.  At Dayton,
Bosnia's political leaders were unable to agree on which ethnic group
would control the strategically important area in and around the city
of Brcko.  The Dayton Agreement instead called for an arbitration
tribunal to decide this issue.  At the end of the war, Brcko city was
controlled by Bosnian Serb political leaders and populated
predominately by Serbs due to "ethnic cleansing" of prewar Muslims
and Croats, who had then accounted for about 63 percent of the city's
population, and settlement of Serb refugees there.  We were told that
an arbitration decision that awarded control of the area to either
the Bosniaks or Bosnian Serbs\11 would lead to civil unrest and
possibly restart the conflict because the location of Brcko makes it
vitally important to both parties' respective interests. 

In February 1997, the arbitration tribunal\12 decided to postpone a
final decision as to which of the parties would control Brcko. 
Instead, the tribunal called for the designation of a supervisor
under the auspices of the Office of the High Representative, who
would establish an interim supervisory administration for the Brcko
area.  The tribunal decision noted that (1) the national and entity
governments were not sufficiently mature to take on the
responsibility of administering the city and (2) Republika Srpska's
disregard of its Dayton implementation obligations in the Brcko area
had kept tensions and instability at much higher levels than
expected.  On March 7, 1997, the Peace Implementation Council
Steering Board announced that the High Representative had appointed a
U.S.  official as Brcko supervisor, and the interim supervisory
administration began operating on April 11, 1997.\13

The interim administration was designed to supervise the
implementation of the civil provisions of the Dayton Agreement in
coordination with SFOR, OSCE, IPTF, and other organizations in the
Brcko area:  specifically, it was to allow former Brcko residents to
return to their homes, provide freedom of movement and other human
rights throughout the area, give proper police protection to all
citizens, encourage economic revitalization, and lay the foundation
for local representative democratic government. 

According to the Brcko supervisor, known as the Deputy High
Representative for Brcko, the implementation process has just begun. 
The Deputy High Representative and his staff have been working hard
and are developing a plan to return refugees and displaced persons in
a phased and orderly manner, but progress will take a long time and
be difficult.  From January 1, 1997, through June 17, 1997, only 159
displaced families from the Bosnian Serb-controlled area of Brcko had
returned to their prewar homes; all of these homes are located in the
zone of separation.  We were told that as many as 30,000 Bosniaks and
Bosnian Croats were driven from their homes in what is now
Serb-controlled Brcko.  Further, freedom of movement does not yet
exist in the area, primarily due to the fear that Bosniak and Bosnian
Serb police have instilled in people from other ethnic groups.  As in
other parts of Republika Srpska, Bosnian Serb political leaders
refuse to cooperate with IPTF in restructuring their police in
accordance with democratic policing standards.  And the Deputy High
Representative told us that he has no "carrots or sticks" either to
reward compliance or punish non-compliance of the parties,
particularly the Bosnian Serbs. 

Brcko has also experienced implementation problems related to the
upcoming municipal elections that go beyond those of other areas of
Bosnia.  For example, in June 1997 OSCE took action after it
investigated cases of alleged voter registration fraud by Bosnian
Serbs in Brcko.  After finding that Bosnian Serbs were engaging in
wholesale fraud, OSCE attempted to correct the situation by (1)
firing the chairmen of the local election commission and voter
registration center, (2) reregistering the entire Brcko population
and political candidates, and (3) suspending and later reopening and
extending voter registration there, which ultimately ran from June 18
to July 12, 1997. 

The interim supervisory administration is scheduled to operate for at
least 1 year.  The arbitration tribunal may make a further decision
on the status of the Brcko area by March 15, 1998, if the parties
request such action between December 1, 1997, and January 15, 1998. 


--------------------
\11 The parties to the arbitration are Bosnia's two entities, the
Federation and Republika Srpska. 

\12 The tribunal consisted of three members--an American, a Bosnian
Serb, and a Bosniak.  The American arbitrator was selected by the
President of the International Court of Justice and was granted
authority to issue rulings on his own, including a final award, if
the tribunal could not reach consensus.  Only the American member of
the tribunal signed the decision. 

\13 While the city of Brcko, the subject of the arbitration dispute,
is located in Republika Srpska, the Brcko Supervisor's area of
responsibility covers almost all of Brcko municipality, which extends
across the interentity boundary line into the Federation. 


      NEED FOR A CONTINUED
      MILITARY PRESENCE IN BOSNIA
-------------------------------------------------------- Chapter 0:3.4

In December 1996, the North Atlantic Council, the body that provides
political guidance to NATO, concluded that without a continuation of
a NATO-led force in Bosnia, fighting would likely resume.  Thus, NATO
that month authorized a new 18-month mission, SFOR, which is about
half the size of the previous Implementation Force.  SFOR's mission
is scheduled to end in June 1998.  According to the SFOR operation
plan, the desired NATO end state is an environment adequately secure
for the "continued consolidation of the peace" without further need
for NATO-led military forces in Bosnia.  The plan lists four
conditions that must be met for the desired end state objective to be
realized: 

  -- The political leaders of Bosnia's three ethnic groups must
     demonstrate a commitment to continue negotiations as the means
     to resolve political and military differences. 

  -- Bosnia's established civil structures must be sufficiently
     mature to assume responsibilities for ensuring compliance with
     the Dayton Agreement. 

  -- The political leaders of Bosnia's three ethnic groups must
     adhere on a sustained basis to the military requirements of the
     Dayton Agreement, including the virtual absence of violations or
     unauthorized military activities. 

  -- Conditions must be established for the safe continuation of
     ongoing, nation-building activities. 

The SFOR operation plan asserts that these objectives will be
achieved by June 1998.  However, international officials in Bosnia
recently told us that the likelihood of these end-state objectives
being met by June 1998 is exceedingly small.  They based this
projection on their assessments of the current pace of political and
social change in Bosnia. 

In their view, an international military force would be required
after June 1998 to deter renewed hostilities after SFOR's mission
ends.  They said that to be credible and maintain international
support, the force must be NATO led and include a U.S.  military
component, and it must be based in Bosnia rather than "over the
horizon" in another country. 

Many participants of the operation told us that without the security
presence provided by such a follow-on force to SFOR, their
organizations would be unable to operate in Bosnia; a U.N.  official
said that IPTF--which consists of unarmed, civilian police
monitors--could not function and would leave Bosnia under those
conditions.  As one international official put it, the follow-on
force--including a U.S.  military presence--needs to be "around the
corner" rather "over the horizon" to provide the general security
environment in which the rest of the peace process could move
forward. 


   U.S.  COSTS AND COMMITMENTS
   EXCEED INITIAL ESTIMATES
---------------------------------------------------------- Chapter 0:4

The executive branch initially estimated that U.S.  military and
civilian participation in Bosnia would cost about $3.2 billion
through fiscal
year 1997:  $2.5 billion in incremental costs for military-related
operations and $670 million for the civilian sector.\14 These
estimates assumed that U.S.  military forces would be withdrawn from
Bosnia when the mission of NATO's Implementation Force ended in
December 1996. 

The executive branch's current cost estimate for fiscal years 1996
and 1997 is about $5.9 billion:  about $5 billion in incremental
costs for military-related operations and about $950 million for the
civilian sector.  Almost all of the increase was due to the decision
to extend the U.S.  military presence in and around Bosnia through
June 1998.  In fiscal
year 1998, the United States plans to commit about $1.9 billion for
the Bosnia peace operation:  about $1.5 billion for military
operations\15 and $371 million for civilian activities. 

Under current estimates, which assume that the U.S.  military
participation in Bosnia will end by June 1998, the United States will
provide a total of about $7.8 billion for military and civilian
support to the operation from fiscal year 1996 to 1998.  Some State
and Defense Department officials agreed that an international
military force will likely be required in Bosnia after June 1998. 
U.S.  participation in such an effort could push the final cost
significantly higher than the current $7.8 billion estimate. 


--------------------
\14 DOD costs are incremental costs; that is, they are costs that
would not have been incurred if it were not for the Bosnia operation. 
For a more detailed discussion of DOD's costs estimates and costs see
Bosnia:  Costs Are Uncertain but Seem Likely to Exceed DOD's Estimate
(GAO/NSIAD-96-120BR,
Mar.  14, 1996); and Bosnia:  Costs Are Exceeding DOD's Estimate
(GAO/NSIAD-96-204BR, July 25, 1996). 

\15 DOD estimated its costs could increase by about $160 million if
the United States maintained an 8,500 force level through June 1998,
rather than being drawn down to 5,000 on October 1, 1997, as assumed
in current cost estimates. 


-------------------------------------------------------- Chapter 0:4.1

Mr.  Chairman and Members of the Subcommittee this concludes my
prepared remarks.  I would be pleased to respond to any questions you
may have. 


*** End of document. ***