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Bosnia and Herzegovina
>> Regional Overview >> Bosnia and Herzegovina Overview
Development Challenge Summary Tables
Program Summary
USAID Search: Bosnia and Herzegovina
Previous Years' Activities
2001, 2000, 1999, 1998, 1997Last updated: 00
Introduction
As an important member and leader of the international donor community and NATO, the United States maintains humanitarian and strategic interests in Bosnia and Herzegovina. Peace and stability in Bosnia and Herzegovina (BiH) are the foundations for a stable and prosperous Southeast Europe, where political and economic progress still remains fragile. While there are signs of new attitudes (e.g., new moderate governments in both Serbia and Croatia), weak economies, high unemployment region-wide and continuing ethnic distrust continue to plague countries in this subregion. Ethnic unrest continues in Kosovo and is slowly spreading beyond its borders, as most recently demonstrated in Macedonia. In BiH, hard-line groups are actively resisting the growing preference for political moderation, intolerance of corruption and closer ties between the two entities of the Federation of Bosnia and Herzegovina (the Federation) and the Republika Srpska (RS). Hard-line Bosnian Croats are attempting to undermine the Federation entity government and to politically ostracize Bosnian Croats who do not support their separatist aims. Members of the RS entity government are blocking the development of effective state-level organizations needed for accession to the European Union (EU). The citizens of BiH need the continued support of the International Community (IC) and the leadership of the United States in their struggle to build a peaceful, multi-ethnic country with strong democratic institutions and a market-based economy.
Development Challenge
BiH made notable progress in 2000 in strengthening itself as a nation. An improved security environment contributed to an estimated 67,000 minority returns in 2000, an increase of 70% over 1999 levels. The Constitutional Court also reached a landmark decision in August, declaring that the three major ethnic groups, as well as "others" share equal rights in all parts of BiH. The Federation and RS Interior Ministries concluded a voluntary redeployment agreement to facilitate the return of minority police officers across entity lines and established a joint task force to combat organized crime and alien trafficking. Payments Bureaus were abolished, an important step towards development of a market-oriented banking system. Legislation was passed establishing the state Treasury, and creating state ministries for Treasury, European Integration, and Human Rights and Refugees, and expanding freedom of information.
The continued support and leadership of the IC remains crucial to change in BiH. By authority of the Dayton Accords, the Office of the High Representative (OHR) has the power to promulgate decrees to enforce compliance with Dayton. Through this function, OHR has vast powers to intervene in BiH affairs. Yet, political gridlock and lack of will continues to impede the pace of economic change throughout BiH. In 2000, OHR imposed laws creating the State Border Service, joint passports and a state level court. A comprehensive program for privatization, overseen by the IC, is now underway. Assistance at the macro level has produced many basic and necessary reforms and the time has come to concentrate on fully implementing those reforms to the benefit of all citizens.
The financial management systems at both the entity and state levels are weak and easily exploited by corrupt politicians. Improved systems and training are needed to introduce transparency and accountability. The dissolution of the Payment Bureaus in January 2001 has already had a dramatic, positive effect on the commercial banks. Vigorous bank supervision, improved bank management, and the introduction of deposit insurance are essential to attracting internal and international investment and to developing consumer confidence. Expanded employment opportunities, private sector credit opportunities, and a strengthened economy are critical to BiH's development.
Challenges in moving toward a democratic Bosnia remain formidable. No new elections are scheduled until 2002, providing an opportunity to build BiH professional and institutional capacity and ensure that legislative, resource management and electoral processes reflect the will of the people. Many newly elected moderate legislators have little or no experience in lawmaking or management and need to strengthen these skills to make their campaign promises a reality. Deficiencies exist at the local level as well. However, there are local officials who seek to improve the level of services provided by government and who want training and technical assistance. The Organization for Security and Cooperation in Europe (OSCE) will no longer oversee elections in BiH. Elections planned for 2002 will be managed by the Association of Election Officials in BiH, and this organization needs capacity building assistance. Free, fair and well-managed elections are critical to the continued growth and electoral gains of moderate political parties.
A strong civil society can play a critical role in informing citizens about their rights and responsibilities and ensuring that governments meet citizen needs. Non-Governmental Organization (NGO) implemented community organizing, civic education and domestic election monitoring are effective and popular tools for change. NGOs, the primary vehicles for civil society, however, lack legal protection. Their undefined status leaves them vulnerable and potentially undermines their effectiveness.
The judicial branch of government remains weak and lawyers and judges do not have access to full-fledged professional organizations that could strengthen professional development. Court administration and legal drafting also remain outdated and inadequate to the needs of the country.
Private sector broadcast and print media continue to consolidate. Only a small number of media outlets can coexist in BiH's weak economy. Private electronic media outlets are presently forced to compete with public media programs, which have both government revenues and the right to sell advertising. Well managed broadcast and print media outlets are essential to ensuring that the public has access to accurate and unbiased reporting. The media sector, however, lacks an effective legal framework. In addition, the media are subject to physical and financial threats and harassment.
The independent District of Brcko was created in March 2000 and continues the process of uniting three formerly physically and ethnically separate municipalities into one united, multiethnic district. Under the administration of OHR/North, the Brcko District has made exemplary progress since then.
Minority refugee returns have grown steadily since 1996 re-establishing multiethnic communities and municipalities in many areas. According to the United Nations High Commission for Refugees (UNHCR), over 75,000 people returned in 1999, 41,000 of whom were minorities. UNHCR conservatively estimates that 67,000 minority refugees returned in 2000, and even higher numbers of minority returns are projected for 2001. Providing employment opportunities and basic services such as water and electricity will both promote and sustain these minority returns.
Against this background, U.S. assistance remains a critical element for creating both the economic and democratic institutions necessary to sustain peace in Bosnia over the long term. While other donors play significant financial and policy direction roles, the U.S. program serves as a model and leader.
Other Donors
The EU is the largest donor to BiH. Through 1999, the EU had pledged approximately $1.2 billion. The United States has pledged approximately $1.0 billion. The World Bank had pledged $0.7 billion and Japan $0.5 billion. Multilateral and bilateral donors, international financial organizations, international organizations such the United Nations and the OSCE, and the North Atlantic Treaty Organization work closely on implementing the Dayton Peace Accords at a variety of levels. Regular meetings of Peace Implementation Council members help prioritize broader program policies and set concrete implementation objectives. On-the-ground coordination, through sectoral task forces covering issues such as economic reform, institutional reform in the utility sectors and refugee returns, strengthens donor effectiveness and maximizes U.S. assistance program resources by leveraging other donor funding, avoiding project duplication, and ensuring that constraints to implementation are addressed as common donor concerns.
FY 2002 Program
USAID's development assistance program operates on two levels: the local level and the state level. At the local level, USAID seeks to make the benefits of reform tangible to ordinary citizens, e.g., helping minority refugees return to their homes, improving local government, and strengthening public utilities. At the state level, USAID supports the development of a single economy and creation of the state level institutions necessary to BiH growth and eventual EU and World Trade Organization accession. To that end, the USAID program offers targeted assistance to state-level institutions and seeks to harmonize financial practices between the Federation and the RS.
In economic reform, the program will continue to support the creation of transparent and accountable financial management tools and institutions that began with the dissolution of the Payments Bureaus. Treasury functions will be developed for both entities and harmonized through the application of identical software and procedures. Support to the state-level Treasury Ministry will continue, although the role of this Ministry remains limited by the BiH constitution. Post privatization support will continue with corporate governance principals implemented and security and exchange commissions harmonized and functioning. Support for bank supervision will be winding down with assistance directed to development of a state-level Banking Supervision Agency and a state-level Deposit Insurance Agency. USAID will also provide macro-economic advice at the entity and state levels aimed at assisting BiH officials to make rational and complementary financial management decisions. Business and mortgage loans, complemented by business management advisory services, will continue to be available as a further spur to the economy
In democratic reform, the USAID program will continue to focus on improvements at the local level by developing linkages among local governments, civil society, and political parties. Better delivery of services and greater responsiveness to citizen needs will be the focus of local government assistance. Civil society activities will focus on strengthening the NGO sector, improving interaction with local government on behalf of constituents and motivating citizens to fulfill their civic responsibilities. Political party members and legislators will be also be assisted to become more responsive to citizen needs and concerns and to better manage the legislative process.
Other democratic reform activities will continue. Support to independent media will begin to wind down with a limited number of sustainable private sector media outlets as the goal. Judicial reform will provide support to bar and judges associations aimed at continuing the professionalization and improved management by Bosnians of the justice sector. Assistance in improved court management and administration and training in administrative law will also continue with an aim of improved service delivery. A better-managed judicial system will increase citizen access to justice. Assistance to the Association of Electoral Officials of BiH will continue to lay the basis for Bosnian management of elections. Assistance to the Association will be reduced after the 2002 elections.
Support for sustainable minority returns will also continue. Access to basic services such as water and electricity will increase. For the first time, assistance will be offered aimed at increasing minority returnee employment and incomes. The combination of basic services and income opportunities is critical to making the return process sustainable. Water and power sector institutional strengthening will continue as well ensuring efficient and cost effective service delivery.
Activity Data Sheets
- 168-031 Recovery from Crisis
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Last Updated on: May 29, 2002 |
