BOSNIA AND HERZEGOVINA

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Support for East European Democracy	$215,000,000	$195,000,000	$175,000,000
Economic Support Fund	5,000,000	--	--
P.L. 480 Title II	14,748,000	--	--

Introduction.

The Dayton Peace Accords and the associated multinational military and civilian peace implementation efforts have resulted in three years of visible peace and economic recovery in Bosnia and Herzegovina (Bosnia). Maintaining that peace continues to be of direct importance to U.S. strategic and economic interests in Europe. U.S. leadership has been critical in setting the course for rapid reconstruction and critical economic reform. By focusing on well-defined goals and moving quickly to produce visible results, U.S. reconstruction assistance is creating economic and democratic incentives for Bosnians to cement into place the framework for longer-term peace. A continued U.S. role in Bosnia assures peace and progress.

The Development Challenge.

Bosnia is faced with a dual challenge: to move from a socialist to a market economy while also recovering from the war. The most immediate task facing Bosnia continues to be economic revitalization. Paralleling the reconstruction process, the country needs to continue to build the legal and institutional framework for a private sector market-led economy. In order for the transition to be sustainable, it must be based on a democratic and active civil society. SEED and PL-480 resources have been augmented with International Disaster Assistance (totalling over $11.5 million in FY 1998) to aid Bosnia's recovery from war and to help make the shift from crisis to economic restructuring, growth and democracy-building.

The resumption of economic activity will enable returning refugees to be reintegrated into their communities with gainful employment, and acquire a stake in lasting recovery. Refugee returns have gained momentum, including 30,000 minority returns reported by UNHCR in 1998; this momentum is expected to continue. Numerous unregistered returns have also taken place, but official estimates do not exist. By helping create the necessary conditions at the community level, U.S. assistance programs facilitate returns. A combination of functioning infrastructure and employment opportunities, especially when linked with democracy building activities, serves as a magnet, drawing refugees home.

Recovery of the economy has been dramatic, primarily in the Federation, where commitment to Dayton principles resulted in larger and earlier donor investment than in the Republika Srpska (RS) in 1996 and 1997. Massive inflows of foreign assistance continue to fuel economic growth. Estimates vary, but most analysts accept World Bank figures for GDP growth: 62% in the Federation and 25% in the RS in 1996, 35% in the Federation in 1997, (RS flat). Estimates for 1998 indicate that growth in the Federation was maintained, while the RS economy improved dramatically as donor investment increased in 1998 following the emergence of a more moderate and market-oriented government.

The establishment and strengthening of critical economic institutions and the implementation of economic reforms are central to promoting a secure and prosperous future for Bosnia. Movement, however, towards achieving these goals has been slow. With U.S. assistance, some progress has been made, such as the establishment of a Central Bank in late 1997; the successful conclusion of debt negotiations with the London Club in December 1997 and the Paris Club in October 1998; and issuance, albeit forced by the international community, of a new currency in mid-1998.

Challenges in moving toward a democratic Bosnia remain formidable. Holdovers from communist times such as authoritarian governments, with rubber-stamp parliaments and weak judiciaries, hinder progress. There are few checks and balances between branches of government. Fifty years of communism and a bitter war have inhibited Bosnian civil society. Citizens remain generally disengaged and apathetic towards government and civic involvement. Government corruption and lack of accountability promote apathy rather than protest.

Citizens of Bosnia went to the polls for the fourth time since the signing of the Dayton Accords in September 1998. Each post-Dayton election has contributed to emerging political pluralism by eroding single party strength, but non-nationalistic parties continue to require assistance in developing practical campaign agendas, voter outreach capacities, increasing and mobilizing membership, and democratic internal structures. Bolstered by their success in the 1998 elections, moderate opposition parties in both entities are uniformly optimistic that they will finally be able to guide the country's economic and political transition. Sustained peace, the promise of an extended international military presence, and political opening in the RS suggest that considerable systemic and institutional reform will be possible in the next few years.

The media, operating in a murky regulatory environment, is in transition. State-owned radio and TV stations, many created during the war, are preparing for privatization. The majority, however, will not survive due to unsound business practices and a poor economy (and the fact that Bosnia is a small country) which cannot support the large number of outlets. Other weaknesses include passive, neophyte journalists reluctant to challenge authority.

The judicial system remains far from impartial and independent. Political parties continue to control the selection process for judges, and political pressure ensures that the courts rarely reach decisions on controversial cases. Few citizens expect that they can get a fair trial or use the judicial system to right a wrong. Considerable attention will be paid to the judicial sector over the next several years to ensure that the courts are transformed into an independent, credible branch of government in which a fair, impartial justice is meted out. USG support for police restructuring covers the costs of 200 experienced U.S. law enforcement personnel assigned to the 2,000 member International Police Task Force (IPTF), training in basic police skills offered through the Department of Justice's International Criminal Investigation and Training Assistance Program, and the creation of special police units to deal with civil disorder, narcotics trafficking and organized crime. IPTF activities have helped establish multi-ethnic police forces in the Federation, which in turn create a security environment conducive to minority refugee 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 are expected to assume the greatest financial burden for rebuilding Bosnia, the U.S. program serves as a model and catalyst.

Other Donors.

U.S. assistance is part of a broad-based Priority Reconstruction Program, spearheaded by the World Bank and the European Union, involving 48 donors who have committed a total of $4.37 billion since 1996 for reconstruction in Bosnia. The European Commission has pledged just over $1 billion (23% of total commitments), which does not include bilateral pledges made by European countries. The United States has pledged a total of $766.65 million (17.5%). The World Bank has pledged $590 million (13.5%). Multilateral and bilateral donors, international financial organizations, international organizations such the United Nations and the Organization for Security and Cooperation in Europe (OSCE), and the North Atlantic Treaty Organization (NATO) 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 infrastructure rehabilitation, economic reform, 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 2000 Program.

The period 1996-1998 saw enormous multinational support for Bosnia's reconstruction and recovery from war. U.S. programs helped lay the groundwork and create a conducive environment for an enduring and just peace by restoring economic productivity, generating employment and supporting democratic reform. Building on these recovery efforts, U.S. priorities in 1999 and 2000 focus on accelerating Bosnia's movement towards a market economy, meeting remaining infrastructure rehabilitation needs, particularly at the community level in support of refugee returns, and continued support for democratic reforms. In all cases, Bosnians will be active managers and participants.

The United States' key reconstruction activities in Bosnia, the Municipal Infrastructure and Services (MIS) program and the Business Development Program (BDP), will continue producing significant results in economic revitalization and refugee return in FY 2000. Funding needs for MIS rehabilitation projects are expected to decline in light of other donor funding coming on-line and as many of the highest priority reconstruction needs will have been met. USAID will continue MIS activities directly facilitating refugee return and assistance related to the institutional strengthening of public utilities in order to improve local capacity to maintain and sustain USG-repaired infrastructure, as well as initiate utility privatization. In FY 2000, the BDP program will continue to provide balance-of-payments support and liquidity to the economy through the provision of loans to commercially viable private enterprises. Privatization getting underway in FY 1999 is expected to increase demand for credit into FY 2000.

In FY 2000, USAID will continue supporting the development of a sustainable market economy to ensure that Bosnia rejoins the European and global economy and attracts foreign investment. Technical assistance will focus on accelerating critical macroeconomic, financial and legal reforms necessary for the emergence of a vibrant private sector, including reform of the payments systems, strengthening of the banking sector, the establishment of post-privatization institutions in a context of good corporate governance, and continued work on making Bosnia's public accounting, taxation and budgeting systems more transparent and compliant with global standards. Success in these areas should help Bosnia move away from international donor finance and become reliant on private foreign and domestic investment to sustain economic growth. USAID recognizes the vital importance of quickening the reform process so as to stimulate foreign investment and continue support for the Dayton Peace Accords.

Democracy assistance in FY 2000 will continue to focus on strengthening independent media, particularly on improving business skills to ensure the commercial viability of broadcast and print media outlets. Civil society activities will continue institution-building support for advocacy-oriented Bosnian NGOs which represent citizen views, initiatives, and projects. Governance activities will focus on making government procedures more transparent and efficient, and parliament more accessible to citizens. Rule of law programs will continue to support Federation and national-level courts, particularly cantonal courts, as well as lawyers' and judges associations. Support for election administration will decline in FY 2000 as the process is placed in the hands of Bosnian officials.

BOSNIA AND HERZEGOVINA

FY 2000 PROGRAM SUMMARY*
(in Thousands of Dollars)

USAID Mission Director: Craig Buck

Strategic Objectives	Economic Restructuring	Democratic Transition	Social Stabilization	Cross-cutting / Special Initiatives	Total
Recovery from Crisis	--	--	175,000	--	175,000
TOTAL	--	--	175,000	--	175,000
*Support for East European Democracy (SEED) Act funds

---

ACTIVITY DATA SHEET

PROGRAM: BOSNIA and HERZEGOVINA
TITLE: Recovery from Crisis, 180-S003.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $175,000,000 SEED
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2002

Summary: The U.S. assistance program is striving for a stable post-war Bosnia with a functioning and dynamic free-market economy and a democratic society. USAID's reconstruction programs provide balance-of-payments support to the Government of Bosnia and Herzegovina. Overall, USAID coordinates its assistance program using the natural linkages among its reconstruction, democracy and economic reform projects, as well as the work of other donors and USG agencies. Because of the broad nature of this objective, the beneficiaries include all residents of Bosnia and Herzegovina. More specifically, the Business Development Program (BDP) benefits enterprise loan recipients and employees, the commercial banking sector, and Bosnia and Herzegovina which receives the balance-of-payments benefit. The Municipal Infrastructure and Services (MIS) program is benefiting over 1,500,000 Bosnians through repaired basic utility and other community services. Economic technical assistance programs directly benefit Ministries of Finance in the Federation and RS, the Central Bank, the Federation and RS Banking Agencies, business associations, local business consulting firms, private entrepreneurs and firms. Democracy assistance directly benefits political parties, voters, civic groups, Parliament, independent television, radio and newspapers, and media audiences.

Key Results: USAID activities are focused on four major intermediate results: (1) Restoring private sector productive capacity to restart production quickly and create immediate, self-sustaining employment; (2) Repairing war-damaged infrastructure to facilitate refugee return and reactivate the local economy; (3) Establishing a policy and institutional framework conducive to the emergence of a market economy, by supporting rapid privatization, critical macroeconomic reforms, sound fiscal policies, and a viable banking system; and (4) Strengthening democratic institutions that promote a multi-ethnic society and political pluralism, by fostering an independent media, free and fair elections, a responsive and transparent government, citizen advocacy, and a professional, independent judiciary.

Performance and Prospects:

Economic Recovery: USAID's BDP program provides quick-disbursing loans (average loan size $350,000) to private Bosnian businesses, enabling them to restart production quickly and create immediate employment. Bosnian banks serve as agents, identifying viable enterprises, transferring funds to the borrower, monitoring loan implementation, and ensuring loan collections. An expert on-site team of U.S. bankers performs the final credit analysis and makes recommendations to USAID for decision. The program also offers business consulting services to improve financial management, marketing, and business plan development skills. The BDP is by far the largest and most effective donor effort underway dedicated to revitalization of the business sector and is pointing the way for other donors and investors to follow.

The BDP has made a major contribution to private sector reactivation in the form of 398 loans worth over $140 million, as of December 1998, primarily in the U.S.-SFOR sector, Sarajevo, Central Bosnia, and Western RS. The majority of financing has been provided in the manufacturing, construction, wood products, processed food and agribusiness sectors. These loans provide employment to over 17,000 Bosnians, including women, returning refugees and demobilized soldiers of all ethnic groups, contributing to the rapid improvement in employment rates in the Federation and increasingly in the RS. Thousands more have found work in related business ventures (suppliers, vendors). A related bank training program has introduced American bank lending and management concepts to more than 2,600 bankers, over 50% of whom are women.

According to preliminary data collected on 103 BDP loan recipients, it is estimated that their total revenues increased about 64% between 1996 and 1997 and that combined net worth moved from a negative 5 to 10 million DEM to a positive 10 to 20 million DEM. In most firms, sales are doubling in the first year of the loan with smaller but substantial (over 60%) increases in later years.

The Business Consulting component of the BDP, working in partnership with loan operations, has conducted over 525 diagnostic reviews of potential borrowers and assisted over 580 companies in problem analysis. 65% have pursued follow-up assistance in strategic planning, financial management, and marketing skills. USAID advisors have helped a number of companies establish new markets and suppliers. EKIS, a Sarajevo-based communications company, formed one of the first joint venture transactions between a major U.S. company and a Bosnian partner. With BDP assistance, including a $230,000 loan in March 1998, EKIS now represents AT&T in Bosnia.

The BDP has also helped leverage reforms. In May 1997, USAID stopped making loans to state-owned enterprises due to the lack of progress on privatization. Pressure from would-be borrowers on political leaders helped generate the necessary political will in the Federation and the RS to pass privatization laws in 1998.

Infrastructure Repair: USAID's MIS program is meeting urgent infrastructure reconstruction needs in support of refugee returns and economic recovery, primarily in the US-SFOR sector, Central Bosnia and Western RS. Through this program, Bosnian contractors are repairing municipal electricity distribution systems, resurfacing roads, repairing bridges and municipal water systems, and rebuilding local schools and health facilities. MIS funds are also being used for a related Community Infrastructure Rehabilitation Project (CIRP), being implemented in partnership with local officials and SFOR troops in both the Federation and RS. CIRP projects are designed to provide short-term employment for demobilized soldiers and other community residents to implement high-impact community activities.

Over 180 MIS projects worth $165 million are underway or completed in the energy, water, transportation, health, and education sectors. MIS construction activities have created 5,000 short-term jobs and some 17,000 people will be permanently employed working in reconstructed facilities or through the use of refurbished infrastructure. Over 8,700 demobilized soldiers have been temporarily employed through over 400 Community Infrastructure Rehabilitation Projects worth $24 million. In addition, 8,000 children are attending schools rehabilitated by USAID and approximately 25% of Bosnia's population are benefitting from USAID-repaired power systems.

USAID MIS activities in 1998 contributed to an estimated 80,000 refugee returns, including approximately one-third of the minority returns reported by UNHCR. The flexibility of the MIS program has allowed USAID to complement refugee return initiatives such as UNHCR's "Open Cities" program, as well as to respond rapidly to spontaneous returns. In the Middle Bosnia Canton, one of two ethnically mixed cantons in the Federation, USAID supported a joint Croat and Bosnian effort to restore power in twenty-one villages where over 5,000 minority returns were taking place in 1998.

Continuing its support for the arbitration efforts of the Brcko Office of the High Representative, USAID restored power and water to targeted villages in the Zone of Separation helping facilitate the return of 1,200 minority refugee families in 1998. USAID has invested over $17 million in infrastructure rehabilitation, business development and technical assistance in Brcko since 1996.

MIS projects in the Federation and the RS demonstrate the tangible benefits for those municipalities which support Dayton. Before undertaking MIS projects, each municipality must sign a Memorandum of Understanding which publicly confirms the municipality's commitment to Dayton, such as freedom of movement for refugees and the surrender of publicly indicted war criminals. Those municipalities which refuse to sign do not receive assistance. Any subsequent violations of terms prevent further USAID-funded assistance.

Economic Reform: Since 1996, the US has implemented a comprehensive economic policy reform agenda to accelerate Bosnia's transition to a market economy in the context of post-war reconstruction. USAID has taken the lead in supporting key financial and economic institutions implementing macroeconomic policy and provides technical assistance in a range of critical areas for Bosnia's economic transformation, such as privatization, commercial law and banking reform, capital markets, and corporate governance. The objective is to provide sound guidance to decision-makers at all levels of government to undertake defined responsibilities, smoothly transfer economic functions to the private sector, and regulate the new market economy fairly and transparently. Rapid and transparent privatization, coupled with sound legal, policy and regulatory framework, will allow Bosnia to better attract foreign investment and rejoin the European and global economy over the next several years.

USAID advisors contributed to the formation of the Federation Banking Agency (FBA) and, in 1998, helped establish its counterpart in the RS, the RS Banking Agency (RSBA). All professional FBA and RSBA staff have been trained in key areas such as bank supervision, audit, and asset/liability management, supervisory policies and procedures, as well as in anti-corruption (e.g., white collar crime, money laundering, and ethics). Bank inspections are leading to the closure of poorly-managed and weak banks, helping create a more stable banking sector necessary for private sector growth and foreign investment. Functioning and effective banking supervision agencies have increased public confidence in the banking system. Most importantly, the FBA is now becoming self-financed, operating on revenues generated through bank examination fees.

USAID technical assistance is helping Bosnian authorities implement a comprehensive privatization program and re-orient current commercial and non-banking financial laws towards a market economy. In the Federation, privatization laws were passed in 1998 and nine Cantonal Privatization Agencies have been formed (1 pending). In the RS, the Dodik government revoked the previous government's unfair lottery privatization program in March 1998, and, with USAID assistance, put in place a voucher-based mass privatization scheme harmonized with the Federation in June 1998. Advisors have played the key role in establishing critical privatization institutions, formulating implementation policies and strategies for enterprise and strategic sector privatization efforts as well as post-privatization structures and markets, conducting on-going training for government officials, enterprise managers, and the media on the privatization process, and providing hardware and software for the electronic claims registry and auctions system. USAID is also conducting direct public education campaigns using a variety of media.

USAID's commercial law advisors have drafted critical legislation for the Federation on corporate governance issues, addressing the most appropriate methods for regulation of private corporations and capital markets in the post-privatization period. This includes the formation of a Corporation and Securities Board and Laws on Share Registries, Securities, Privatization Investment Funds, and Commercial Enterprises. All but the last passed in September, 1998. In the RS, a similar package of capital markets laws was also passed. USAID advisors are also working with local accountants and auditors to develop internationally-accepted accounting systems useful for enterprise managers, bank officials, privatization agencies, and corporate regulators, and the development of professional associations that could serve as self-regulating organizations.

In July 1998, the joint USAID-European Union customs modernization program was completed ahead of schedule. The project trained 100% of customs officials (over 1,250) in both the Federation and RS, leaving behind a cadre of experienced Bosnian customs trainers to ensure long-term sustainability and continuity. Monthly customs revenues in the Federation have increased by over 50% since 1996, while the average waiting period for customs clearance in the Federation has been reduced from 6-7 days to 3-4 days.

USAID-funded Treasury advisors have provided significant technical assistance and policy advice in the areas of budget, fiscal reform, tax policy and administration, external debt, and bank privatization/restructuring. These advisors helped Bosnian officials prepare for and successfully conclude negotiations with the London Club in December 1997 and the Paris Club in October 1998, both essential for Bosnia to normalize its relations with external creditors. The debt team is also helping establish debt management units at the State and entity levels.

USAID's fiscal federalism activities (completed in August 1998) strengthened budgeting and financial management systems in the Federation. Training in the use of budget classification codes enabled regional and local governments to account for their funds in accordance with international standards. These activities have also promoted transparency and accountability of Federation and canton governments. Public budget hearings have now been held in six cantons (Sarajevo, Gorazde, Zenica, Bihac, Central Bosnia, and West Herzegovina) and five municipalities (Maglaj, Lukavac, Celic, Tuzla, and Bihac) to allow citizen input into decision-making on the allocation of public funds.

The anti-corruption efforts of the international community focus on institutional and legislative reforms needed to ensure good corporate governance, to develop a strong judiciary and legal system, to combat fraud and organized crime, as well as to introduce international standards governing banking, public accounting, and taxation along with methods to enforce these regulations. The international community looks to the Bosnian government to move quickly on passing appropriate legislation eliminating opportunities for corruption, tax evasion and diversion of public revenue, establishing enforcement mechanisms with appropriate penalties to ensure compliance, and raising public awareness of the negative effects of corruption.

Democratic Reform: The United States is working to build enduring democratic institutions in a just and multi-ethnic society through its assistance programs. The USAID-funded democratic reform agenda gives top priority to achieving the following results: (1) viable and independent media offering consistent, objective, and balanced information to all citizens and candidates; (2) free and fair elections with a pluralistic party structure and high voter participation; (3) a pro-democratic political leadership governing in response to a vibrant civil society; and (4) a professional and independent judiciary operating in an environment governed by the rule of law.

Continued manipulation of information flow by nationalist political leaders and the lack of an effective regulatory environment remain major impediments to enabling independent media in Bosnia to thrive. USAID, through Internews, continues to support independent broadcast media with a comprehensive package of assistance focused on seven television and five radio stations; helping production houses provide programming for a starved local market; and the development of an independent broadcasters association to encourage program sharing and lobbying on behalf of members. In 1998, USAID initiated a print media program to focus on ensuring the commercial viability of promising print outlets; strengthening news wire services; and creating a professional and unified journalist's association. US funding also helped establish the Independent Media Commission (IMC), tasked with creating a regulatory environment to eliminate nationalistic broadcasting as well as a legal framework to support independent media. With significant support from the US, the Open Broadcast Network's (OBN) news and information programming continue to be praised for its lack of political partisanship. USAID advisors are working with the OBN management on a business plan to help ensure commercial viability of the only cross-entity network in Bosnia.

USAID training seminars in 1998 helped RS radio journalists improve newsroom efficiency and productivity by reducing editing time for a typical news broadcast from ninety to thirty minutes. A seminar for Chief Editors and Managers of RS radio stations resulted in five additional stations in the RS agreeing to broadcast Radio Free Europe.

USAID on-site training at targeted television stations, using Bosnian technical professionals supplemented by foreign journalism and business management advisors, has helped stations produce better programming, introduce neutral graphics and programs, make better business decisions, and overcome equipment shortfalls. For example, GLS TV in Srbac, RS, used USAID-provided audio equipment to produce election roundtable and information programs, enabling local viewers to make more informed choices on election day. TV Gorazde in the Federation has expanded its news coverage to include on-site field reports from RS communities to encourage cross-entity information exchange. It has agreed to join the OBN, enabling it to broadcast the OBN national news program, ranked by viewer surveys as the most balanced and accurate news program available. Seven TV stations receiving USAID assistance pooled their funding to successfully negotiate and legally acquire a variety of copyrighted entertainment programming at an international television programming sales exhibition. RTV Travnik and CV7 in Vitez, both in the multi-ethnic Middle Bosnia Canton in the Federation, eliminated ethnic-based iconography from their station identification in order to serve a broader population and improve the professional look of their local news and information programming. In addition, CV7 in Vitez, a hardline Croat town, also broke away from municipal control and registered as a private company during 1998.

On-going USAID programs to develop a pluralistic political environment yielded results in the 1998 elections as moderate opposition parties gained in all races, except the RS Presidency. The national parties, however, continue to benefit from lingering distrust between ethnic groups, and from the perception that they alone can offer resources, jobs, and protection from "others" who vote along national lines. USAID, through the International Foundation for Election Systems (IFES), has provided specialized technical assistance to directly support the OSCE in supervising all four elections held since Dayton. The team of IFES elections administration experts, which includes the Director General for Elections, the Director of Out-of-Country Voting, and the Director of Voter Education, has provided crucial continuity and expertise to OSCE's oversight of the electoral process. Efforts are currently focused on electoral law reform, institution-building and training Bosnians gradually to take over this responsibility.

USAID, through the National Democratic Institute for International Affairs (NDI), has provided targeted training in message development, media relations, voter contact, strategic planning, and volunteer recruitment to Federation and RS political parties; in the run-up to the 1998 general elections, USAID focused its assistance on democratically-oriented parties that support the Dayton Accords and have a significant political constituency. 1998 marked the first year in which opposition parties actively campaigned in the field, conducted voter interest surveys (34 local branches of 15 parties collected 11,000 voter surveys), and ensured that party candidates at all levels shared a unified message. USAID-funded public opinion polling across Bosnia assisted political parties in gauging voter attitudes and finessing campaign strategies. The result was a dramatic increase in political pluralism in Federation cantons and at the parliamentary level in both Entities at the expense of the ruling national parties.

USAID, through NDI, also enhanced Bosnian ownership of the electoral process by supporting a nationwide non-partisan monitoring effort. Prior to the 1998 elections, local non-governmental organizations in Tuzla, Sarajevo, Mostar, and Banja Luka established four citizen monitoring leagues, involving ninety-six citizen organizations. The leagues recruited and fielded 2,500 volunteers who covered 865 polling stations in fifty-seven municipalities. Each league held a press conference to report preliminary findings and hosted a joint press conference in Sarajevo to release a common election assessment. In addition, NDI's Bosnian staff trained over 2,000 party agents in multi-party poll watcher training sessions held throughout the country. IFES's interactive voter and civic education project has now reached nearly 33,000 voters in 2,200 discussion groups held in four Federation Cantons and 11 RS municipalities.

USAID-funded judicial reform assistance is helping establish a professional and independent judiciary operating in an environment governed by rule of law. Since 1995, USAID has supported the American Bar Association's Central and East European Law Initiative (CEELI). With CEELI assistance, two working groups of Bosnian experts completed codes and procedures that significantly enhance due process protections and bring Federation legislation into compliance with the international standards set forth in the BiH Constitution. Both codes were adopted in July 1998, and include a rape shield law; right to counsel; the right to remain silent; and mandatory reporting on child abuse. As a follow-on activity, CEELI, in conjunction with the U.S. Department of Justice, is implementing a training program in which foreign and local legal professionals train Bosnian lawyers, prosecutors, and judges regarding the new codes.

Building on its earlier work in establishing a Federation-wide Judges' Association (AJF), USAID/CEELI advisors in 1998 helped municipal, district, supreme and constitutional court judges in the RS create the Association of Judges and Prosecutors of Republika Srpska. The Association is the first voluntary, non-partisan, professional association dedicated to strengthening the judiciary and enhancing administration of justice in the RS.

In 1998, USAID funded the International Human Rights Law Group (IHRLG) to implement an advocacy initiative to foster the development of a more dynamic civil society. Through technical assistance and training, the program is empowering local non-governmental organizations to mobilize and develop advocacy campaigns around human rights issues linked to the incorporation of the European Convention for Human Rights into Bosnia's legal system. IHRLG is also assisting a local women's organization to produce a national status report on women in Bosnia for submission to the United Nations and for use as an advocacy tool.

Cross-Cutting Activities: Since 1995, USAID's participant training program has sent over 500 (35% women) mid and senior level officials, business leaders, and citizen activists from both entities to the United States and third countries for intensive short-term training. Training topics have ranged from commercial banking to public utility management to NGO development. Each training program is designed to directly complement USAID activities in support of economic growth and reform, infrastructure rehabilitation, and democracy building in Bosnia. Participants are recruited and selected competitively from the professional and functional levels identified as critical to effecting change in institutions with which USAID is working.

International NGOs have played a vital humanitarian role in Bosnia. Today, there are at least 250 Bosnian NGOs operating in Bosnia, many of which are now providing the trauma counseling and humanitarian assistance once handled by the international NGO community. To facilitate the development of a pluralistic civil society in Bosnia, USAID provides direct support to civic groups throughout Bosnia such as women's organizations, children's groups, and cultural organizations.

The Delphi International "STAR" (Strategies, Training, and Advocacy for Reconciliation) project, completed in 1998, helped foster women's participation in the development of civil society in Bosnia through technical assistance and financial support to non-nationalistic, advocacy oriented women's NGOs and women leaders. The STAR project emphasized public policy advocacy, democratic leadership, sustainability, and regional networking.

In 1999, the American Refugee Committee will complete the "Reintegration of Children and Youth into Society" program, which repaired or constructed nearly 300 playgrounds, and play fields at 275 sites in 60 municipalities throughout the country. The program is helping reintegrate communities through recreation programs to foster youth participation and build a sense of community ownership for the repaired sites. In October 1998, ARC organized the first inter-entity bicycle race.

The International Rescue Committee's NGO Development Project (completed in 1998) through organizational development training, seminars, and technical assistance has improving the capacity of local NGOs to respond to crisis situations, address community needs, and offer trauma rehabilitation. One sub-grantee in 1998 successfully lobbied the Sarajevo Canton government to make existing sidewalks accessible for people with disabilities.

Save the Children implements a program in Bosnia to establish community based pre-schools and provide training for local teachers. Since 1995, 440 sites have been opened and over 21,400 children enrolled. Approximately 60% of these sites are now self-sustainable. In 1998, the program expanded into the RS to open 49 playrooms serving over 2,300 children.

Through the American International Health Alliance (AIHA), USAID completed in 1998 a health partnership between Buffalo General Hospital and the Tuzla Medical Center which focused on improving healthcare services and quality for local citizens through training and professional educational exchanges. AIHA also established a modern nursing resource center at the Tuzla Medical Center.

Other Donors Programs: As outlined earlier, the United States is the second largest donor in Bosnia, after the European Commission. USAID’s BDP complements other donor commercial lending programs. The MIS program is closely coordinated with the infrastructure rehabilitation efforts of the World Bank, the EU, and other multi or bilateral organizations. USAID's economic advisors actively coordinate with the IMF, the EBRD, and World Bank to ensure a common donor approach on promoting critical reforms. USAID's leadership of the Industry Sector Task Force has helped maintain the necessary momentum to get privatization underway in Bosnia. U.S.-European Union partnership in modernizing Bosnia's customs system has created a cadre of trained professionals, reduced the average customs clearing time, and generated much-needed revenue for Bosnia's war-torn economy, while similar cooperation on institutional strengthening in the water sector is paving the way for the long-term sustainability of donor repaired infrastructure and the eventual privatization of Bosnia's utilities. In the democracy arena, USAID works closely with other donors, primarily the OSCE, the OHR, the EU, Council of Europe, other bilaterals, and private organizations, in efforts to support independent media, political party development, judicial reform, and civil society building. USAID-funded NGOs partnered with both international organizations and European NGOs on a variety of multi-sector projects which helped leverage funding and create greater project impact.

Principal Contractors, Grantees, or Agencies: USAID implements activities under this strategic objective through private U.S. and local companies such as the Ralph M. Parsons Company and local construction firms; U.S. consulting firms such as the Recovery Group, Price Waterhouse, East/West Management Institute, Overseas Strategic Consulting, and the Barents Group; U.S.-based and local NGOs, such as the International Foundation for Election Systems, the National Democratic Institute, the American Bar Association, Internews, the American Refugee Committee, CARE, and Catholic Relief Services, and other USG agencies such as Treasury, State, TDA, Justice, and the U.S. Information Agency.

Selected Performance Measures: Due to the special nature of this program, USAID reports periodically throughout the year on U.S. assistance to Bosnia. For this reason, annual targets are not established. Indicators used in reporting include the following.

Real GDP growth.
Unemployment rate.
Number of jobs created through USAID programs.
Number of BDP Agent banks taking on own lending.
Number of residents provided with repaired infrastructure and restored services.
Number of residents returning to their communities.
Financial system providing financing to private entrepreneurs.
Private sector investment in industry.
Number and effectiveness of local NGOs promoting citizen concerns.
Public confidence in the courts.
Self-generated revenue of cantons and municipalities.
Political party platforms are communicated to citizens and reflect citizen input.
Balanced information being reported by Bosnian media.

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