EUROPEAN COMMISSION Brussels, 29.5.2019 SWD(2019) 222 final COMMISSION STAFF WORKING DOCUMENT Analytical Report Accompanying the document Communication from the Commission to the European Parliament and the Council Commission Opinion on Bosnia and Herzegovina’s application for membership of the European Union {COM(2019) 261 final}



Table of Contents A.INTRODUCTION 1.Application for membership 2.Relations between the EU and Bosnia and Herzegovina 3.Contents of the analytical report BCriteria for membership 1.POLITICAL CRITERIA AND RULE OF LAW ISSUES 1.1.Functioning of democratic institutions and Public Administration Reform 1.1.1Democracy 1.1.2Public administration reform 1.2.Rule of law and fundamental rights 1.2.1.Chapter 23: Judiciary and fundamental rights 1.2.2.Chapter 24: Justice, freedom and security 2.Fundamentals first: economic development and competitiveness 2.1.Introduction 2.2.Assessment in terms of the Copenhagen Criteria 2.3.General evaluation

C.Obligations stemming from the Stabilisation and Association Process - Good neighbourly relations and regional cooperation D.Ability to assume the obligations of membership Chapter 1: Free movement of goods Chapter 2: Freedom of movement for workers Chapter 3: Right of establishment and freedom to provide services Chapter 4: Free movement of capital Chapter 5: Public procurement Chapter 6: Company law Chapter 7: Intellectual property law Chapter 8: Competition policy Chapter 9: Financial services Chapter 10: Information society and media Chapter 11: Agriculture and rural development Chapter 12: Food safety, veterinary and phytosanitary policy Chapter 13: Fisheries Chapter 14: Transport policy Chapter 15: Energy Chapter 16: Taxation Chapter 17: Economic and monetary policy Chapter 18: Statistics

Chapter 19: Social policy and employment Chapter 20: Enterprise and industrial policy Chapter 21: Trans-European Networks Chapter 22: Regional policy and coordination of structural instruments Chapter 25: Science and research Chapter 26: Education and culture Chapter 27: Environment Chapter 28: Consumer and health protection Chapter 29: Customs union Chapter 30: External relations Chapter 31: Foreign, security and defence Policy Chapter 32: Financial Control Chapter 33: Financial and budgetary provisions ANNEX I – STATISTICAL ANNEX



A. INTRODUCTION 1. Application for membership Bosnia and Herzegovina presented its application for membership of the European Union on 15 February 2016. Subsequently, on 20 September 2016, the Council of the European Union invited the Commission to submit its opinion on this application. This is in line with the procedure laid down in Article 49 of the Treaty on European Union, which states that ‘Any European State which respects the values referred to in Article 2 and is committed to promoting them may apply to become a member of the Union. The European Parliament and national Parliaments shall be notified of this application. The applicant State shall address its application to the Council, which shall act unanimously after consulting the Commission and after receiving the consent of the European Parliament, which shall act by a majority of its component members. The conditions of eligibility agreed upon by the European Council shall be taken into account’. Article 2 states that ‘the Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail’. This is the legal framework within which the Commission submits this Opinion.

The European Council in Feira in June 2000 acknowledged that Western Balkan countries participating in the Stabilisation and Association Process are ‘potential candidates’ for EU membership. The European perspective of these countries was confirmed by the European Council in Thessaloniki in June 2003 which endorsed the ‘Thessaloniki Agenda for the Western Balkans’. This agenda remains the cornerstone of EU policy towards the region. The European Council in December 2006 renewed the EU’s commitment ‘that the future of the Western Balkans lies in the European Union’ and reiterated that ‘each country's progress towards the European Union depends on its individual efforts to comply with the Copenhagen criteria and the conditionality of the Stabilisation and Association Process. A country’s satisfactory track record in implementing its obligations under a Stabilisation and Association Agreement (SAA), including trade-related provisions, is an essential element for the EU to consider any membership application’. In the February 2018 Western Balkans strategy the Commission stated that ‘with sustained effort and engagement, Bosnia and Herzegovina could become a candidate for accession’. At the EU-Western Balkans summit which took place in Sofia in May 2018, EU leaders reaffirmed their unequivocal support for the European perspective of the Western Balkans, and the Western Balkan partners recommitted to this perspective as their firm strategic choice. The EU leaders agreed on the Sofia Declaration and the Sofia Priority Agenda, outlining new measures for enhanced cooperation with the region in key areas such as security, rule of law and migration In the Opinion, the Commission assesses Bosnia and Herzegovina’s application on the basis of the country’s capacity to meet the criteria set by the European Council in Copenhagen in 1993, as well as in Madrid in 1995, notably regarding the country’s administrative capacity and the conditions of the Stabilisation and Association Process (SAP). The Opinion also takes into account Bosnia and Herzegovina’s track record in implementing its obligations under the SAA, which entered into force on 1 June 2015. In June 1993, in Copenhagen, the European Council concluded that: ‘Accession will take place as soon as a country is able to assume the obligations of membership by satisfying the economic and political conditions required. Membership requires: – that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; – the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union; – the ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union’. The Union’s capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries. In December 1995, in Madrid, the European Council referred to the need ‘to create the conditions for the gradual, harmonious integration of [the applicant] countries, particularly through the development of the market economy, the adjustment of their administrative structures and the creation of a stable economic and monetary environment’. In December 2006, the European Council agreed that ‘the enlargement strategy based on consolidation, conditionality and communication, combined with the EU’s capacity to integrate new members, forms the basis for a renewed consensus on enlargement’. For the Western Balkans, the Council defined on 31 May 1999 the specific conditions under the SAP. These include cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) and regional cooperation. These conditions are integrated as a fundamental element into the SAA. The Opinion has been prepared following a methodology similar to that used in previous Opinions. The Commission delivered a total of 3 897 questions covering all EU policies to Bosnia and Herzegovina. It took the country 14 months to answer the initial 3 242 questions and 8 months to reply to the 655 follow-up questions. Despite the establishment of a coordination mechanism on EU matters, the authorities could not agree to submit answers to 22 questions: 1 on the political criteria, 4 on regional policy, and 17 on education policies. The Commission organised a number of expert missions to Bosnia and Herzegovina with a special focus on the areas covered by the political criteria. The Commission also took into account the contributions received from the consultations held with stakeholders such as civil society organisations, international organisations and EU Member States. This approach allowed the Commission to assess the administrative capacity of Bosnia and Herzegovina institutions and the way legislation is implemented. It also helped to better identify remaining challenges and priorities for future action. The Commission has analysed the current situation and has provided guidance to address issues in the short term as well as in the longer term. In line with the renewed consensus on enlargement, this analytical report provides initial estimates of the impact of the future accession of Bosnia and Herzegovina in some key policy areas. The Commission will provide more detailed impact assessments for these policy areas at later stages of the pre-accession process. In addition, an EU accession treaty for Bosnia and Herzegovina would involve technical adaptation of the EU institutions in the light of the Treaty on European Union. 2. Relations between the EU and Bosnia and Herzegovina Relations between the EU and Bosnia and Herzegovina have developed since the independence of the country in 1992 and the signature of the General Framework Agreement for Peace (GFAP) at Dayton/Paris in 1995. Bosnia and Herzegovina is participating in the Stabilisation and Association Process (SAP). The Stabilisation and Association Agreement between Bosnia and Herzegovina and the EU was signed on 16 June 2008 in Luxembourg, along with an Interim Agreement, which as of 1 July 2008 regulates trade and trade-related matters. While ratified by all EU Member States by February 2011, the SAA could not enter in force, since Bosnia and Herzegovina had not fulfilled the condition that was set on the compliance with the 2009 decision of the European Court of Human Rights (ECtHR) in the Sejdić-Finci case. Such ruling requires the country to amend the Constitution to remove discriminatory provisions from the electoral rules for the Presidency and the state-level House of Peoples.

In December 2014, the Council agreed on a renewed approach to Bosnia and Herzegovina, without changing the EU accession conditions, including the implementation of the decision of the ECtHR in the Sejdić-Finci case, and invited the Vice President/High Representative Mogherini and Commissioner Hahn to engage with the political leaders to secure their irrevocable commitment to undertake reforms towards EU accession. Following the agreement upon a written commitment by the Presidency of Bosnia and Herzegovina in January 2015, its signature by the leaders of the 14 parliamentary parties and its endorsement by the Parliamentary Assembly, in March 2015 the Council agreed to the entry into force of the SAA, which started on 1 June 2015. With the entry into force of the SAA, Bosnia and Herzegovina opened a new chapter in its relations with the EU and confirmed its commitment to pursue EU accession. By establishing contractual relations among the parties, the SAA provides a framework of mutual commitments on a wide range of political, trade and economic issues as well as the legal basis for formalised policy dialogue. The EU provides guidance to the country on reform priorities on the EU membership path. Political and economic dialogue between the European Commission and Bosnia and Herzegovina has been taking place since 2009 under the Interim Agreement, and since 2015 under the SAA. Policy dialogue on the rule of law has taken place since 2011 in the context of the ‘structured dialogue on justice’, and since 2016 in the framework of the subcommittee on justice, freedom and security. A special group on public administration reform has also been meeting since 2017. Bosnia and Herzegovina has developed appropriate administrative capacities to ensure the implementation of the SAA provisions, in particular concerning the smooth operation of the Stabilisation and Association Council, Committee and sectoral sub-committees. The protocol adapting the SAA to take into account the accession of Croatia to the European Union has been provisionally applied since 1 February 2017 and entered into force on 1 October 2017. However, concerns remain. To meet its legal obligations under the Agreement, Bosnia and Herzegovina needs, among other things, to ensure the functioning of the parliamentary dimension of the Agreement, and adopt a national programme for the adoption of the EU acquis. The parliamentary dimension of the SAA is not properly functioning. The Stabilisation and Association Parliamentary Committee was established in November 2015 as part of the SAA bodies, but it failed to adopt its rules of procedure due to the insistence of some delegates from Bosnia and Herzegovina on the inclusion of ethnic voting provisions not in line with European standards. In spite of this, the European Parliament regularly discusses and adopts resolutions on the situation and developments in view of Bosnia and Herzegovina’s EU path. Bosnia and Herzegovina participates in an economic dialogue with the Commission and the EU Member States. The country submits every year to the Commission a medium-term Economic Reform Programme (ERP) setting out plans to strengthen macrofiscal stability and tackle structural obstacles to growth. On the basis of the ERP, Bosnia and Herzegovina meets every year with the Commission, EU Member States and all other enlargement countries at the Economic and Financial Dialogue. This dialogue on economic governance is meant to prepare the country for its future participation in EU economic policy coordination, including the European Semester process. However, largely as a result of insufficient cooperation among key ministries and bodies at various levels within the country, the quality of the programme is low and the implementation of the jointly adopted policy guidance, which is a central part of the process, is limited. Between 2015 and 2018 Bosnia and Herzegovina embarked on an ambitious ‘reform agenda’ to bring back economic growth and jobs opportunities. Its implementation allowed economic indicators and the macroeconomic situation to improve, including balanced public finances and steady economic growth. A new set of socio-economic reform measures needs to be agreed and implemented by the governments at all levels in the country, in full alignment with the ERP and the jointly agreed policy guidance. Bosnia and Herzegovina started negotiations for visa liberalisation in 2008. Following a decision of the Council in consultation with the European Parliament, citizens of Bosnia and Herzegovina enjoy visa-free travel to the Schengen area as of November 2010. This decision was based on substantial progress in the areas of justice, freedom and security and fulfilment of the 174 specific conditions set out in the roadmap for visa liberalisation, such as the introduction of biometric passports. The Commission monitored and reported regularly on its implementation. The Commission presented its second report under the visa suspension mechanism in December 2018. Overall, Bosnia and Herzegovina continues to fulfil the visa liberalisation benchmarks. An agreement on readmission has been in force since January 2008. Bosnia and Herzegovina ratified the Energy Community Treaty in September 2006, the European Common Aviation Area Agreement in July 2007, and the Transport Community Treaty in April 2018. The SAA and its Interim Agreement, applied since 2008, have allowed progressive trade liberalisation and mutual duty-free access for most goods. Since 2000 Bosnia and Herzegovina has also been benefiting from the ‘autonomous trade measures’. Bosnia and Herzegovina joined the Central European Free Trade Agreement (CEFTA) in 2007. The negotiations for its accession to the World Trade Organisation are in the final stage. The EU is the main trading partner of Bosnia and Herzegovina, followed by CEFTA countries. Trade integration with the EU is high. In 2017, 61% of the country imports worth EUR 5.6 billion originated from the EU (12% from CEFTA). Of the country exports, 71% went to the EU (15% to CEFTA). The country’s trade deficit with the EU amounted to EUR 1.7 billion in 2017. The EU deploys considerable resources in Bosnia and Herzegovina under the common foreign and security policy and the common security and defence policy. The enhanced presence ensured since 2011 by the combined Office of the EU Special Representative and EU Delegation in Bosnia and Herzegovina is instrumental in communicating EU priorities to the citizens of the country and in implementing the objectives of the EU agenda in key areas. Since December 2004 the EU has deployed the EUFOR Althea military operation in the country, helping to build capacities and train the armed forces of Bosnia and Herzegovina. This is in line with the strategic intent expressed by the Ministry of Defence to develop operational capabilities of dual use in support of civil authorities for the removal of physical remnants of war or disaster relief and deployment in peace support operations overseas. At the same time, EUFOR Althea has deterrence capacity to support a safe and secure environment. In November 2018, the UN Security Council extended for the fourteenth time EUFOR Althea’s yearly mandate until November 2019. A framework agreement on the participation of Bosnia and Herzegovina in EU crisis management operations has been in place since September 2015. The EU provides significant financial assistance to Bosnia and Herzegovina, which over the years allowed the country to recover from wartime destruction and to re-establish itself as a catching-up economy. From 1996 to 2000 Bosnia and Herzegovina benefited from EU financial assistance under the PHARE and OBNOVA programmes. From 2000 to 2007 the CARDS regulation foresaw financial support tailored to SAP priorities. Since 2007 Bosnia and Herzegovina benefits from EU assistance mainly under the Instrument for pre-accession assistance (IPA). Over the 2007-18 period, Bosnia and Herzegovina received EUR 1.5 billion from the EU, of which an estimated EUR 433 million from regional programmes. Since 2000 the European Investment Bank awarded EUR 2.4 billion in loans to support projects in Bosnia and Herzegovina. The EU Delegation to Bosnia and Herzegovina is responsible for implementing EU financial assistance via direct management as well as for ensuring the coordination of assistance with EU Member States. Implementation of the IPA I and IPA II programmes is ongoing. The indicative strategy paper for Bosnia and Herzegovina 2014-17 was revised in 2018 to include several additional sectors and extend it until 2020. Sector strategies are in place for environment, energy, transport and rural development, enabling IPA support in those sectors. The adoption of countrywide strategies such as on public financial management and on employment remains a key requirement for Bosnia and Herzegovina to benefit fully from IPA funding in 2018-20. Bosnia and Herzegovina has progressively extended its participation to EU programmes, which has been partly co-financed via IPA funds. Bosnia and Herzegovina currently takes part in COSME, Creative Europe, Customs 2020, Europe for Citizens, Erasmus+, Fiscalis 2020, Horizon 2020, and the Third Programme for the Union’s action in the field of health. Bosnia and Herzegovina also takes part in the INTERREG programme.



3. Contents of the analytical report The analytical report takes into account the conclusions of the European Council in Copenhagen in 1993 and subsequent European Council conclusions. The report: -describes the relations between Bosnia and Herzegovina and the Union; -analyses the compliance of Bosnia and Herzegovina with the political conditions established by the European Council (democracy, rule of law, human rights, protection of minorities; regional issues and international obligations);

-assesses the country’s situation and prospects in respect of the economic conditions established by the European Council (functioning market economy, capacity to cope with competitive pressure); -addresses the country’s overall capacity to uphold the obligations of membership, i.e. the full body of EU law as expressed in the Treaty, the secondary legislation, and also the policies of the Union (acquis of the European Union); -provides, in line with the December 2006 European Council conclusions, initial impact estimates in the fields of freedom of movement for workers (chapter 2), agriculture and rural development (chapter 11), regional policy and coordination of structural instruments (chapter 22), and financial and budgetary provisions (chapter 33). These have been identified as the main policy areas likely to require particular attention in the case of Bosnia and Herzegovina accession. In assessing Bosnia and Herzegovina’s situation with regard to the economic criteria and its capacity to assume the obligations of the acquis, the Commission has also estimated the progress which could reasonably be expected in the years ahead, before possible accession, taking account of the fact that the acquis itself will continue to develop. As for previous Opinions, the Commission has drawn on a number of sources of information, starting with the answers provided by Bosnia and Herzegovina to a detailed questionnaire and additional follow-up questions. The Commission also took into consideration: -reports of expert missions; -reports by the Member States’ embassies in Sarajevo; -reports by the European Parliament; -assessments by international organisations (including Council of Europe, Organisation for Economic Cooperation and Development, Organisation for Security and Cooperation in Europe, International Monetary Fund, World Bank); -assessments by local and international non-governmental organisations; -information submitted to the Commission by citizens of Bosnia and Herzegovina. The Commission organised a large number of expert missions and peer reviews in Bosnia and Herzegovina with EU Member States’ experts focusing on rule of law and fundamental rights matters as part of the political criteria. This methodology also allowed the Commission to prepare a sound assessment of the administrative capacities of the country institutions and of the implementation of legislation, in order to identify the key challenges and priorities for future action. The Commission has analysed the current situation and provided in this analytical report a comprehensive number of short-term priorities as well as structural issues which Bosnia and Herzegovina must address on its path towards EU accession.

B Criteria for membership 1. POLITICAL CRITERIA AND RULE OF LAW ISSUES 1.1. Functioning of democratic institutions and Public Administration Reform 1.1.1 Democracy Constitution The Constitution of Bosnia and Herzegovina is an integral part of the General Framework Agreement for Peace (GFAP) (Annex IV), and establishes Bosnia and Herzegovina as a parliamentary democracy in which the executive powers are exercised by the Presidency and the Council of Ministers, and the legislative powers by the Parliamentary Assembly. The Constitution sets out the internal structure of the country as a state consisting of two entities, the Federation of Bosnia and Herzegovina and Republika Srpska as well as the Brčko District. The Constitution guarantees the fundamental principles of a democratic state, including the rule of law, free elections and the protection of human rights. It emphasises full freedom of movement of persons, goods, services, and capital throughout Bosnia and Herzegovina. The Constitution commits Bosnia and Herzegovina to ensuring the highest level of internationally recognised human rights and fundamental freedoms and stipulates that the rights and freedoms set out in the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) and its Protocols are directly applicable and have priority over all other law. In its decisions U-5/04 and U-13/05 the Constitutional Court clarified that the ECHR does not have priority over the Constitution. The Constitution also commits Bosnia and Herzegovina to non-discrimination in the enjoyment of rights and freedoms, and establishes the right of all refugees and displaced persons to return freely to their homes of origin, including property restoration or compensation. The Preamble to the Constitution lists ‘Bosniacs, Croats, and Serbs, as constituent peoples (along with Others), and citizens of Bosnia and Herzegovina’ as determining the Constitution. In its decision U-5/98 the Constitutional Court held that the Preamble contains a constitutional principle of equality of ‘constituent peoples’, which prohibits any privilege or domination of any group over the others in any parts of the country, establishing Bosnia and Herzegovina as a democratic multi-ethnic state. Entity constitutions and laws have been amended to be brought in line with the Constitution, to ensure equality and non-discrimination among members of constituent peoples across the whole country.

The Constitution enumerates the competences expressly assigned to the State, and attributes all other powers to the entities. As provided for by the Constitution and where relevant confirmed by the Constitutional Court, state-level competences also include powers that have been gradually attributed to or assumed by the State on the basis of transfer agreements concluded between the entities; of Annexes V through VIII to the peace agreements; and of implied powers when necessary to preserve the sovereignty, territorial integrity, political independence, and international legal personality of Bosnia and Herzegovina. The Constitution provides that additional institutions may be established as necessary to carry out such responsibilities. Frequent disputes on the distribution of competences between the State and the entities affect their effective exercise and therefore the alignment of legislation with the acquis and its implementation in a large number of chapters. To prevent such systematic disputes and ensure effective implementation of the acquis, Bosnia and Herzegovina needs to ensure legal certainty on the distribution of competences among the levels of government. There is also no procedure in the Constitution providing for the state level to prevent and remedy breaches of EU law by other levels of government. While the acquis may be implemented by other levels of government, according to the case-law of the European Court of Justice the liability for breaches of EU law rests with the State as a whole. To ensure the full compliance with EU membership obligations, a substitution clause should be introduced to allow the State upon accession to temporarily exercise competences of other levels of government to prevent and remedy breaches of EU law for which Bosnia and Herzegovina would be held liable as a whole. The entities, cantons and Brčko District are obliged to fully comply with the Constitution, which has primacy over entity constitutions and laws. They must also comply with all decisions of the state-level institutions. The Constitution requires the entities to provide all necessary assistance to the government of Bosnia and Herzegovina in order to enable it to honour the country’s international obligations. The Constitution provides for the separation of legislative and executive powers. It guarantees specific collective rights for the members of the constituent peoples in the composition and decision-making procedures of the legislative and executive bodies. The Parliamentary Assembly is composed of a directly elected lower house, the House of Representatives, and of an indirectly elected upper house, the House of Peoples, which comprises five members for each constituent people, elected among the members of the entity-level upper houses. Both chambers need to approve all legislation with at least one third of members elected from each entity voting in favour (‘entity voting’). In the House of Peoples, a majority of members from each constituent people may declare a decision to be ‘destructive’ of their vital interest (‘vital national interest’ veto). Such ethnic-based veto rights affect the work of the Parliamentary Assembly, risking to delay the legislative process. The Constitution may be amended by a decision of the Parliamentary Assembly, which must be taken by a two-thirds majority of those present and voting in the House of Representatives and a qualified majority of the House of Peoples. The protection of human rights and fundamental freedoms established in the Constitution cannot be derogated. The Constitution establishes a collective head of state of Bosnia and Herzegovina, the Presidency, composed of one Bosniak and one Croat member, each directly elected from the territory of the Federation entity, and one Serb member directly elected from the territory of the Republika Srpska entity. The Presidency is in charge of foreign policy and international representation of the country, and has civilian command authority over the armed forces. Citizens who do not declare themselves as Bosniaks, Croats or Serbs, as well as Serbs living in the Federation entity and Croats and Bosniaks living in the Republika Srpska entity, cannot stand for election to the Presidency or to the state-level House of Peoples. Since 2009 the European Court of Human Rights (ECtHR) has established in the Sejdić-Finci, Zornić, Pilav and Šlaku decisions that these restrictions are in violation of the ECHR and its Protocols. Significant reforms are needed to ensure that all citizens can effectively exercise their political rights, irrespective of their ethnicity and residence. As for the executive, the Constitution establishes a Council of Ministers as government of Bosnia and Herzegovina, whose Chair is nominated by the Presidency and assumes office upon approval of the whole Council of Ministers by the House of Representatives. Two thirds of ministers are appointed from the Federation entity and one third from the Republika Srpska entity. The Chair and its two deputies must declare themselves as members of one of the constituent peoples each, and at least one position should also be allocated to a member of the ‘Others’ within the Council of Ministers or as its Secretary-General. Save for the Constitutional Court, the judiciary is not explicitly mentioned in the Constitution but is regulated in the entity constitutions and in the Brčko District Statute. The judiciary in Bosnia and Herzegovina is organised into four systems (State, entities and Brčko District), each of them having its own jurisdiction and internal institutional structures. The self-regulatory body of the judiciary, the High Judicial and Prosecutorial Council of Bosnia and Herzegovina (HJPC), is tasked with guaranteeing its independence. The HJPC was established in 2004, replacing entity-level judicial and prosecutorial councils, on the basis of a transfer agreement from the entities, confirmed by the Constitutional Court. The Court of Bosnia and Herzegovina and the Prosecutor’s Office have been established in the period 2000-04 to fulfil the constitutional obligations of the State. The Constitutional Court confirmed their compliance with the Constitution in 2001. A separate state-level court of appeal is missing. The independence of the judiciary is not sufficiently guaranteed to shield it from all forms of politicisation and pressures. The Constitution needs to explicitly guarantee the independence of the judiciary and provide an explicit constitutional basis for the HJPC and the state-level court system. The Constitution does not provide for a supreme court. The consistency of case-law across the four legal orders is promoted by voluntary harmonisation panels among the highest court instances, which issue guidelines. To safeguard the principle of independence of all judges, the consistency of case-law should rather be ensured through decisions of higher courts. Ultimately, Bosnia and Herzegovina needs to establish a judicial body to ensure the consistent interpretation of the law and the harmonisation of case-law, while fully ensuring the principle of independence of all judges. The Constitutional Court is the final authority as regards interpretation of the Constitution. The Court possesses exclusive jurisdiction to decide on disputes arising between entities or between the state level and the entities or between institutions, including on compliance of the entities’ constitutions or laws with the Constitution. Through its appellate jurisdiction over constitutional issues arising out of a judgment or pursuant to the request of any other court, the Constitutional Court is competent to decide whether a judgement or law complies with the Constitution, the ECHR, the legislation and the general rules of public international law. The Constitutional Court also takes final decisions on motions for the protection of the ‘vital national interest’ of constituent peoples brought by the Parliamentary Assembly. The Constitutional Court is composed of nine judges, of which six are elected by the entity assemblies (four by the House of Representatives of the Federation entity, and two by the Republika Srpska National Assembly), and three are international judges appointed by the ECtHR President after consulting the Presidency. They remain in office until the age of 70. There are no specific criteria for their appointment, such as age or judicial experience, save for the eligibility requirement of being recognised as ‘distinguished jurists of high moral standing’. Entity constitutions provide that judges are appointed by simple majority of the entity assemblies, which risks leading to politicised and ethnic-based appointments. The professionalism and independence of Constitutional Court judges need to be strengthened, starting with improving their eligibility criteria and appointment procedures. The issue of international judges in the Constitutional Court needs to be addressed. The Constitution provides that the Parliamentary Assembly may decide by law a different method of selection of the three judges selected by the ECtHR President. Enacting this provision might ensure a stronger domestic participation in their selection process. The decisions of the Constitutional Court are final and binding for all competent authorities, legal persons and individuals. The criminal code qualifies their non-implementation as a criminal offence. As of May 2019, eight decisions remain not implemented, without leading to prosecutions or convictions. Once the deadline for implementation expires, the Constitutional Court adopts a ruling on nonenforcement which repeals the unconstitutional legal provision. This practice risks creating a legal vacuum if the parliament does not adopt a compliant provision in due time. The Constitutional Court has a key role in interpreting the Constitution and solving conflicts of competence between different levels of government which hamper legislative activity and the alignment with the acquis. The Court needs to be able to take a proactive and independent role, and its judges must act with full impartiality. Annex VI to the GFAP provided for an internationalised Human Rights Commission, including the Ombudsman for Human Rights and the Human Rights Chamber. The Human Rights Chamber was later transformed into the Human Rights Commission within the Constitutional Court and discontinued by mid-2007. Since 2001 domestic institutions have assumed responsibility over the Institution of the Ombudsman for Human Rights, which is currently the national human rights institution, equality body, and supervisory body on freedom of access to information. The Constitution establishes the Central Bank of Bosnia and Herzegovina as the sole authority for currency and monetary policy. Its governing board is composed of five persons and is appointed by the Presidency for a six-year term. The board chooses the Governor from among its members. Its goals and tasks, including monetary stability and managing the currency board between the euro and the Bosnian Mark, are laid down in the 1997 Law on the Central Bank. The Central Bank also coordinates the activities of the entities’ banking agencies which are in charge of bank licensing and supervision. (Also see chapter 17) The Supreme Audit Office is responsible for external audit at the state level. The two entities and the Brčko District also have their audit institutions. The functional, operational and financial independence of the supreme audit institutions needs to be guaranteed. (Also see chapter 32)

Annex X to the Dayton Peace Agreement established the Office of the international High Representative (OHR) as the final authority on the interpretation of the civilian aspects of the implementation of the peace agreement. Based on the 1997 conclusions of the Peace Implementation Council in Bonn, the OHR has been granted extensive powers to decree legislation in the place of domestic institutions and to remove from office those public officials who did not fulfil their duty to implement the peace agreement, including as regards cooperation with the ICTY. The OHR ‘Bonn powers’ were last used in 2011. In its 2005 opinion on the constitutional situation in Bosnia and Herzegovina and the powers of the High Representative, the Council of Europe’s European Commission for Democracy through Law (Venice Commission), although recognising the use of the Bonn powers as beneficial for post-war Bosnia and Herzegovina, noted that ‘such an arrangement is fundamentally incompatible with the democratic character of the state and the sovereignty’ of Bosnia and Herzegovina, in particular since these powers may be exercised without due process and judicial control. Such extensive international supervision is in principle incompatible with the sovereignty of Bosnia and Herzegovina and therefore with EU membership. A process towards closing the OHR has been underway since 2008; its outcome depends on an agenda of five objectives and two conditions. The constitutions of the two entities and the statute of the Brčko District provide for the internal organisation and separation of powers at their level of government. While the Republika Srpska entity is a single administrative unit, the Federation entity consists of 10 cantons, entrusted with shared and exclusive legislative competences. The entity and cantonal constitutions, as well as the Brčko District statute, have been amended multiple times either by their respective legislatures or by decisions of the OHR. Each entity has its own constitutional court that ensures that legislation complies with the entity constitution, and which is the final instance on motions of vital national interest of constituent peoples brought by the respective entity or cantonal legislature. The constitutional court of the Federation entity is also competent to decide on disputes of competence between entity and cantons. Overall, the Constitution of Bosnia and Herzegovina enshrines the basic principles necessary for a parliamentary democracy based on the rule of law, protection of human rights and division of powers. However, the Constitution needs to be amended to be brought in line with EU membership requirements. The complex constitutional architecture and the frequent disputes on the distribution of competences between levels of government affect the alignment of legislation with the acquis and its implementation in a large number of chapters. Bosnia and Herzegovina needs to ensure legal certainty on the distribution of competences across levels of government, and introduce a substitution clause to allow the state to temporarily exercise competences of other levels of government to prevent serious breaches of EU law for which the country would be held liable as a whole. All administrative bodies entrusted with implementing the acquis need to be based only upon professionalism and ethnic-based veto rights in their decision-making need to be removed. The Constitution contains ethnic and residence-based provisions that are not in line with the ECHR and its Protocols. These concern the appointment, composition and decision-making procedures of the head of state and the executive and legislative bodies, as certain electoral rights are reserved for citizens who affiliate to the ‘constituent peoples’ – Bosniaks, Croats and Serbs. Significant incremental reforms are needed to ensure that all citizens can effectively exercise their political rights, in compliance with the Sejdić-Finci case-law of the ECtHR. Ethnic-based veto rights also adversely affect the work of the Parliamentary Assembly and of entity legislatures. The Constitution needs to explicitly guarantee the independence of the judiciary, including the Court of Bosnia and Herzegovina, the Prosecutor’s Office and the High Judicial and Prosecutorial Council as the self-governance institution of the judiciary. Bosnia and Herzegovina needs to strengthen the professionalism and impartiality of constitutional judges and the independence of the Constitutional Court, and ensure sustained compliance with its decisions at all levels of authority. The issue of international judges in the Constitutional Court needs to be addressed. The executive powers of the Office of the High Representative needs to be phased out, as such an extensive international supervision is in principle incompatible with EU membership. Parliament Elections in Bosnia and Herzegovina are overall organised in an orderly manner and genuinely competitive, but are characterised by segmentation along ethnic lines. The legal framework is generally conducive to holding democratic elections, but the effective exercise of the voting rights of all citizens is not fully ensured. The right to stand for election to the Presidency and the House of Peoples is restricted on the basis of ethnicity and residence, which is in breach of European standards, as the ECtHR has held since 2009 in its Sejdić-Finci case-law. Residents of the city of Mostar have not been able to vote in local elections since 2008, as the Parliamentary Assembly has not been able to replace the electoral provisions repealed in 2010 by the Constitutional Court. The Parliamentary Assembly also failed to revise the Electoral Law in line with the 2016 Ljubić decision of the Constitutional Court on the Federation entity House of Peoples, leading to further legal uncertainty. The results of the October 2018 general elections were implemented following an ad hoc decision by the Central Electoral Commission. The electoral legislation was last amended in May and June 2016 to address some of the shortcomings identified by the OSCE/ODIHR and Council of Europe’s Group of States against Corruption (GRECO) on campaign financing, the deregistration process of parties and independent candidates, the threshold for distribution of mandates on candidate lists, and fines for violating the election process. However, there is no strategy to address other outstanding recommendations, including the need for several levels of authority to regularly review constituency boundaries. The country needs to conduct a comprehensive review of the election legislation to ensure compliance with ECtHR and Constitutional Court decisions and to ensure the transparency and legitimacy of the election process and outcomes. Persistent shortcomings include in particular those identified by the Office for Democratic Institutions and Human Rights (ODIHR) of the Organisation for Security and Cooperation in Europe (OSCE) in the final report of its 2018 election observation mission. The lack of transparency of media ownership and the influence of political and business interests over editorial policies raise concerns about the ability of most media to provide unbiased political coverage. Public broadcasters generally provide electoral contestants with free airtime during the official campaign period; however, some provide significant coverage to only one party or candidate. The total number of registered voters in 2018 was 3 352 933. There are no women party leaders. At the 2018 elections, among the 7 497 candidates, 4 378 were men and 3 119 women (41%). The Parliamentary Assembly of Bosnia and Herzegovina is a bicameral legislature. The lower house, the House of Representatives, is directly elected and consists of 42 members of which 33 men and 9 women (21%) in 2018. The upper house, the House of Peoples, consist of 15 members, 5 for each constituent people, indirectly elected from among the members of entity assemblies, of which 12 men and 3 women (20%) in 2018. Each chamber requires as quorum the presence of at least 22 members out of 42 in the House of Representatives and of 9 members (3 for each constituent people) in the House of Peoples. Both chambers need to approve all legislation with at least one third of members elected from each entity voting in favour (‘entity voting’). In the House of Peoples, a majority of members from each constituent people may declare a decision to be ‘destructive’ of their vital interest (‘vital national interest’ veto). This term is not clearly defined and can therefore be very broadly interpreted. The veto procedure also often requires the involvement of the Constitutional Court, thus risking to lead to delays in adopting legislation. The mere existence of a veto right is a deterrent to tabling legislative initiatives, including in the EU integration process, and should be clearly delimited at all levels. Such ethnic-based veto procedures adversely affects the work of the Parliamentary Assembly, risking to delay the legislative process. An urgent procedure which includes only one reading but no amendments nor public debates is used for legislative proposals with a high degree of urgency or formulated in such a simplified way that they can be adopted or rejected in their entirety. Urgent procedures for the adoption of legislation have been used 36 times in the Parliamentary Assembly over the past five years. The right of legislative proposal is granted to each Member of Parliament, as well as to committees, the Council of Ministers and the Presidency. Citizens may also submit legislative initiatives to the authorised proponents for consideration. Parliament’s oversight and control over the executive is primarily exercised through the right of its members to hold hearings, initiate reports, ask questions, submit initiatives and table interpellations, as well as establish thematic committees of inquiry. The parliamentary committees may decide to put a legislative proposal or a specific issue to a public debate. Members of Parliament can table a vote of no-confidence on the Council of Ministers or its members. The motion requires at least three delegates from the House of Peoples or eight members from the House of Representatives in order to be valid. In the 2014-2018 parliamentary term, the no-confidence mechanism was triggered several times to initiate the removal of individual ministers. The House of Representatives is also entitled to put the candidate ministers and Chair through a hearing process. There is no mechanism in place to ensure a comprehensive impact assessment of the proposed legislation at all levels, with the exception of a fiscal assessment of the budgets.

All administrative authorities and publicly-funded institutions are required to present their work plans and annual work reports to the legislative assemblies. The Parliaments may decide on their budget or take other appropriate corrective actions. The Parliamentary Assembly or its committees may at any moment ask the Audit Office to conduct a special audit. The Joint Commission for Defence and Security supervises the Armed Forces, Border Police, State Investigation and Protection Agency, and the Directorate for Coordination of Police Forces. A dedicated joint commission oversees the activities of the Intelligence and Security Agency. The Parliamentary Assembly is particularly active in exercising parliamentary oversight in the supervision of financial and budget spending, human rights related issues, and intelligence, defence and security issues. Members of Parliaments at all levels enjoy functional immunity, which excludes criminal and civil liability for acts they carry out within the official scope of duty. This is defined as actions stemming from responsibilities of individual office holders as prescribed in respective constitutions. Immunity may be lifted by a decision of the respective institution or a judicial organ, though no such instances have been recorded. The rules of procedure of the Parliamentary Assembly require respect for gender balance in the appointment of members of the collegiums, as well as of the members of delegations to international organisations, although this is largely ignored. In the 2014-18 term, there were 33 women out of 156 members and 2 women out of 16 chairpersons in standing and joint parliamentary committees; 11 women out of 45 members and 2 women out of 9 chairpersons in inter-parliamentary delegations; and 1 woman was chairperson in the Collegium of both houses out of six. Parliamentary committees have not yet been established following the October 2018 elections. The eligibility requirements for standing for election to the parliamentary assemblies are defined by the election law. Any citizen, upon turning eighteen, has the right to vote and to be elected. However, citizens who do not declare themselves as Bosniaks, Croats or Serbs cannot be appointed to the state-level House of Peoples. The ECtHR has held since 2009 in its Sejdić-Finci case-law that these restrictions are in breach of the ECHR and its Protocols. Any person serving a sentence imposed by the ICTY or by a domestic court, or serving a sentence for serious violations of humanitarian law imposed by a foreign court, is not eligible for political office. Ineligibility ends with the end of the sentence. The replacement of members of Parliament during their mandate is allocated to the next candidate from the list of the same political party from the same electoral unit. The Parliament of the Federation entity and the National Assembly of the Republika Srpska entity are also bicameral legislatures. The members of their indirectly elected upper houses have to declare themselves as Bosniaks, Serbs and Croats or ‘Others’. The 10 cantons of the Federation entity and the Brčko District elect a unicameral legislative assembly. All legislative assemblies in Bosnia and Herzegovina have a four-year mandate and are elected on the same date. No early elections are possible. Mandates start on the day election results are published in the Official Gazette. In the Federation entity, the Federation Parliament adopts legislation and the budget, and oversees the executive. For the 2018-22 term, its House of Representatives consists of 98 members, of which 70 men (71%) and 28 women (29%). Its House of Peoples includes 58 members (17 for each of the constituent people and 7 for the ‘Others’), indirectly elected from among the members of the cantonal assemblies, of which 13 women (22%) in the 2018-22 term. In the 2014-18 term, 23 laws out of 94 were adopted in urgent procedure, or 24%. Parliamentary oversight is performed through the joint committee responsible for auditing. If a House decides to start an investigation, the Committee on human rights and freedoms and the Committee on security of the House of Peoples may oversee the investigation. The Parliament may dismiss the Government after a no-confidence vote; this procedure was used successfully in 2012, and unsuccessfully in 2015 and 2017. Gender equality committees are tasked with reviewing legislative proposals to ensure their compliance with domestic and international obligations on gender equality and non-discrimination. In the Republika Srpska entity, the National Assembly and its Council of Peoples adopt legislation and the budget and oversees the executive. For the 2018-22 term, the National Assembly consists of 83 deputies, of which 63 men (76%) and 20 women (24%). The Council of Peoples includes 28 members (8 for each constituent people and 4 for the ‘Others’) elected among the members of the National Assembly which may raise the ‘vital national interest’ veto. Laws may be proposed by the President of the entity, the Government, each member or at least 3 000 voters. In principle, fast-track procedures are reserved to exceptional cases. Yet, in the 2014-18 term, 88 laws out of 200 were adopted in fast-track procedure (44%). There are no specific standing committees on oversight and control of the Republika Srpska entity government. At least one third of members may table a motion of no-confidence in the government, which must be approved by an absolute majority of MPs. The no-confidence vote was last used in 2006. The assembly has an equal opportunities committee. The Brčko District Assembly, which adopt legislation and the budget and oversees the executive, has 31 seats, of which 2 reserved to members of national minorities. In the 2016-20 term two councillors are women (6%). Urgent procedures are used relatively frequently, with 14 laws out of 78 adopted in urgent procedure since January 2013 (18%). The mechanism of interpellation has been used on a number of occasions. The assembly may dismiss appointees and express a vote of no-confidence. It cast a vote to dismiss the Mayor in 2011. Its gender equality commission has a limited impact on the quality of legislation. Each of the ten cantons of the Federation entity has an assembly in charge of adopting legislation and the budget and overseeing the cantonal government. Out of the 289 members of cantonal assemblies elected in 2018, 236 are men (82%) and 53 are women (18%). In the last five years, the urgent procedure was used for the adoption of 2 laws in Livno canton, 9 laws in Zenica-Dobo canton, 13 laws in Herzegovina-Neretva canton, 9 laws in West Herzegovina canton, 21 laws in Sarajevo canton, 4 laws in Una-Sana canton, 6 laws in Posavina canton; in Tuzla canton 26 laws were passed in urgent procedure in 2010-2016 and 13 in the last two years. Cantonal assemblies do not generally have a standing committee for oversight and control of the executive. They may express no-confidence in the cantonal government. This happened in Sarajevo canton once in 2012, in Bosnia-Podrinje canton twice in 2012, in Tuzla canton once in 2018, in Livno canton twice in 2013 and 2017, while the Central Bosnia and Posavina cantons have not used the vote of no-confidence in the last several terms. Western-Herzegovina, Herzegovina-Neretva and Una-Sana cantons have used no-confidence vote in the last 5 years. Three cantonal assemblies have not established a gender equality committee. A joint concept of cooperation on EU matters provides for some cooperation between legislative assemblies at all levels. A parliamentary forum on European integration holds quarterly meetings on EU issues. Members of sectoral committees of the four parliaments are also active in joint activities about the EU integration process of the country. However, the parliaments and assemblies have little capacity to review and assess draft legislation for EU compliance leaving this task to the executive. This results in misunderstandings and controversies about what is requested to comply with the EU acquis. Such a lack of legal capacities to assume the obligations resulting from EU integration is even more significant at the level of cantons, as cantonal assemblies have weak or no capacities to assess legal compliance with EU acquis. All legislative assemblies, including at cantonal level, needs to significantly improve their cooperation, in particular to ensure a harmonised countrywide alignment process on the basis of a national programme for the adoption of the acquis. Due to the insistence of some delegates from Bosnia and Herzegovina on including an ethnic voting provision not in line with European standards, the Stabilisation and Association Parliamentary Committee could not adopt its rules of procedure and meet regularly since. The Parliamentary Assembly needs to address this issue in order to meet the country’s obligations regarding parliamentary cooperation with the EU under the SAA. The Parliament and other legislative assemblies in Bosnia and Herzegovina are generally in a position to adopt legislation and exercise democratic control and oversight on the executives. Significant reforms are needed to ensure that all citizens can effectively exercise their right to vote and stand for election. Ethnic-based restrictions for election to legislative bodies need to be removed to comply with the ECtHR Sejdić-Finci case-law. Local elections in Mostar, which have not been held since 2008, need to be organised. Outstanding OSCE/ODIHR recommendations need to be addressed without delay to improve the integrity of the electoral process. Ethnic-based veto procedures also adversely affect the work of the Parliament and of the entity legislative assemblies, and should be reconsidered. Legislative assemblies at state and entities level display a tendency to use urgent procedures to pass legislation related to the acquis, adversely affecting the quality of the legislative alignment. The assemblies should, in particular, ensure that adopted legislation includes impact assessments and step up the oversight of the governments, including monitoring the implementation of legislation. The cooperation among legislative assemblies as well as their capacities to address challenges stemming from the process of alignment with the acquis are weak and should be significantly enhanced, if necessary by pooling resources countrywide. Bosnia and Herzegovina needs to ensure the proper functioning of the Stabilisation and Association Parliamentary Committee. Governance The Constitution establishes a collective head of state of Bosnia and Herzegovina, the Presidency, which is in charge of matters such as conducting foreign policy and representing the country in international organisations, and has civilian command authority over the armed forces. The Presidency is composed of three members: one Bosniak member and one Croat member, both directly elected from the territory of the Federation entity, and one Serb member directly elected from the territory of the Republika Srpska entity. Citizens of Bosnia and Herzegovina who do not declare themselves as Bosniaks, Croats or Serbs, as well as Serbs living in the Federation entity, and Croats and Bosniaks living in the Republika Srpska entity, cannot stand for election to the Presidency nor be appointed to the state-level House of Peoples. The ECtHR has held since 2009 in its Sejdić-Finci case-law that these restrictions are in breach of ECHR and its Protocols. The Presidency adopts its decisions by consensus or by two members out of three, when all efforts to reach consensus have failed. In such a case, the dissenting member may declare a decision to be ‘destructive’ of a ‘vital interest’ of the entity and the entity legislature (Republika Srpska National Assembly, Bosniak or Croat caucus of the Federation House of Peoples) may stop the decision by two-thirds majority.

The Presidency has set EU integration as the key strategic goal of Bosnia and Herzegovina as witnessed with the country’s application for EU membership in February 2016 and the Presidency declaration of December 2018 recalling the institution’s commitment for the country to join the European Union. However, the functioning of the Presidency is affected by the divergent positions of its members on foreign policy decisions or the future of Bosnia and Herzegovina as a sovereign country within its existing borders. As for the executive, the Constitution establishes a Council of Ministers as government of Bosnia and Herzegovina. The Presidency nominates the Chair of the Council of Ministers, who then appoints the ministers and their deputies. Two thirds of ministers are appointed from the territory of the Federation entity and one third from the territory of the Republika Srpska entity. The Chair and its two deputies must declare themselves as members of one of the constituent peoples each. At least one position should also be allocated to a member of the ‘Others’ as within the Council of Ministers or as its Secretary-General. The Chair and the Council of Ministers assume office upon approval of the House of Representatives and are accountable to the Parliamentary Assembly. In the 2014-2018 term, the Council of Ministers included 2 women among the 9 ministers (22%) with responsibility over defence and over human rights and refugees. At entity level, the Federation Government comprises a Prime Minister and 16 ministers, including two deputy prime ministers. Ethnic quotas require that eight ministers be Bosniaks, five Croats and three Serbs; one minister coming from among the ‘Others’ may be appointed from the Bosniak quota. The Prime Minister and its two deputies, selected from amongst the ministers, must declare themselves as members of one of the constituent peoples each. In the 2014-18 term, it included two women as ministers (12.5%). The Republika Srpska Government comprises a President of the Government and 16 ministers. Ethnic quotas require that eight ministers be Serbs, five Bosniaks and three Croats; one minister coming from among the ‘Others’ may also be appointed. In the 2014-18 term, it included three women ministers (18.5%) and a woman prime minister. Each entity also has its own President and two vice-presidents, which must not be affiliated with the same ethnic groups of the Bosniaks, Croats and Serbs. The Constitutional Court has found this restrictions discriminatory in its decision U-14/12. In the absence of broader institutional reforms, such decision has not been implemented. Since 2018, a woman is President of the Republika Srpska entity. In the Brčko District, the executive authority is the Mayor, who is elected by the District Assembly and presides the District government. Each of the ten cantons has a cantonal government with a prime minister and cantonal ministers. Cantonal governments must be confirmed by majority vote in seven of the cantonal assemblies, and by a two-thirds majority in Central Bosnia, Herzegovina Neretva and Canton 10. The participation of women in the executives across the country stands at around 20%, with Tuzla canton scoring highest at 25%, and Herzegovina Neretva canton lowest with no woman. The constitutional and legislative framework providing for coordination on EU matters in Bosnia and Herzegovina is broadly in place. The Chair of the Council of Ministers ensures cooperation between the Council of Ministers, the entities and other levels of government in the country. A Directorate for European Integration has been established in 2003 as the standing body of the Council of Ministers in charge of coordinating activities and supervising the implementation of decisions relevant for European integration. The Directorate’s activities include coordinating EU affairs and legal approximation with the acquis, assessing compliance with the acquis, and coordinating EU assistance. The Directorate’s coordination role, which is particularly important in view of the increasing workload resulting from the EU integration process, needs to be strengthened. The Directorate needs to be provided with the necessary political support to perform its mandated tasks. In August 2016 Bosnia and Herzegovina established a system of coordination in the process of European integration. This ‘coordination mechanism’ aims at providing the country with a consistent position on all EU matters, including for the purpose of participation in the SAA bodies. The coordination mechanism involves over 1 400 civil servants from the 14 executives at all levels; the Directorate for European Integration acts as its secretariat. It includes 36 working groups covering all chapters of the acquis, as well as the political and economic criteria. A Commission for EU integration discusses and agrees on issues that could not be addressed at the level of the working groups. At the highest political level, a Collegium for European integration (comprising the heads of government of the State, the two entities and the Brčko District) discusses and agrees on issues which could not be addressed at other levels. Decisions taken under the coordination mechanism are not legally binding. Once an agreement is reached through the coordination mechanism, the 14 executives need to formally validate the decisions. The coordination mechanism was used in 2017/18 to deliver the answers to the Commission’s questionnaire for the preparation of the Opinion, which were handed over in February 2018 as well as the answers to the follow-up questions in February 2019. The functioning of the mechanism needs to be improved in the light of lessons learned from the preparation of the answers to the Commission’s questionnaire. Such process has highlighted the need to make full use of all the bodies of the coordination mechanism. A clear distribution of competences and enhanced cooperation between different levels of government will be essential for the successful management of the next stages of EU integration. Bosnia and Herzegovina does not have a national programme for the adoption of the acquis (NPAA) or a similar strategic document as required under the SAA and needs to develop it as a priority. The NPAA needs to reflect the role of the different levels of government based on their respective legislative competences. In the absence of such a programme, Bosnia and Herzegovina cannot sufficiently ensure the approximation of legislation at all levels with the acquis as the distribution of competences is unclear. The annual work programmes of the governments at all levels are not sufficiently correlated with the implementation of the SAA and other relevant EU obligations; cooperation between different governments in approximation with the acquis and enforcement of the law is not ensured. The cantons have limited institutional capacity to deal with EU law approximation, implementation and enforcement. In the two entities, different bodies are in charge of coordinating EU matters. Each cantonal government also has its own EU coordinator. While the Directorate for European Integration is responsible for assessing whether legislation adopted at state level complies with the acquis, the governments of the two entities and of the Brčko District conduct their own compliance assessment. This highly fragmented system may lead to discrepancies between the various levels of government and it is likely to prevent the country from adequately meeting its EU membership obligations, thus risking to significantly slow down the EU integration process of Bosnia and Herzegovina. The country should ensure that approximation with the EU acquis is done in a systematic and coherent manner in order to guarantee consistent application and enforcement of EU law. The legislation provides for consultations with stakeholders in the preparation of legislative initiatives, including public consultations; this possibility is not efficiently used. Entity institutions may be involved in the legislative process at state level by participating in the related working groups, or by submitting written comments on a proposal. In the Federation entity, the legal framework provides for the possibility of close coordination and consultations between the Federation and cantons in preparing legislation in areas of shared competences but its implementation needs to be enhanced. At the same time, cantons do not consult the Federation entity on legislative initiatives, which may result in legislative divergences. In the Republika Srpska entity, the public may be consulted and participate on legislative initiatives. The transparency of the work of the government needs to be improved, in particular as regards restrictions to access to information. In the Brčko District, the Statute provides that local legislation be harmonised with state-level laws, but there is no institutionally established procedure for consultations with state-level authorities. Local self-governance is regulated differently in the two entities, while most cantons also have their own laws on local self-governance. The basic form of local self-government is the municipality. Local self-government units have autonomy in performing their tasks. The Republika Srpska entity has a 2017-2021 strategy on development of local self-government, while there is no strategy on decentralisation at the state level or in the Federation entity. Municipalities in the Republika Srpska entity are tasked with the provision of services in the areas of education, social assistance, communal police and local roads, including the related financial responsibilities. In the Federation entity, most of such services are delivered by the cantons. The responsibilities of cantonal authorities may be delegated by law to cities and municipalities, taking into consideration the principle of subsidiarity, the capacity of the local authorities to efficiently carry out such activities, and the necessary financial allocations. Only 2 women have been elected mayor among the 79 mayors in the Federation entity and 5 among the 64 mayors in the Republika Srpska entity. Bosnia and Herzegovina has a complex system of executive power, which is broadly functioning. While Bosnia and Herzegovina has expressed its intention to join the EU and to undertake the necessary reforms, the complexity of its institutions leads to significant issues related to coordination and harmonisation of the country’s policy stances, notably with respect to the alignment with and implementation of legislation stemming from the EU acquis. With 14 executives across the country exercising competences relevant for implementing the EU acquis, either considerable efforts and significant strengthening of the country’s capacities at all levels or some pooling of resources and capacities are needed for Bosnia and Herzegovina to cope with the obligations of EU membership. This is notably the case at cantonal level where capacities to deliver on EU membership obligations are insufficient. The governments have taken some steps to improve coordination on EU integration matters, including by establishing the Directorate for European Integration and a coordination mechanism on EU matters, which is yet to become fully operational. These bodies must be strengthened and fully used at all levels. The governments’ capacities for policy planning and coordination across all levels of government are still insufficient. A national programme for the adoption of the EU acquis needs to be adopted as a matter of priority. The programme is a legal obligation under the SAA and is essential for planning and streamlining the EU legal approximation process throughout the country. Civil society An empowered civil society is a crucial component of any democratic system and should be recognised and treated as such by the institutions. In Bosnia and Herzegovina, the legislative framework on public consultations differs across levels of government and there is no strategic framework for cooperation with civil society. An institutional mechanism for consultations, the e-consultation web platform, was launched in 2016 for the state-level institutions only. There has been no significant follow-up to the signature of the Charter on Cooperation between the Council of Ministers and civil society organisations in November 2017. The Council of Ministers needs to operationalise the Charter provisions including by developing regular cooperation and consultations with civil society organisations. Not all institutions at all levels of government have designated specific bodies or contact points in charge of dialogue and cooperation with civil society organisations. Sector-specific consultations are organised occasionally through dedicated working groups. More than 700 civil society organisations took part in providing alternative replies to the European Commission’s Questionnaire which were annexed to the official replies from the authorities. Only some municipalities have a legal framework for transparent funding of civil society organisations on the basis of clearly defined criteria and monitoring and evaluation tools. The distribution of public funds to civil society organisations is not fully transparent and systematic. Public funding calls and, in some cases, the results of selections, have been publicly available, but certain mechanisms for distribution of funds are not legally binding and were not fully implemented. Overall, Bosnia and Herzegovina needs to ensure a framework for the transparent funding of civil society organisations. Civilian oversight of the security and intelligence sector

Bosnia and Herzegovina’s security forces comprise three main categories: the armed forces, the law enforcement agencies and the intelligence service. The Armed Forces of Bosnia and Herzegovina (AFBiH) are governed by a civilian-led command-and-control structure, with the Presidency having the supreme command and control and a single Ministry of Defence at the state level. The Parliamentary Assembly is in charge of their democratic parliamentary control and oversight. The armed forces, totalling 9,200 professional staff, are responsible for national defence, and provide support to the civilian authorities in case of emergencies. They also contribute to international peace-support operations. Recruitment in the armed forces is based on ethnic quotas. The law enforcement agencies in Bosnia and Herzegovina include 16 different bodies: three at the state level, – the State Investigation and Protection Agency, the Border Police and the Directorate for the Coordination of Police Bodies – and one for each of the two entities, the Brčko District, and the 10 cantons. There are 16 845 members of police forces in the country. The independent board, the board for complaints of police officials and the public complaints board perform civilian oversight at state level. Similar structures are in place at other levels of government. The Directorate for Coordination of Police Bodies is competent to co-ordinate the state-level agencies. The exchange of information between the Ministry of Security and the police agencies across the country takes place only on a voluntary basis. As a result of such a fragmentation, the law enforcement sector in the country continues to be politicised, poorly coordinated, and dysfunctional. (see also Chapter 24) The Intelligence-Security Agency of Bosnia and Herzegovina (OSA-OBA) is the civilian institution responsible for collecting, analysing and distributing intelligence in order to protect the security, including sovereignty, territorial integrity and constitutional order of the country. In the conduct of its activities the Agency is legally authorised to collect information from all publicly available sources within the country under the authority of its Director-General. Measures to secretly gather information by intercepting telecommunications and other forms of electronic devices must be authorised by the President of the Court of Bosnia and Herzegovina or a designated judge and must be justified by a threat to the security of the country. The Agency is accountable to the Chair of the Council of Ministers, who reports annually to the Presidency on the activities of the Agency. An Executive Intelligence Committee, including the Minister of Security and the Minister of Foreign Affairs, advises the Chair and coordinates intelligence matters. The Agency’s Director-General, Deputy Director-General and Inspector-General are appointed and dismissed by the Council of Ministers. The Inspector-General is responsible for the internal control of the Agency. The legislation on the Intelligence and Security Agency needs to be amended to address a number of procedural shortcomings identified by the Constitutional Court in June 2017. The Parliamentary Assembly and its committees have a key role in the oversight of the security forces. The Joint Committee on Defence and Security held 48 sessions over the 201418 mandate and adopted four annual reports. The Joint Security and Intelligence Committee held 17 sessions over the 2014-18 mandate and adopted two annual reports covering 2015 and 2016. However, no meetings were held since 25 July 2017 and a new Committee is not yet in place following the October 2018 elections. The Parliamentary Military Commissioner oversees the protection of human rights and freedoms of soldiers and personnel of the armed forces and of the Ministry of Defence and may conduct investigations at the request of the Parliamentary Assembly and the Joint Committee for Defence and Security. The Parliamentary Assembly’s Joint Defence and Security Committee has called on the authorities to improve coordination in the work of police agencies within the Ministry of Security, especially with regards to the migration crisis. It has also pointed to the need to better equip and modernise the armed forces, as well as to strengthen procurement capacities as a prerequisite for modernising the defence sector and its functioning. At entity level, each chamber of the Federation Parliament as well as the Republika Srpska National Assembly has its respective Committee for Security which is responsible for parliamentary oversight. The Assembly of the Brčko District has a Committee for Security and Oversight of the Police Forces. The constitutional and legal framework for the democratic civilian oversight of security and intelligence sector is broadly satisfactory. The Joint Parliamentary Committee needs to be established following the October 2018 elections. Further efforts are needed to enhance the coordination and professionalisation of the fragmented law-enforcement sector, in line with EU standards. Certain provisions of the Law on the Intelligence and Security Agency have to be brought in line with the 2017 decision of the Constitutional Court. 1.1.2 Public administration reform The Commission defines public administration reform (PAR) in the enlargement context according to six core areas, which are further detailed by the Principles of Public Administration. A well-functioning public administration requires a professional civil service; inclusive and evidence-based policy and legislative development; well-defined accountability lines between institutions and towards citizens; capacity to deliver services to citizens and businesses; and a sound public financial management system. A strategic framework on PAR ensures that reforms in different core areas are sequenced and inter-linked. According to the constitutional framework in Bosnia and Herzegovina, each level of government is competent for the regulation and institutional set-up of public administration in the different core areas of PAR – policy development and coordination, public service and human resources management, accountability, service delivery and public financial management. This division of competences has resulted in differences in legislation, procedures, practices and administrative capacity as well as accountability and services to citizens and businesses. PAR efforts are coordinated by dedicated institutions, such as the Public Administration Reform Coordination Office at state level, the Institute of Public Administration in the Ministry of Justice in the Federation entity, the Ministry of Administration and Local Self Government in the Republika Srpska entity and the office of the Mayor of Brčko District. Cantonal ministries of justice and administration also perform administrative and professional tasks related to public administration. The current division of competences on PAR requires sound institutional coordination and cooperation between all government levels. Strategic framework for public administration reform The countrywide strategic framework on public administration reform (PAR) for 2018-22 has been adopted by the State, the Federation entity and the Brčko District, but not by the Republika Srpska entity. Bosnia and Herzegovina needs to adopt a common action plan for all levels of government. Public financial management (PFM) reforms are not addressed in a single strategic framework but they are addressed through various strategies. The Republika Srpska entity has not adopted a dedicated PFM strategy. Due to lack of a common PFM strategy, there is currently no countrywide reform direction on PFM. To ensure a harmonised approach across all levels of government, Bosnia and Herzegovina needs to introduce a coordinated countrywide public administration reform framework with a coordinated monitoring and reporting system. Insufficient political support hinders the coordinated implementation of reforms by all levels of government. A decision-making body that guides PAR at the highest political level is not yet in place. Due to lack of political ownership, budgetary resources for implementation of reforms are insufficient. Financial sustainability is not ensured, and reforms are mostly donor-driven. Reform efforts so far have been supported mainly through the PAR Fund, an instrument to pool donor assistance. Bosnia and Herzegovina has yet to demonstrate political commitment to public administration reform by establishing a functioning political body to steer and coordinate reforms across all levels of government, strengthen the existing coordination structures at technical level, and ensure sufficient funding for the reform efforts. Policy development and coordination Public administration institutions operate within a complex governance structure with separate decision-making competences in public policies. Reflecting the institutional set-up, the policy-making system in Bosnia and Herzegovina is fragmented. Although there is a legal framework for sectoral strategies at entity level, harmonised legal provisions and guidance for countrywide strategic planning are lacking. The regulatory and legal framework on medium-term policy planning is in place at state and entity levels, but not in some cantons and in the Brčko District. Central planning documents such as the medium-term and annual government programme, framework budget document and action plan for implementation of priorities from the BiH report, are generally not aligned among them and with the sector strategies. There is no body tasked with policy quality review function to check the coherence, consistency and legal and financial scrutiny of policy proposals. A programme for EU integration, including a consolidated plan for the adoption of the acquis, is required under the Stabilisation and Association Agreement and needs to be developed and adopted as a matter of urgency. Bosnia and Herzegovina needs to adopt policy planning guidelines for the NPAA, to align the government annual work plans with the NPAA, to earmark costs and to reflect such financial estimates in the annual and mid-term budgets. The legal framework for inclusive and evidence-based policy development is incomplete especially at cantonal level, and is not consistently implemented. Legal requirements for regulatory impact assessment are set at state and entity level and in some cantons. The quality of analysis supporting policy proposals needs to be improved, and financial implications are not systemically calculated. Administrative data collection and its use for policy-making is not systematically ensured across the administration. The law requires inter-institutional consultation on legislative and policy proposals; the duration of the written consultation process is not regulated and there is no dispute settlement mechanism in case of diverging opinions among institutions. Public consultations, although generally required, in practice tend not to be implemented in line with legal requirements. The legal framework needs to be improved and applied consistently. Enhancing quality and ensuring coherence and financial affordability of public policies across the country remains a major challenge in the medium term. The existing legislative framework does not fully establish standards for monitoring and reporting on key government planning documents at each level of government, thus preventing concrete public scrutiny over government work. Public financial management Despite the lack of a countrywide strategy, there have been reform efforts in different PFM areas at various levels of government. These have led to partial alignment with international standards in the area of internal control and audit, debt management, treasury operations and external audit. PFM systems at all levels of government need to be further brought in line with international standards in the areas of budget formulation and execution procedures, monitoring, transparency of budget data and forecasting. A budget management preparation information system is the system most commonly used in the different levels of the administration for both the budget planning process and the medium-term framework budget document, while the public investments management information system needs further upgrading.

The budget transparency is not sufficient. At state level, the Ministry of Finance publishes annual budgets and annual reports on budget implementation. Charts of accounts of the state, entities’ and Brčko District are not harmonised. This hampers access to consolidated data. There is no citizens’ budget at any level of government. For the public to be in a position to understand the budget meaningfully, citizen participation in the budget process should be enhanced. In-year reporting remains to be improved. Social contributions and pension entitlements, which account for a significant portion of public funds, are managed by extra-budgetary funds that are in most cases integrated neither into the budget planning process nor into the budget documentation such as the medium-term or annual budgetary outlooks. Available budgetary information is thus incomplete and an assessment of the overall budgetary and fiscal policy is difficult. The institutions at all levels have insufficient internal audit capacity and the lack of fully adequate internal controls, especially in public procurement, makes the PFM systems in BiH vulnerable to inefficiency and waste. Public service and human resources management According to the constitutional framework, the state, the entities, the cantons and Brčko District are competent on regulating and managing their respective civil service, resulting in a fragmented legislative framework. The common policy framework on civil service has been adopted only by the State and by the Federation entity, but it is not used effectively to ensure a common approach to human resource management and civil service legislation. Ensuring a non-politicised, merit-based and professional civil service across the country remains a major challenge. Even though the Federation and the cantons have a shared competence on the civil service, seven cantons have adopted their own civil service laws. This has contributed to further fragmentation of the civil service. Different requirements and practices in recruitment, promotion and dismissal hampers their mobility across the country. Political interferences at cantonal level exist particularly regarding the practice of excluding top-level positions from the scope of civil service law. Political influence in recruitment and promotion procedures occurs systemically across government levels, thereby distorting the merit-based principle in civil service. While all civil service laws regulate merit-based recruitment, promotion and demotion procedures, the merit principle is not fully enshrined in the laws and procedures and safeguarded in practise. The quality of examination and recruitment procedures at all levels is low. A competency framework screening for the most competent candidates exists so far only for the state-level institutions. The appointment of members of selection committees needs to be more transparent and to ensure their professionalism and impartiality. In most cases, the political heads of the institutions choose any candidate from the shortlist produced by the selection committee. In certain recruitment procedures at cantonal level, ethnic background determines the final selection of candidates without consideration of best-ranked candidates; the legislation should ensure that ethnic criteria does not prevail over merit-based recruitment. Constitutional provisions on the general representation of the population in the public administration should not be interpreted as strict ethnic proportionality in civil service. Rather, stricter merit-based civil service procedures need to be introduced to ensure that constitutional provisions of ethnic proportionality are not wrongly applied against the merit principle. All civil service laws and recruitment practices need to ensure the primacy of the merit principle over ethnic-based criteria. Temporary employment is a common practice when entering civil service, including at managerial level. Data is generally not available, rendering it difficult to assess the use of temporary contracts in practice. The criteria for dismissals and disciplinary procedures, including the possibility to appeal, are also enshrined in the legislation, but are insufficiently used. Termination of service is mainly only due to retirement. Human resources management (HRM) is decentralised across all levels. Expansion of HRM units across public institutions and establishment of functional HRM information systems across the different levels of authority is key in contributing to enhanced planning on human resources. The administrative capacities of civil service agencies in the country need to be strengthened in order to adequately perform their functions. The remuneration system of civil servants is neither coherent nor transparent. It is based on different salary legislation and different job classification and pay grades across government levels. Additionally, salaries are much higher in the public than in the private sector. The upgrade in salaries is not linked to appraisal procedures, and this has resulted in a promotion system which rewards seniority rather than performance. With regard to professional development, training and performance appraisal are regulated in laws and secondary legislation and training strategies adopted at state, entity and at Brčko District level. Training of civil servants is carried out mostly by the different civil service agencies, with little resources provided for training across the various levels of government. Particularly, data on the number of training courses provided are lacking at cantonal level. The performance appraisal system is formally in place, but it is not used effectively to justify promotions. A coherent system for performance appraisal, promotion and training as a right of a civil servant needs to be established in the medium term. Integrity in public service is regulated through anti-corruption and integrity plans, codes of conduct, rules on incompatibility of office and the work of the Agency for Prevention of Corruption and Coordination of the Fight against Corruption. There are no systemic and consolidated data on practice of integrity of civil servants, both in terms of questionnaires on self-declarations on civil service integrity and verification of integrity of civil service to assess better this area. The public perception of corruption in the civil service is high. Accountability of the administration The structure and organisation of the administration is regulated at each level of government. The legislation does not specify the different functions of administrative bodies subordinated to the executive and legislative level or the conditions for establishing, merging or abolishing them. This leaves excessive discretion to restructure the administration without consideration of rationale and cost-effectiveness of the changes. Clear supervision and reporting lines between ministries and subordinated institutions are also lacking. The political level does not sufficiently delegate decision-making responsibility to senior civil servants and to the middle management. (see Chapter 32) Although the legal framework has established oversight mechanisms, including Parliaments, the State Audit Institution and the Human Rights Ombudsman, their recommendations are rarely implemented. This compromises the citizens’ right to good administration. The full implementation of Ombudsman's recommendations by the respective authorities is low and several addressed institutions do not even respond to its recommendations, although legally obliged to do so. (see Chapter 23, Fundamental Rights) The citizens’ right to access public information is regulated differently at the state and entity level. Proactive disclosure is not provided for at any level. Implementation deficits result primarily from administrative silence, delays in replying, incomplete information provided and insufficient institutional responsibilities in dealing with appeals. There are no mechanisms for monitoring whether the laws on free access to information are implemented effectively. (see Chapter 23, Fundamental Rights) The citizens’ right to administrative justice is ensured by law. The judicial review of administrative acts is decentralised and processed by courts. The efficiency of courts has improved in the recent years, but remains uneven across the country. There are no effective remedies against excessive length of judicial proceedings; though applicants may file a case to the Constitutional Court, this instrument does not enable acceleration of the pending proceedings. (see Chapter 23, Fundamental Rights) The citizens’ right to seek compensation for damage caused by unlawful actions or omissions of the public administration is explicitly ensured by law at State, entity and Brčko District level. However, there is no systematic collection of data related to implementation of public liability cases, and it is therefore not possible to assess the enforcement of these legal guarantees. Service delivery to citizens and business The legal framework for a user-oriented administration is partially in place, but varies substantially across levels of government. A policy on service delivery is integrated in the PAR strategic framework which has been adopted by all levels of government save for the Republika Srpska entity. This policy area provides good reform directions, but its implementation has been slow and has not led to tangible results so far. Laws on general administrative procedures are in place at all levels of government and currently new amendments to those procedures are developed in state, entity and Brčko District level and already adopted during 2018 in the Republika Srpska entity and Brčko District; such and further amendments to these laws should be well coordinated. Bosnia and Herzegovina has to ensure a harmonised approach to modernisation, simplification and digitalisation of services. The legislative framework and infrastructure for interoperability of registries and e-signature is not complete and is not harmonised between State and entity levels, thus compromising the e-signature system. The Office for Supervision and Accreditation has been established since January 2017. Interoperability and the automatic exchange of information between public registries is very limited. Bosnia and Herzegovina has to create conditions for the provision of electronic services within their jurisdiction by undertaking efforts to ensure the interoperability of the e-signature system throughout a country. (see also Chapter 10) Bosnia and Herzegovina should simplify and harmonise business registration procedures and ensure full mutual recognition between entities, including concessions and licensing. No onestop-shop exists for either citizens or business, except in the Republika Srpska entity. Systematic monitoring of user satisfaction with service delivery is not carried out at any level. Bosnia and Herzegovina is at an early stage with public administration reform.

The lack of sound institutional coordination and cooperation prevents the adoption and implementation of policies aimed at ensuring minimum standards of treatment of all citizens and businesses throughout the country. The country should make strong efforts to ensure a comprehensive and harmonised approach to public administration reform, in line with the principles of public administration. In particular, the country needs to ensure political support, sufficient financial resources from all levels of government and effective coordination structures to implement and monitor public administration and finance management reforms. To ensure a countrywide approach to mid-term policy planning, Bosnia and Herzegovina should establish, and where necessary harmonise, the regulatory framework and methodology on central and sectoral policy development, monitoring and budgeting at all levels. The country needs to improve the quality of policies, and regulatory impact assessment and policy consultations should become integral part of policy-making. To ensure a professional civil service, the legislation should be brought in line with merit principles on recruitment, promotion and dismissal; its practical implementation should be free from political interference. The capacities of civil service agencies need to be strengthened, human resource management should be modernised and training programmes should be upgraded. The administration should rationalise its structures and delegate responsibilities to senior civil servants. Measures to improve the citizens’ rights to good administration, to access to public information, to administrative justice and to seek compensation should be introduced. To foster a user-oriented administration, Bosnia and Herzegovina has to ensure a harmonised approach to modernisation, simplification and digitalisation of services. Amendments to laws on general administrative procedures need to closely coordinated across state, entity and Brčko District. The interoperability of the e-signature system needs to be guaranteed throughout the country. In the coming year, Bosnia and Herzegovina should in particular: ®adopt countrywide strategies and action plans for public administration reform and for public finance management, establish a common performance-based monitoring framework and ensure financial sustainability; ®establish a political decision-making body and strengthen technical coordination structures to promote countrywide approach in public administration reform; ®amend civil service laws by ensuring merit principle in all procedures of recruitment, promotion and dismissal, and strengthen the capacities of civil service agencies to improve human resource management and trainings. 1.2. Rule of law and fundamental rights 1.2.1. Chapter 23: Judiciary and fundamental rights The EU’s founding values include the rul