EUROPEAN COMMISSION Brussels, 10.11.2015 SWD(2015) 214 final COMMISSION STAFF WORKING DOCUMENT BOSNIA AND HERZEGOVINA

2015 REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

EU Enlargement Strategy {COM(2015) 611 final}

{SWD(2015) 210 final}

{SWD(2015) 211 final}

{SWD(2015) 212 final}

{SWD(2015) 213 final}

{SWD(2015) 215 final}

{SWD(2015) 216 final}



Table of Contents 1.Introduction 1.1.Context 1.2.Summary of the report 2.Political criteria 2.1.Democracy 2.2.Public administration reform 2.3.Rule of law 2.4.Human rights and the protection of minorities 2.5.Regional issues and international obligations 3.Economic criteria 3.1.The existence of a functioning market economy 3.2.The capacity to cope with competitive pressure and market forces within the Union 4.European standards 4.1.Internal market 4.1.1.Free movement of goods 4.1.2.Movement of persons, services and right of establishment 4.1.3.Free movement of capital 4.1.4.Customs and taxation

4.1.5.Competition 4.1.6.Public procurement 4.1.7.Intellectual property law 4.1.8.Employment and social policies, public health policy 4.1.9.Education and research 4.1.10.WTO issues 4.2.Sectoral policies 4.2.1.Industry and SMEs 4.2.2.Agriculture and fisheries 4.2.3.Environment and climate change 4.2.4.Transport policy 4.2.5.Energy 4.2.6.Information society and media 4.2.7.Financial control 4.2.8.Statistics 4.3.Justice, freedom and security 4.3.1.Visa, border management, asylum and migration 4.3.2.Money laundering 4.3.3.Drugs 4.3.4.Police

4.3.5.Fighting organised crime and terrorism 4.3.6.Judicial cooperation in civil and criminal matters Annex I – Relations between the EU and Bosnia and Herzegovina Annex II – Statistical Annex



1.Introduction 1.1.Context The EU initiated in December 2014 a new approach to Bosnia and Herzegovina, which provides for the re-sequencing of the conditionalities in order for the country to progress towards the EU and address the outstanding socio-economic challenges it faces. This led to the entry into force of the Stabilisation and Association Agreement (SAA) between Bosnia and Herzegovina and the EU on 1 June 2015. It replaced the Interim Agreement (IA) which had been in force since 2008. In July, the country adopted a Reform Agenda aimed at tackling the difficult socio-economic situation and advancing the judicial and public administration reforms. Its implementation has started. Meaningful progress in the implementation of the Reform Agenda is necessary for the EU to consider an EU membership application from Bosnia and Herzegovina. Despite these positive developments, the adoption of a decision of the Republika Srpska National Assembly in July to hold a referendum on the Bosnia and Herzegovina state-level judiciary runs against the written commitment signed in February which is the basis for moving ahead on the EU path. Remaining shortcomings in the judiciary need to be addressed in the Structured Dialogue on Justice. Regular political and economic dialogue took place between the EU and Bosnia and Herzegovina in the framework of the SAA/IA structures. However, Bosnia and Herzegovina has continued to refuse to adapt the trade concessions granted under its SAA/IA to take into account its bilateral traditional trade with Croatia, following the accession of Croatia to the EU. Prolongation of the Autonomous Trade Measures beyond 2015 is conditional on Bosnia and Herzegovina accepting this adaptation of the SAA/IA. 1.2.Summary of the report As regards to the political criteria, the October 2014 general elections were efficiently administered and held in an orderly manner and competitive environment. Bosnia and Herzegovina’s Parliamentary Assembly has started to function and deliver on the legislative agenda. The adopted Reform Agenda, which set out major socio-economic reforms to be carried out, was followed by initial progress in its implementation. Cooperation between the State-level, Entity-level and Brčko District parliaments has yet to be improved. Closer cooperation and coordination between all levels of government need to be established, not least to be able to tackle the major socioeconomic challenges. The country’s Constitution established a complex institutional architecture that remains inefficient and is subject to different interpretations. The Constitution remains in breach of the European Convention on Human Rights, as stated in the Sejdić-Finci ruling of the European Court of Human Rights, and needs to be amended. The country is at an early stage in public administration reform, with a high level of politicisation and poor service delivery. Establishing a new strategic framework ensuring appropriate political guidance to public administration reform in the country is needed. Bosnia and Herzegovina's judicial system has reached some level of preparation. A Judicial Reform Sector Strategy was adopted and now needs to be implemented. In September at a ministerial meeting in the framework of the Structured Dialogue, the authorities reiterated their commitment to develop jointly key features of the reform of the judiciary. Bosnia and Herzegovina has some level of preparation in the fight against corruption. A new anti-corruption strategy and action plan covering the years the 2015-2019 were adopted. There was a substantial increase in the confiscation of assets. Corruption continues to be widespread and the political commitment on this issue has not translated into concrete results. The legal and institutional framework remains weak and inadequate. The lack of enforcement of the law negatively affects citizens and institutions. Penalties in force do not constitute a sufficient deterrent against corruption. Concerning the fight against organised crime, the country also achieved some level of preparation. While there have been a number of successful large-scale joint operations in the past year, some including neighbouring countries, coordination and cooperation between all institutions throughout the country needs to be significantly improved. The number of final convictions remains low. Financial investigations remain under used. The lack of strategic coordination is hampering the effective delivery of police services. Bosnia and Herzegovina faces many challenges regarding human rights and the protection of minorities. The legal and institutional framework for the observance of human rights requires substantial improvements and the adopted legislation needs to be effectively implemented, notably regarding anti-discrimination aspects. The conditions for the exercise of the freedom of expression have deteriorated over the reporting period. Although there is some level of preparation in this are with legal provisions generally in place, the institutional and political environment is not conducive to creating the conditions for full freedom of expression. The lesbian, gay, bisexual, transgender and intersex community continued to be subject to threats and attacks. Some steps were taken on the registration and housing of the Roma minority, but there was limited action on health, education and employment. The country continued to participate actively in regional initiatives and has made progress on good neighbourly relations, including signature of a border agreement with Montenegro in August. In May, Bosnia and Herzegovina took over the chairmanship of the Council of Europe's Committee of Ministers. With regard to the economic criteria, Bosnia and Herzegovina is at an early stage in developing a functioning market economy. Some progress has been made on improving the business environment, particularly on easing market entry and the granting of construction permits. Despite the setback from the 2014 floods, economic growth remained resilient. However, difficult labour market conditions have remained largely unchanged, with unemployment at 27.6%, rising to 62.7% among youth. In order to tackle high unemployment and low participation rates the country should reduce labour market rigidities, including a reduction of the tax wedge. The quality and sustainability of public finances have deteriorated. The business environment remained weak, impeding a stronger economic recovery. The government needs to improve the quality of public sector governance, in particular by increasing fiscal space for growth enhancing capital investment. Furthermore, concrete steps are needed to improve its budget management framework, to advance privatisation and to improve the business environment.

Bosnia and Herzegovina is at an early stage in achieving the capacity to cope with competitive pressure and market forces within the Union. Some progress has been made on the liberalisation of energy markets. However, in order to strengthen the country's competitiveness, the authorities should pay particular attention to developing a more strategic approach to tackling deficiencies in its training and education system; simplifying its complex procedure for exports and developing a transport strategy and an energy strategy. Bosnia and Herzegovina is at an early stage regarding its approximation with European standards. There is some level of preparation as regards public procurement and internal market. The country is at an early stage in the transport area, but the adoption of the Transport Policy in July is a positive step forward towards the country benefitting from the connectivity agenda. However, significant efforts are needed in most of the policy areas for the country to further align with the EU acquis. This includes financial control as well as statistics where the country is at an early stage and major steps are needed to address outstanding priorities. In this respect, the processing of the 2013 census data and the publication of the results need to be completed. Further sustained efforts are also needed in particular as regards justice, freedom and security matters, the competition area, industry and SMEs, agriculture, environment and climate change policies, energy, and information society and media. 2.Political criteria 2.1.Democracy Elections The 12 October 2014 general elections were assessed as being efficiently administered and held in an orderly manner and competitive environment. The OSCE Office for Democratic Institutions and Human Rights made a number of recommendations to further improve the electoral framework. General elections were held in Bosnia and Herzegovina on 12 October 2014. The elections took place in a difficult political environment and deteriorating socioeconomic conditions, as witnessed over the last years. The OSCE Office for Democratic Institutions and Human Rights (ODIHR) assessed the elections as having been efficiently administered and held in an orderly manner and competitive environment. The candidates were able to campaign freely and fundamental freedoms of expression, association and assembly were met. The civic monitoring coalition ‘Pod Lupom’ reached similar overall conclusions. At the same time, OSCE/ODIHR issued a number of recommendations aimed at improving the holding of elections. These include reviewing constituency boundaries to uphold the principle of voting equality, the removal of ethnicity and residency-based limitations on the right to vote and stand as a candidate and reviewing the regulatory framework for campaign finance. After five years of deadlock the 2010 Constitutional Court decision on Mostar’s statute needs to be implemented as a matter of priority to ensure that the citizens of Mostar can exercise their democratic rights. Parliament Bosnia and Herzegovina’s Parliamentary Assembly has started to function and deliver on the legislative agenda. Cooperation between the State-level, Entity-level and Brčko District parliaments has yet to be improved. Following the October elections, the two chambers of Bosnia and Herzegovina’s Parliamentary Assembly, the House of Representatives and the House of Peoples, were established in the new compositions in December and February respectively. The formation of the parliamentary committees was only completed in June. The new Rules of Procedure for the Parliamentary Assembly entered into force and introduced a fast-track mechanism for EU-related legislation. Cooperation between the State-level, Entity-level and Brčko District parliaments has yet to be improved. Joint meetings of the parliaments did not take place. The Federation of Bosnia and Herzegovina’s House of Representatives and House of Peoples held their constitutive sessions in December and January respectively. The Federation House of Peoples remained short of three Serb delegates, as no more than 14 Serb delegates could be appointed from the cantonal assemblies. Legislative changes preventing this issue from reoccurring are yet to be adopted. The functioning of the Federation Parliament continued to be hampered by the lack of space in its rented premises and insufficient capacity to deal with European integration-related issues. Coordination with cantonal assemblies, in particular on shared powers, remained problematic. In November, the Republika Srpska National Assembly held its constitutive session. In February, the Republika Srpska National Assembly unanimously adopted a written commitment to undertake the necessary reforms for Bosnia and Herzegovina’s European integration. In March, the Department for European Integration and International Cooperation was established within the Parliamentary Secretariat. This body will be in charge of providing support to parliamentarians in Republika Srpska. In July, upon a proposal from the Republika Srpska president, the assembly adopted a decision to hold a referendum on the Bosnia and Herzegovina state-level judiciary and its jurisdiction in Republika Srpska. Such a decision runs against the written commitment signed, in February, by the representatives of all political parties represented in the country's Parliamentary Assembly. Questioning the existence of the court and the prosecutor's office of BiH would go against a number of rulings of the Constitutional Court of Bosnia and Herzegovina, which confirmed that the establishment of the state level judiciary was in line with the constitution. The work of the Brčko District Assembly committees, including the Committee for European Integration, remains problematic due to frequent lack of quorum at their meetings and limited capacities of the District Assembly’s services. Governance Bosnia and Herzegovina's institutions made some progress towards addressing the outstanding reform priorities notably with the adoption of the Reform Agenda and the start of its implementation. However, major challenges remain, including the need for closer cooperation and coordination at all levels of government. The Constitution remains in breach of the European Convention on Human Rights (the Sejdić-Finci judgment). The Dayton/Paris Peace Agreement (DPA) put an end to the 1992-1995 war. The country’s Constitution, which is Annex 4 to the DPA, established a complex institutional architecture that remains inefficient and which is subject to different interpretations. The Constitution prevents citizens who do not declare themselves as one of the country’s three constituent peoples from standing as candidates for the Presidency and the House of Peoples of the Parliamentary Assembly. This has been declared in breach of the European Convention on Human Rights in the Sejdić-Finci judgment. Constitutional Court decisions have yet to be fully enforced throughout the country. The new tripartite Presidency of Bosnia and Herzegovina initiated a written commitment to undertake reforms and advance the European integration process. The written commitment, whose language fully reflected the conclusions of the EU Foreign Affairs Council of December 2014, was signed by the leaders of all the 14 political parties represented in the Parliamentary Assembly, and endorsed by Bosnia and Herzegovina’s Parliament in February. The new Council of Ministers was sworn in at the end of March. In May, the Council of Ministers adopted its 2015 work plan covering the adoption of some 65 laws related to the EU integration agenda. The preparations of the Programme of EU Integration started in May. In July the Council of Ministers adopted the Reform Agenda. The processing of the 2013 census data and the publication of the results need to be completed without further delay in line with recommendations of the International Monitoring Operation. Country-wide sectoral strategies necessary to fully benefit from EU pre-accession assistance on transport, energy and the environment need to be adopted as a matter of urgency. The role and capacities of the Council of Ministers’ Directorate for European Integration (DEI) will need to be enhanced in order to cope with the challenges stemming from the entry into force of the Stabilisation and Association Agreement. The mandate of the DEI Director expired in August 2015 and the vacancy was published.

An effective coordination mechanism has yet to be put in place between the various levels of government for the alignment, implementation and enforcement of EU laws. Such a mechanism is needed to enable the country to interact in an efficient manner with the EU. In the Federation of Bosnia and Herzegovina, a new government was appointed in March and the budget for 2015 adopted. The lack of an agreement on appointments to the supervisory boards of public companies has been detrimental to the work of the Federation Government and led to the break-up of the ruling coalition and a minority government. Negotiations on the formation of a new government are pending. A new labour law was adopted in July, in line with the provisions of the Reform Agenda. The Director of the new Federation Office for European Integration took office in February. However, the Office does not have enough administrative capacity to coordinate EU affairs with the rest of the country and across the different levels of government within the Federation. So far, the Federation Government and the Cantons are not cooperating successfully on EU integration issues. In Republika Srpska, a new government was appointed in December. The government has engaged in economic reforms. In January, it established two working bodies, the board for economic system reform and the board for public sector reform, which were tasked with drawing up legislation in their respective areas. The Brčko District government held several specific sessions on European integration. In October, five sectoral working groups were set up and communication on EU matters was made an official part of the working procedures of the relevant institutions and bodies of the District. In December, a decision was adopted on procedures to harmonise legislation passed by Brčko District with the EU acquis. Entity legislation is largely in line with the European Charter of Local Self-Government. However, a lack of clarity remains in the division of powers between the Entities, Cantons and municipalities, with a relatively low level of financial autonomy at municipal level. The Ombudsman’s Office continues to be hampered by financial and human resource constraints. The law on the reform of the Ombudsman has yet to be adopted. As of December, the mandate of the three Ombudspersons expired. The joint ad hoc committee of the BiH Parliamentary Assembly for appointing the new Ombudspersons was established in April and new rules of procedures regulating the selection process were adopted in July and are in line with the European standards. Civil society No progress was made in improving mechanisms for dialogue and cooperation between government and civil society organisations. The legal and financial framework needs to be further improved. An empowered civil society is a crucial component of any democratic system and should be recognised and treated as such by the institutions. There have been no developments towards ensuring formalised policy dialogue between the Council of Ministers and civil society. A national strategy on civil society has yet to be adopted. The State law on the joint registry of non-governmental organisations which would allow for the establishment of a centralised database has not yet been adopted. Political activists that emerged during the February protests 2014 remained active at the local level and attempted to organise and establish networks across the country to address pressing socioeconomic issues. Some civil society organisations strived to increase their capacity to monitor the EU integration process and enter into dialogue on the Reform Agenda with the EU and the authorities across the country. However, civil society organisations continue to have limited capacity at grassroots level to participate in policy dialogue. Public funding for civil society organisations has to be provided in a transparent way following clearly defined criteria. Substantial funding is mostly given to sporting associations and war veterans in a non-transparent and unregulated way. Republika Srpska has adopted initial guidelines on grant management which are obligatory for all ministries. Country wide legislation, for instance tax rules, is not conducive to stimulating private donations to civil society organisations. Civilian oversight of the security forces The Joint Parliamentary Committee for Security and Defence was set up in April 2015. Mandated to scrutinise and shape Bosnia and Herzegovina’s security and defence policy, the Joint Committee should play an important role in steering the defence reform process. However the Committee held only two sessions and no substantive issues have been discussed so far. The Parliamentary Military Commissioner continued to oversee the protection of human rights and freedoms in the armed forces and Bosnia and Herzegovina’s Ministry of Defence. The armed forces made substantial progress in disposing of the most unstable ammunition and building sustainable capacity to manage the rest of the stockpiles. At the same time, the widespread presence of weapons held illegally by the population and the large stockpiles of ammunition and weapons under the responsibility of the armed forces remain issues of concern. 2.2.Public administration reform Bosnia and Herzegovina is at an early stage with the reform of its public administration. No progress was achieved in the past year. The lack of broad political support for country-wide reforms and the fragmentation of public service are hampering efforts to carry out institutional and legislative reforms. A systematic approach to policy development and coordination is still largely lacking and the politicisation of the civil service continues to be an issue of concern. In the coming year, Bosnia and Herzegovina should in particular: → develop, adopt and start to implement a new country-wide strategic framework for public administration reform and ensure appropriate political leadership and guidance to public administration reform in the country; → ensure implementation of an effective human resources management system; → develop a public financial management reform programme, which is clearly linked to the new PAR strategic framework. Public service and human resources management

The public service in Bosnia and Herzegovina is fragmented, which is not conducive to the emergence of a unified professional civil service. The legal framework is not consistent, with different laws applying to the civil service at different levels of government. Moreover, the laws are all amended over time in an uncoordinated fashion. The principle of merit-based recruitment and promotion is enshrined in law. However, in practice internal competitions and transfers are preferred to external competitions, limiting the potential for merit-based recruitment. Recruitments to senior management positions continue to be influenced by political parties and ethnic considerations, and the separation between politics and public service is not properly reflected in the legislation. The criteria for dismissals and disciplinary procedures, including possibility to appeal, are also enshrined in law. In practice the number of dismissals is low. Women are slightly under-represented in senior management: 30% in the institutions of the State, 40% in the Federation, 43% in Republika Srpska and 37% in Brčko District in 2014. Human Resources Management is fragmented and inefficient. There are four main civil service coordination bodies. The creation of up to 10 new civil service agencies in the Federation is not in line with efficient resource management and will only further risk fragmenting the public service. The human resources management information system and the central civil service registries are in place, but they are not being used to their full potential, either because of legal obstacles on personal data protection or because they do not contain complete information. This is a further hindrance to a unified public service. The remuneration system is based on the job classification of the civil service. The system is not transparent and does not ensure equal pay for equal work because different salary regulations are in force. Public sector salaries in Bosnia and Herzegovina, including the civil service, are almost 40% higher than in the private sector, creating the conditions to attract and retain qualified and competent civil servants. The right for professional development of public servants is not fully respected. Funding for training is mainly provided by international donors. Performance appraisals are regulated by law, but practical application remains weak. Integrity in public service is relatively well addressed through the adoption of anti-corruption policies and action plans, codes of conduct for civil servants, rules on incompatibility of office and the establishment of the anti-corruption agency. There is no legal requirement for public sector employees to make public information on their personal assets and income. There is still no whistle-blower protection legislation in the Entities and Brčko District. Bosnia and Herzegovina’s Criminal Code and the relevant laws in the Federation, Republika Srpska and Brčko District do not exempt public sector employees from liability in cases of abuse of authority. However, the number of individuals prosecuted for abuse of authority has been very low. Policy development and coordination The policy-making system in Bosnia and Herzegovina is very fragmented. The basic institutional structure for a ‘whole-of-government’ approach and policy-making is enshrined in law but policy coordination is weak as the General Secretariat of the Council of Ministers focuses mainly on procedural issues. The European integration coordination structure is partially in place in the country’s institutions, but decision-making and implementation is scattered. The main weakness is the lack of medium-term harmonised planning at country-wide level. Overall, no measures are in place to ensure the financial sustainability of sectoral strategies and programmes. However, a 2014 Decision on Mid-Term planning, monitoring and reporting procedure at the level of institutions of BiH provides for an attempt to link policy planning with medium-term fiscal planning. Only some aspects of inclusive and evidence-based policy and legislative development are in place. Significant challenges remain with regard to developing high-quality policy and legislative proposals. Lack of co-ordination between the State level, the Entities and Brčko District hampers the process of harmonisation with the EU acquis. Both inter-ministerial and public consultations are regulated by law, but are not systematically implemented. Regulatory impact assessments are enshrined in law but are not carried out systematically. Financial impact assessments are carried out for draft legislative proposals but not for strategic documents. The lack of country-wide medium-term policy planning is a serious obstacle to public scrutiny of government work. Government reports that are available to the public do not provide information that would enable them to compare achievements with specific policy objectives. At the State level more transparency is ensured with publicly available reports, publication of government agendas and summaries of decisions. Accountability of the administration The overall organisation of the public administration in Bosnia and Herzegovina is not conducive to ensuring clear lines of accountability. The structure and powers of the different public administration bodies are regulated by overlapping and unclear legislative framework. This has resulted in blurred accountability and reporting lines, with over 40 institutions reporting directly to the Council of Ministers. There is a lack of procedures ensuring control over the creation of new institutions. With regard to lines of accountability within institutions, managerial accountability is not yet ingrained in the administrative culture. (See also 4.2.7. Financial control) The institutional set-up and resources to protect the citizens' right to good administration are fragmented. The Ombudsman is relatively active in issuing recommendations, but the rate at which the public administration implements them is low. (See under Governance) The right to access public information is regulated at all levels. The laws are mutually consistent and ensure a wide scope of access, but implementation is not uniform in practice. When citizens are refused access to public information, there are no efficient means for them to appeal. There also is no independent supervisory body to review appeals and issue decisions and guidelines. On the right to administrative justice, the judicial review of administrative acts is decentralised and handled by general courts. Public trust in the courts is generally low. There are a number of laws governing the public’s right to seek compensation in cases of wrongdoing, but in the absence of a specific law on public liability, practical implementation is inconsistent. Public financial management A budget management information system is in use throughout the different levels of the public administration. Budget preparation processes improved in 2014 and budgets were adopted on time. However, this trend did not continue in 2015 due to delays over the formation of governments following the 2014 elections. Bosnia and Herzegovina has so far addressed public finances on a sub-system basis, without explicitly linking different areas and reform measures under a public financial management reform programme. A public expenditure and financial accountability assessment and other relevant assessments were carried out in 2014 and 2015, providing a basis for developing the reform programme. Bosnia and Herzegovina has not yet achieved sufficient budget transparency. An annual financial report is published by the Ministry of Finance and Treasury and audited by the Supreme Audit Institution. Similar provisions also apply in the Entities and in Brčko District. Information on debt and guarantees is also included. In the Entities and in Brčko District parliamentary approval is not required for spending by the extra budgetary funds. Service delivery to citizens and businesses There is no consistent policy on user-oriented administration, as the responsibilities for service delivery are highly decentralised. Citizen satisfaction with government services is not generally measured. Equal access to services is not yet ensured. There is potential for e-services as over two thirds of citizens have internet access. However, further development is held back by the lack of a country-wide approach and differences in how the State, the Entities and Brčko District apply the legal framework for e-signatures, develop e-government portals and implement the interoperability framework. The current legal framework provides for simplification of administrative procedures at State level, in the Entities and in Brčko District, but the pieces of legislation regulating the special administrative procedures would need to be reviewed and revised, as relevant, to determine the actual level of implementation. Strategic framework for public administration reform

Bosnia and Herzegovina does not have a comprehensive public administration reform strategy in place, since the latest strategy expired in 2014. There has been no progress on preparing a new strategy, mainly due to lack of broad political support and strategic guidance. Despite the expiry of the strategy and its action plan, its monitoring and reporting structure continues to operate and some actions are being implemented. No political body oversees reforms country-wide, but the Public Administration Reform Coordinator’s Office coordinates the process within its limited functions. The new State-level PAR Co-ordinator was appointed in August. Coordinators and supervisory teams are also operational at Entity level. The current monitoring framework has major weaknesses due to the lack of concrete performance indicators that would allow evaluating whether reform objectives had been implemented. The previous strategy did not include any costing, and financial sustainability has not so far been ensured. 2.3.Rule of law Functioning of the judiciary Bosnia and Herzegovina's justice system has achieved some level of preparation. Some progress was achieved in the last year, notably through the adoption of a justice sector reform strategy. In September at a ministerial meeting in the framework of the Structured Dialogue, the authorities reiterated their commitment to develop jointly key features of the reform of the judiciary. However, politically motivated attacks against the judiciary continued, measures to ensure full accountability of judges and prosecutors remain to be adopted, there remains a need to develop specialised training and the efficiency of parts of the system is seriously hampered by a backlog and excessively lengthy proceedings. In addressing the shortcomings outlined below, in the coming year Bosnia and Herzegovina should in particular: → adopt an action plan with result indicators and budgeted activities to implement the 2014-2018 justice sector reform strategy; → strengthen accountability and integrity mechanisms, particularly through a more deterrent disciplinary system and by adopting measures to prevent conflicts of interest; → adopt a backlog reduction plan for utility-related cases; → modernise the training and provide full access to court decisions. Strategic documents An updated and country-wide justice sector reform strategy for the 2014-2018 period was adopted in September 2015. The accompanying action plan that includes a comprehensive set of concrete actions together with completion indicators and financial resources has still to be adopted. In order to fill the gaps caused by the delayed adoption of the new strategy, the institutions responsible for implementing it need to achieve tangible results with consistent efforts and due pace. Management bodies The High Judicial and Prosecutorial Council (HJPC) is the key institution administrating the judiciary throughout the country. It enjoys institutional independence and of its 15 members, 11 are appointed from among fellow judges and prosecutors. The four remaining members are appointed by the Council of Ministers, the Parliamentary Assembly and one per each bar association in the Entities. The HJPC manages the entry of judges and prosecutors into judicial careers and is also responsible for overseeing appraisals and career development. While the HJPC is generally allocated a budget commensurate with its immediate priorities, its secretariat needs to be given adequate resources. Judicial scrutiny of most of the HJPC's decisions on appointments or dismissals does not exist as it is possible only for violation of constitutional and human rights as result of disciplinary proceedings. The HJPC is only required to produce and publish on its website the annual activity reports it submits to the executive and legislative branches. In 2015 the HJPC decided to open its sessions to the public, though there are some restrictions. There remain shortcomings in the legal framework governing the HJPC. These need to be addressed based on the opinion of the Venice Commission and relevant recommendations issued by the European Commission as part of the EU-Bosnia and Herzegovina Structured Dialogue on Justice. Independence and impartiality The principles of judicial independence and prosecutorial autonomy are set out in the legislation at all levels and enshrined in Entity Constitutions but not in the State Constitution. While external and internal independence and autonomy have a legal basis, there is no effective oversight for their implementation. There are no formal procedures carrying penalties against undue influence or threats to judicial independence. The HJPC can only issue public statements or provide a non-binding opinion if a judge or prosecutor complains or if a threat contains elements of a criminal offence. As a result, unlawful and politically motivated attacks against the judiciary continue without proper legal or constitutional protection. The new Law on the HJPC should also address these problems, in the absence of constitutional guarantees for judicial independence at State level. Legal safeguards exist in case of transfer of judges or prosecutors without their consent. These are laid down mainly in the rules on disciplinary proceedings. Appeals for a final disciplinary decision of the HJPC on transfer are possible only where there are violations of human or constitutional rights. As regards the principle of immovability, over the reporting period, the HJPC decided in only one case to apply a transfer without consent, as an alternative to the removal requested by the Office of the Disciplinary Prosecutor. The ‘case management system’ performs random allocation of incoming cases to judges, while court presidents decide on parameters for case distribution. Regarding the withdrawal of cases from judges, despite the existence of an automated case allocation system, court presidents are entitled to reassign a case in order to guarantee impartiality. In such cases, the HJPC monitors the rationale behind each reassignment. Impartiality is also protected by exemption and disqualification mechanisms under the procedural laws in force. If judges fail to disqualify themselves in such situations this constitutes grounds for disciplinary action. Several judges have been sanctioned on this basis.

Accountability Although the Office of the Disciplinary Prosecutor is an autonomous body, it is functionally dependent on the HJPC. The two-instance disciplinary procedure guaranteed by the law is also subject to final scrutiny by the HJPC, which has the right to revoke the disciplinary penalty imposed at second instance. However, the number of serious disciplinary penalties remains low. Codes of ethics for judges and prosecutors exist, but there is no formal enforcement mechanism. An ethics committee established within the HJPC has the power to issue consultative opinions and oversee implementation of the codes but has no power to initiate disciplinary cases. A breach of a code of ethics does not constitute a formal reason to initiate disciplinary action. Moreover, decisions of the Disciplinary Prosecutor cannot be appealed against. Other aspects of accountability are at an early stage or do not exist. The integrity of legal practitioners is only checked when candidates apply for judicial vacancies. Declarations of assets are required for all judges and prosecutors, but no institution verifies their accuracy. The issue of conflicts of interest in the judiciary has raised additional concerns regarding integrity and accountability. The rulebook on conflicts of interest for the members of HJPC, which has introduced a clear set of safeguards to prevent situations of conflict of interest, should be extended to the functioning of the entire judiciary. The new law on HJPC should work on providing clear rules that can be applied to the functioning of the entire judiciary. Professionalism and competence Procedures regulating entry or advancement in judicial careers based on merit and promotion are in place, with the focus on candidates' professionalism and competencies, which are assessed against objective indicators. For appointments to any position in the judiciary that would represent a promotion for a judge or prosecutor, candidates are evaluated in accordance with the criteria stipulated in the Law on the HJPC i.e. job performance in the lower-level position or results in the entrance exam and written test (for candidates from outside the judiciary). However, there is no effective and systematic application of objective criteria for final appointments to posts of judicial office holders and management-level positions. Dismissal is also regulated by objective criteria under the Law on the HJPC, although very few dismissals have actually occurred. Quality of justice Training for judges and prosecutors in Bosnia and Herzegovina is provided through the judicial and prosecutorial training centres in the Entities. These centres also provide induction training for new members of the judiciary when they are appointed. Training standards, methodology and delivery need upgrading, particularly on building specific capacities to handle complex cases, such as in cases of human trafficking, financial and organised crimes. Management training and training for specialised judicial or prosecutorial functions are not systematically provided. The country has observer status in the European Judicial Training Network. Monitoring of the day-to-day activities of courts and prosecutors’ offices takes place through the ‘case management system’, which includes an individual and institutional quota system. In addition to biannual and annual statistical reports submitted to the HJPC, all courts and prosecutors’ offices produce an annual activity report, which is submitted to their respective Ministry of Justice and to the HJPC. The budget allocated to courts and prosecutors’ offices and the HJPC amounts to 119 million euros, i.e. 0.85% of GDP of Bosnia and Herzegovina. Since the introduction in 2010 of the 'Online Access to Court Cases' web service, lawyers and parties in court proceedings across the country can access relevant information online. The system recorded more than 100 000 entries over the reporting period. The working of the courts has become significantly more transparent, though general access to court decisions remains limited to interested parties and requires payment of a fee. Selected decisions are available electronically and are easily accessible for judges and prosecutors. More work is needed to ensure that the working of the courts is fully transparent. This should include improving the availability of decisions while respecting data protection legislation and improving conditions for recording court proceedings. In the absence of a State-level supreme court, consistency of jurisprudence is ensured only within the Entities and Brčko District, but not across the various levels of authority. Regular meetings are held of joint panels of the highest-level courts throughout the country. These have helped to achieve better harmonisation of case law in civil matters but not yet in administrative or criminal law. Public access to online jurisprudence is limited to the information published by the courts themselves on their web pages, while judicial professionals wanting to access full case law have to request a specific access code and pay a subscription fee. On availability of alternative dispute resolution methods, commercial arbitration and judicial conciliation are regularly used, while the use of in-court and out-of-court mediation needs to be further promoted. Mediation is rarely promoted by judges. Only five cases went to mediation in the reporting period compared with 5 418 cases adjudicated using judicial conciliation, thus amounting to barely 1% of cases solved through alternative dispute resolution methods. Aligning Bosnia and Herzegovina legislative framework with the relevant EU legislation and achieving a more significant reduction in case backlog through the use of mediation needs to be further enhanced. Efficiency The average length of proceedings in 2014 was just over seven years for all courts across the country. In 2014, there were 428 701 incoming cases and 472 213 solved cases in all courts across the country. This gives a clearance rate (i.e. the ratio of solved cases to newly filed cases) of 110%. With the bulk of the backlog consisting of 1 700 000 unpaid utility bills cases, the HJPC and legislative bodies in the Entities are aiming to reduce this by providing support for the introduction of alternative solutions to courts, such as private bailiffs or enforcement officers on special assignment. However, these have not yet produced significant results in reducing the backlog. The package of reforms provided by the HJPC and other relevant stakeholders to improve the efficiency of justice has helped to bring about a progressive reduction in the backlog of cases. This included solving the oldest cases through the implementation of ‘plans to resolve old cases in courts’ and the Rulebook on orientation measurements for the work of judges and legal assistants of the courts in Bosnia and Herzegovina. The backlog of non-utility-related cases in the last two years was decreased by more than 40 000 cases out of a total of 406 227 old cases, which is a direct result of actions by the HJPC to improve judicial efficiency. During 2014, the average duration of unresolved non-utility-related civil cases before courts of first instance in Bosnia and Herzegovina, measured in days, was also reduced by 27 days compared with 2012. The courts solved 85 941 old cases in 2014, achieving 80% of their target, 7% more than in 2013. Fight against corruption Bosnia and Herzegovina has some level of preparation in the fight against corruption. Some progress has been achieved in the past year. However, the legal and institutional framework remains weak and inadequate. The lack of enforcement of the law negatively affects citizens and institutions. As a general pattern, the penalties in force are not enough of a deterrent against corruption. Corruption continues to be widespread and the political commitment on this subject has not translated into concrete results. In the coming year, Bosnia and Herzegovina should pay particular attention to: → ensuring that sufficient funds from the budget are allocated to the anti-corruption strategy and implementing its action plan; → establishing outstanding prevention and monitoring bodies at the relevant levels of government and ensuring their functioning, under the coordination of the Agency for the Coordination of the Fight against Corruption and Prevention of Corruption; → improving the legislative framework, particularly for political party financing, asset declarations and protection of whistle-blowers;

→ bringing in tougher penalties on the prevention and combat of corruption in order to achieve more of a deterrent effect. Track record In 2014, there were a total of 158 investigations at State level into financial crimes and corruption, out of which 103 (65%) have been closed, and 53 sent to the Prosecutor’s Office of Bosnia and Herzegovina. There has been no final conviction in high profile cases in the reporting period. From 1 October 2014 to 31 July 2015 there were a total of 304 confirmed indictments country-wide, resulting in 209 convictions. Most of the convictions related to the offence of embezzlement in office. Audit reports and tax administration reports are not used in a systemic way to fight corruption. Cases are often leaked to the press, at which point they then tend to become politicised. The political authorities should ensure that law enforcement bodies are fully empowered to act effectively and impartially when investigating corruption allegations. Financial investigations are not yet systematically launched in cases of corruption and organised crime. Since the creation in 2010 of the only agency dedicated to asset confiscation in the Republika Srpska, in 16 cases an amount of around 7 775 000 euros was confiscated. 2014 alone saw the confiscation of assets worth around 7 325 000 euros. There is no track record of effective control of political party and electoral campaign financing and relevant GRECO (Group of states against corruption) recommendations still need to be addressed on this point. Asset declarations are governed by separate and uncoordinated pieces of legislation, making their implementation ineffective, including the penalties imposed. Amendments to the State law on conflicts of interest established a new parliamentary commission to decide on conflict of interest cases. There were no cases at State level or in Brčko District. In Republika Srpska, 116 cases were processed, and in 10 cases a conflict of interest was found. Different laws govern access to information, but common flaws were reported, including the lack of automated statistical information. 218 access to information complaints were referred to the Ombudsman in 2014. Following the entry into force of the law on whistle-blowers in 2014, two individuals were granted the status of whistle-blowers. However, the law covers only the State-level public sector. Institutional framework Although the anti-corruption agency's mandate is essentially focused on prevention and coordination, recent amendments entrusted the agency with new powers on whistle-blower protection and conflicts of interest. Its budget has constantly increased since inception in 2009 and the staffing is at a satisfactory level. At entity level, the Republika Srpska has appointed in April 2015 a dedicated body. The mandate of the prevention body within the Federation needs to be reconfirmed. Cantons, where most of the areas at risk are, have limited or no legislation and no bodies dedicated to preventing corruption. Moreover, there is no policy in place to prevent corruption in the private sector. On law enforcement, the capacity to investigate economic, financial and public procurement-related crimes remains weak. Relations between the police and the prosecution services in combating corruption still need to be improved. Greater specialisation is needed within the police and judiciary in order to fight corruption. The law establishing specialised departments within the Federation's Prosecutor’s Office and the Supreme Court of the Federation to prosecute corruption and organised crime cases entered into force in February. However, these bodies are not yet in place while the cantons have ceased to prosecute corruption cases above a certain threshold, thus creating a legal vacuum. There is still no effective criminal justice policy, including as regards penalties which are not deterrent. Rules on personal data protection by the police are not sufficient and generally not implemented, while penalties for breaches are not dissuasive. Rules on the immunity of members of parliaments in criminal procedure and procedures governing the lifting of immunity are in place. Legal framework Passive and active corruption are criminalised under the criminal codes at all levels. However, a number of GRECO recommendations on improving the legal framework have not received any attention. Bosnia and Herzegovina is party to the UN Convention against corruption, but has chosen not to criminalise illicit enrichment. The country ratified the Council of Europe Anti-corruption Conventions but has not ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Amendments to the State law on conflicts of interest are still not in line with international standards because there are no independent bodies in charge of processing conflict of interest cases. In Brčko District, the authorities have entrusted the task of deciding on conflict of interest cases to the Brčko District Election Commission. The Federation has not yet amended the law to determine the body that will decide in conflict of interest cases. The verification of declared assets is not effective and penalties are not serving as a deterrent. The law on financing of political parties and electoral campaigns has not been adjusted in line with GRECO recommendations. The country has no legislation governing lobbying and rules on the protection of whistle-blowers are at a very early stage. Strategic framework A new Bosnia and Herzegovina anti-corruption strategy and action plan covering the 2015-2019 period was adopted in April. However, no specific budget has been allocated for its implementation. Provision has been made for regular revision of the action plan, which should enable it to undergo adjustments. Similar documents for the 2013-2017 period have also been adopted in Republika Srpska. To overcome the fragmentation of powers and the various administrative layers, the fight against and the prevention of corruption require the identification of dedicated and specialised structures at all levels of government with appropriate coordination channels and a holistic vision. Strategic documents need to be improved by including notably a solid risk assessment and clear identification of benchmarks. Monitoring and implementation in most of the cases remain weak. Fight against organised crime The fight against organised crime has reached some level of preparation. Some progress has been made over the past year. Coordination and cooperation between all institutions throughout the country needs to be significantly improved. The number of final convictions remains low. Financial investigations remain under used. The lack of strategic coordination is hampering the effective delivery of police services. To remedy the systemic shortcomings, Bosnia and Herzegovina should pay particular attention in the coming year to:

→ strengthening the framework for inter-agency cooperation among law enforcement bodies to allow for the establishment of specialised multi-agency investigation teams for complex cases involving organised crime, economic crime and corruption and to make it possible to dismantle criminal networks; → regulating mutual access to databases and the exchange of information between law enforcement agencies and prosecutors’ offices; → developing effective asset confiscation and recovery systems at all levels. Track record The number of first instance convictions for organised crime is 22. Even though the number of cases concerning fighting human trafficking in the reporting period increased, the number of final convictions for organised crime remains low. The country remains a source, transit and destination country for trafficking, mostly of women and children, for various types of exploitation. The number of convictions for money laundering decreased. Anti-money laundering legislation still needs to be implemented in an effective way by all relevant institutions, including financial and non-financial sector and supervisory bodies. There is no policy for carrying out serious financial investigations on a systematic basis and the precautionary freezing of assets during the early phase of investigations is not often applied. There are frequent leaks to the press, violating the confidentiality of investigations. The joint counter terrorism task force is not functioning properly and its capacity has to be further strengthened. Institutional and operational capacity Bosnia and Herzegovina has 16 531 police officers, or 4.3 per 100 000 inhabitants. A major reform of the police was carried out in 2008 and new institutions still need further consolidation. Undue political influence over police top managers and overlapping competences hamper the proper delivery of police services in some areas. Command structures remain opaque, with overlapping powers, partly due to the country’s complex administrative set-up. While clear criteria for the recruitment, evaluation and promotion of police officers are in place, they are not yet being implemented in a fair and transparent way, particularly for the appointment of senior police officials. Curricula for initial and in-service training are being developed by police academies and training institutions. Their capacity to provide specialised training is, however, limited. A working arrangement between Bosnia and Herzegovina and the European Police College (CEPOL) was signed in November. Specialised anti-terrorism, human trafficking, drugs, cybercrime and financial investigations units are broadly in place at State and Entity level, though with limited or insufficient capacities. A Financial Investigation Unit remains to be set up in the Federation. The interoperability of the police equipment notably radio communication systems need to be improved. Relations between prosecutors’ offices and the police require structural improvements to guarantee a more effective judicial follow-up. The system for electronic data exchange of police and prosecution registries is operational, although some technical aspects of the system are being updated and improved. Better regulation continues to be needed on determining access rights to data and databases. Provisions governing personal data protection in the police sector are not sufficient and generally not implemented, while sanctions for breaches are not deterrent. Operational inter-agency cooperation takes place on a case-by-case basis and still needs to be improved. Negotiations with Europol on an Operational Agreement were concluded in December 2014 but the Agreement has not yet been signed. Statistics on investigations, prosecutions and convictions for criminal offences are collected from the judiciary throughout the country in an automated fashion and centralised using the HJPC’s case management system. However, the qualitative analysis of cases has yet to be introduced. There is no operational country-wide DNA database and the DNA profiling capacity remains limited, while the swift exchange of forensic data with other countries does not exist. Joint minimum standards on civil possession and the carrying of weapons were adopted in July with a view to harmonise laws within the country and with existing EU and international standards. Capacity to combat money laundering is weak. On human trafficking, the country still needs a victim approach and a multidisciplinary and comprehensive strategy. This would be mainly based on improved police-prosecution cooperation, data exchange and investigations. There are serious delays in the Federation’s implementation of its assets seizure legislation because its Agency for Management of Seized Assets is not operational. Legal framework The legal framework is fairly well developed, but legal loopholes and lack of implementation limit its efficiency. The country's four Criminal Codes are largely in line with the acquis, although the penalties imposed are not enough of a deterrent. A number of shortcomings in criminal investigations need to be addressed, including through strategic guidance and operational priority-setting mechanisms to ensure that special investigative means are used efficiently and through rules on how to implement them, where these are missing. The legislation on the confiscation of criminal assets is partially aligned with the acquis. However, provisions on minimum standards governing asset seizure have yet to be consistently incorporated into legislation across the country. Recommendations by the Financial Action Task Force on Money Laundering (FATF) are partially reflected in anti-money laundering legislation, but the implementation of this legislation remains insufficient. In June an action plan for addressing deficiencies in the system to combat money laundering and terrorism financing was adopted. Strategic framework The 2014-2016 strategy on the combat of organised crime is in place. However, its action plans have still be adopted and implemented. Inspired by the Europol methodology, a Serious and Organised Crime threat Assessment is in place, providing a strategic picture of organised crime in the country. However, its findings have not yet been translated into a coherent national security policy based on clear priorities.

A strategy for the prevention and fight against terrorism for the 2015-2020 period was adopted in July but an action plan implementing the strategy has yet to be adopted. The strategy to combat money laundering and drug abuse and its accompanying action plan have expired, and the new strategic framework has not yet been adopted. Bosnia and Herzegovina lacks a comprehensive overall strategic approach to address the issue of cybercrime and cyber security threats. Existing capacities to combat cybercrime and respond to cyber security threats need to be strengthened. Fight against terrorism Bosnia and Herzegovina has been seriously affected by the phenomenon of foreign fighters and radicalisation. In April, the police station in Zvornik was attacked by a lone gunman, resulting in one police officer being killed and another two injured. The attacker was killed in the exchange of fire. The reason for the attack is being investigated by the State Prosecutor’s Office. In July, Bosnia and Herzegovina’s Council of Ministers adopted its 2015-2020 strategy for the prevention and fight against terrorism for the period. The strategy follows the model of the EU’s counter terrorism strategy and is structured around four major principles: prevention, protection, pursuit and response. Action plans remain to be developed. Cases of hate speech need to be addressed more forcefully. The phenomenon of foreign fighters needs a dedicated approach by the intelligence and law enforcement community and a coherent judicial policy towards offenders. 2.4.Human rights and the protection of minorities The legal and institutional framework for the observance of human rights requires substantial improvements. No progress was achieved over the past year in addressing country wide reforms conducive to creating the conditions for the effective exercise of some human rights. Conditions for the exercise of the freedom of expression have deteriorated. Shortcomings particularly affect the following areas: • Effective protection of human rights is undermined by the uneven implementation of the anti-discrimination legislation and the absence of a country-wide anti-discrimination strategy. • The country is still missing an effective free legal aid system to guarantee efficient access to justice. • The lesbian, gay, bisexual, transgender and intersex community continued to be subject to threats and attacks. • Socio-economic integration of the Roma minority continues to be undermined by limited action on health, education and employment. Bosnia and Herzegovina (BiH) has ratified all major European and international human rights instruments. The UN Human Rights Council Universal Periodic Review took place in November, with Bosnia and Herzegovina receiving 167 recommendations. However, the country has not yet implemented recommendations from the previous cycle, including those on anti-discrimination, inclusive education, gender-based violence, harmonisation of law and policy at all Entity levels and criminal code reform on war crimes. Since September 2014, the European Court of Human Rights (ECtHR) has found that the country violated the European Convention on Human Rights (ECHR) in one case relating to the right to a fair trial and protection of property. A total of 842 new applications have been allocated to a decision-making body, bringing the number of pending applications to 808. The remaining outstanding cases relate mainly to re-possession of occupancy rights, missing persons and discrimination on the ethnic grounds of ethnicity. Some progress has been made in implementing the Court’s judgments, while action plans foreseeing preparatory steps for the implementation of the Sejdić-Finci and Zornic cases were adopted by the Council of Ministers in September. On the promotion and enforcement of human rights, the Ombudsman continues to be affected by a lack of adequate human and financial resources to perform its functions as national human rights institution. In 2015 training related to the ECHR and ECtHR case law for judges, prosecutors, legal associates and advisers of the Constitutional Court and the Court of Bosnia and Herzegovina focused in particular on the right to a fair trial. On the right to life, the provision on death penalty in the Constitution of Republika Srpska needs to be repealed. On the prevention of torture and ill treatment, Bosnia and Herzegovina has still not put in place an independent national preventive mechanism against torture aligned with the procedures of the Optional Protocol to the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (OPCAT). There has been no progress on the adoption of legislation on the rights of civilian victims of torture during the war. There are reports of ill treatment of suspects in some police stations and of prisoners in some detention facilities. Such cases need to be properly investigated and preventive measures taken. Legislation on the prison system is partially harmonised throughout the country. In November, the psychiatric institution in Sokolac, intended to provide mandatory psychiatric treatment requested during criminal proceedings was opened. There is no overall strategy for correctional systems as responsibility for the execution of criminal sentences is a shared competence between the State and the Entities. The adoption of a new law on execution of criminal sanctions in the Federation to ensure harmonisation with State-level law and international standards is still pending. The continuous backlog in the execution of criminal sanctions in the Federation remains a matter of concern. Existing penitentiary legislation needs to be aligned with European including Council of Europe standards and effectively implemented. No official coordination mechanism has been set up between the country's prison administrations. The quality of healthcare services in prisons remains deficient and continues to be affected by insufficient resources and medical staff. Protection of personal data in Bosnia and Herzegovina is partially harmonised with the European standards. Staffing of the Agency for Personal Data Protection needs to be strengthened. The number of complaints that were addressed by the agency increased from 107 in 2013 to 140 in 2014. It continued training civil servants at State and Entities level. However, there were attempts to alter the general personal data protection regime by introducing contradictory provisions in the special laws. There is no legal obligation to consult the agency on draft laws that include provisions on personal data. The constitutional and legal guarantees on the freedom of thought, conscience and religion are generally fulfilled. However, cases of discrimination on religious grounds continue to be reported. There have been incidents targeting religious symbols, clerics, believers and religious property. Freedom of expression There is some level of preparation on the right to freedom of expression. However, the country has been backsliding in this area. Although the legal provisions are generally in place, the institutional and political environment is not conducive to creating the conditions for full freedom of expression. The financial stability of the system of public service broadcasting remains to be addressed. Political pressure and intimidation towards journalists continued during the reporting period. Transparency on media ownership continues to be lacking. Recent legislative developments in Republika Srpska raise concerns over possible limitation of online freedom of expression.

In the coming year, Bosnia and Herzegovina should particularly pay attention to: → ensuring proper follow-up on cases of threats to journalists; → securing depoliticisation, financial and institutional stability and editorial independence for the Public Service Broadcasters; → finalising the reform of the broadcasting system and harmonising relevant entity legislation with legislation at State level. Intimidation of journalists Political and financial pressure on the media continued in the reporting period. Intimidation and threats against journalists and editors and polarisation of the media along political and ethnic lines continued during and after the October general elections. Cases were recorded of political statements putting pressure on journalists and police raids on media outlets. In December 2014, the police of Republika Srpska and the Sarajevo Canton raided the offices of a news portal over a criminal investigation involving the Prime Minister of Republika Srpska. The courts subsequently ruled that the raid was unlawful and in violation of both the European Convention on Human Rights and national law. The follow-up by the authorities to threats to media freedom and journalists has been insufficient. Cases were reported of verbal attacks by politicians towards journalists. Legislative environment Legal provisions guaranteeing freedom of expression are in place. However, there are serious concerns that the implementation of the newly adopted Republika Srpska Law on Public Peace and Order may limit the freedom of expression online and possibly affect freedom of assembly and association. The implementation of the Freedom of Access of Information Act remains uneven and is frequently limited by the right to privacy and the protection of the commercial interests of companies dealing with governments, without running the test of public interest. Implementation of legislation/institutions The appointment of the new Director General of the Communications regulatory agency is pending. The political, institutional and financial independence of the agency remains to be secured. Bosnia and Herzegovina’s Communications Regulatory Agency adopted in 2012 rules requiring internet service providers to apply appropriate technical measures to disable access to internet addresses that were found to be harmful or illegal and would pose threats to safe internet use. Criminal offences listed in the Additional Protocol to the international Convention on Cybercrime have yet to be incorporated into the criminal codes. Republika Srpska’s Law on Public Peace and Order, adopted in February, raises concerns about the potential for arbitrary implementation of certain of its provisions related to online social networks. The law opens up the possibility for potential abuses through vague provisions related to minor offences committed on the internet and the setting of a low standard of proof in proceedings for minor offences. Public Service Broadcaster The independence of the three public broadcasters within the country’s public broadcasting system remains to be ensured. The public broadcasters in the two Entities were exposed to political influence through political appointments to managerial positions. The Federation Parliament failed to appoint members to the steering committee of Radio-Television of the Federation of Bosnia and Herzegovina (RTVFBiH). The Director General of RTV FBiH remained in a caretaker role, which opened the door to political influence. The steering committee of Republika Srpska’s public service broadcaster Radio Televizija Republike Srpske (RTRS) remained politically affiliated, which increased political control over RTRS and undermined editorial independence. Entity laws on public broadcasting services are not harmonised with State-level law. The statute of the State-level public service broadcaster Radio and Television of Bosnia-Herzegovina (BHRT) has yet to be amended. The adoption of the public broadcasting corporation’s statute is pending and public broadcasting system reform has yet to be completed. All types of broadcasting are licensed by the Communications Regulatory Agency in accordance with the law on communications. The financial sustainability of the public service broadcasting system remains to be ensured. Economic factors The transparency of media ownership remains limited and is partly ensured through the court registration of businesses that own the media. Full information is not easily accessible due to problematic legal provisions hampering systematic insight into the ownership structure. This is especially problematic for online media, which are often not registered as media businesses. There is a lack of rules governing government financing of the media. Public broadcasters that are not part of the public broadcasting system are financed from municipal and canton budgets and remain under strong political influence. At Entity level, the Government of Republika Srpska funds both public and private media. Lack of transparency and clear criteria in the distribution of subsidies are a serious concern. In addition, media integrity is also harmed by the advertising practices of public companies controlled by political parties. Professional organisations, Professional conditions

The Bosnia and Herzegovina Journalists’ Association has continued to lead civil society efforts in the country to secure freedom of expression and freedom of the media, the protection of journalists and media integrity. The complaint commission of the Press Council of Bosnia and Herzegovina continued to work and mediate between the readers and the media, securing that readers' complaints are addressed by the editors. An increased level of unity and solidarity among journalists across the country over the protection of journalists' rights and privileges was noted after the December police raid on a news portal. On the freedom of assembly and association, cases of attacks and intimidation against human rights activists continue to be reported. Such cases are often not adequately investigated and prosecuted by the authorities. On property rights, there are 72 ongoing administrative disputes before the Court of Bosnia and Herzegovina in which the Commission for real property claims of displaced persons and refugees is a respondent party. On non-discrimination policies, no steps were taken to develop an anti-discrimination strategy at State level. The anti-discrimination law has not been amended to include age and disability as grounds for discrimination, nor have its provisions been adequately reflected or transposed into labour law or higher education. A working group, co-ordinated by the Ministry of Human Rights and Refugees and tasked with the revision of the anti-discrimination law was formed in August. Implementation of the 2009 anti-discrimination law is hampered by procedural hurdles and low levels of knowledge of the law. A total of 144 judicial cases of discrimination were pending as of August. Hate crime and hate speech are not covered by the Federation’s criminal law. Most hate incidents targeted returnees, LGBTI persons or were ethnically motivated. Information about hate crime acts is not systematically collected or tracked. The Sejdić-Finci ruling of the European Court of Human Rights has still not been implemented, meaning that people not belonging to one of the three constituent peoples are still not allowed to stand for in the House of Peoples and the Presidency of Bosnia and Herzegovina. The Supreme Court of Federation passed two judgments and the Supreme Court of the Republika Srpska rendered one judgement in cases of discrimination in 2015. There is still a lack of consistent and comprehensive collection of data on discrimination. Legal provisions providing equality between women and men are broadly in place but are not being implemented in an effective manner. Cooperation between the State Agency and Entity Centres for Gender Equality remained good. Implementation of gender policies in Bosnia and Herzegovina is hampered by the fragmentation of powers and the multiple institutional bodies, as well as by limited budgetary resources. To date, financing is not in place to continue running the 2009-2014 Financial Mechanism for Implementation of the Gender action plan of Bosnia and Herzegovina. A strategy for implementing the Council of Europe Convention on preventing and combating violence against women and domestic violence for the period 2015-2018 was adopted in July. Legislation on safe houses is not adequately implemented and lacks sufficient funding, undermining protection and assistance to women victims of violence. There is no comprehensive State-level legal framework on sexual assault and rape and no appropriate compensation mechanism in place for victims. There is no effective data collection mechanism for monitoring domestic violence and no specialised police units. Women’s political participation across the country has slightly improved. In the 2014 general elections, 19.03 % of candidates elected at all levels were women. On the rights of the child, Bosnia and Herzegovina’s Council of Ministers adopted in June the 2015-2018 action plan for children, which provides a mechanism for the overall protection of children and complies with the UN Convention on the rights of the child. Institutionalisation of children with disabilities remains high and only a very low proportion of them are in pre-school education. Use of foster care and alternative solutions needs to be further promoted. The exploitation of children and child begging remain issues of concern and violence against children continues to be widespread. Reporting of violence against children remains weak, resulting in few cases being brought before the courts and no such specific cases were reported to the Ombudsperson. Data collection on violence against children remains weak. No awareness-raising activities on rights of the child were organised. A national strategy against juvenile offending has yet to be adopted. The legal framework on juvenile justice is in place but has still not been harmonised across the country. The Federation law on protection and treatment of children and juveniles in criminal proceedings entered into force in February 2015 but pre-conditions for its full implementation including relevant by-laws are not in place. Separate units for juveniles exist in prisons and juvenile educational-correctional facilities, but the absence of separate units during pre-trial detention and in police stations across the country continues to be a serious concern. The alternatives to juvenile detention laid down by law contine to be underused and there is insufficient coordination between the responsible authorities. The Orašje educational-correctional facility, while ready for immediate use, is not running due to problems with its electricity supply. Child-friendly proceedings in civil and administrative cases are still not ensured in a harmonised and non-discriminatory way and measures for child victims and witnesses, while in place, are not systematically applied. On the integration of people with disabilities, no steps were taken to change the entitlement system for rights and benefits to base it on needs instead of status. Inequalities remain in the level of rights granted by the different Entities and implementation of the legislative framework for social protection remains limited. On the rights of lesbian, gay, bisexual, transgender and intersex (LGBTI) persons, the 2015 LGBTI Merlinka festival was held with no incidents and with appropriate police protection. Bosnia and Herzegovina was one of the signatories of the Joint Statement of Ministers of the region at the 2015 IDAHO (International Day against Homophobia) forum. The anti-discrimination law needs to be amended as it does not include a clear definition of gender identity and sexual orientation and refers to sexual expression and/or orientation as grounds of discrimination. The Republika Srpska and Brčko District criminal codes need to be amended to include gender identity and sexual orientation as grounds for hate speech. Despite an increase in violence, attacks and threats towards LGBTI persons and human rights defenders, only a limited number of cases are reported to the police. In September, Bosnia and Herzegovina’s Constitutional Court ruled on a violation of the freedom of assembly in the case of the October 2008 Queer Sarajevo Festival when a dozen individuals were attacked, but there has been no criminal prosecution of the attack on the 2014 Merlinka Queer Film Festival. Transgender persons are a particularly marginalised group and no measures are planned for legal gender recognition. On labour and trade union rights, the fragmentation of the legal framework and the absence of a harmonised approach to social allowances hamper effective exercise of social rights across the country. On procedural rights, the legal and institutional framework for free legal aid remains incomplete, un-harmonised and discriminatory, as basic pre-conditions for free legal aid do not exist at all levels, including the State level. Minimum common standards for free legal aid should be harmonised between the various levels of authority and incorporated into the legal framework, where missing. Non-governmental organisations continued to actively provide free legal aid without any harmonised country-wide regulation. The Free Legal Aid Network, a platform for cooperation between civil society and government agencies, helped to provide specialised training and awareness-raising on free legal aid. Communication between prosecutors' offices and victims' associations improved. In the absence of a national transitional justice strategy, compensation for wartime gross human rights violations is achieved through civil actions. As a result, the right to compensation continues to be upheld in an uneven manner. The legal framework for the protection of minorities is largely in place and in line with the Council of Europe Framework Convention for the Protection of National Minorities. However, the lack of coordination between the State and Entity levels continued to hamper implementation of the law on national minorities. The presence and participation of national minorities in public debates and the media remain low. The effectiveness and impact of national minority councils at State and Entity level is hindered by insufficient resources and lack of political leverage in decision-making. Politicised appointment procedures also undermine the legitimacy and ability of the councils to operate properly. In November, the Federation Supreme Court confirmed the 2012 first instance verdict that the 'two schools under one roof' in Stolac constitutes ethnic segregation of pupils. Progress in eliminating the ‘two schools under one roof’ phenomenon continues to be slow and the number of mono-ethnic schools has not decreased. The common core curriculum is not yet applied throughout the country. Bosnia and Herzegovina held the most recent chairmanship of the Decade for Roma Inclusion, which concluded in September 2015. The third Roma inclusion seminar, held in Sarajevo in June 2015, adopted specific recommendations in all five key policy priority areas. Significant progress was achieved towards completing the civil registration process. As of September, only 77 identified persons at risk of statelessness remained to be registered. On education, free textbooks for Roma children in primary school continued to be provided to some Roma pupils. The drop-out rate has slightly decreased, but the number of Roma children included in the education system needs to be significantly increased. Further housing was provided to Roma in need in 60 municipalities. The assistance provided included co-financing by local authorities, including for those affected by the May 2014 floods. However, access to infrastructure is not provided to all rebuilt housing. Roma remain the country’s most vulnerable and disadvantaged minority. The lack of reliable data hampers effective policy-making. A more comprehensive and integrated approach needs to be adopted for the social inclusion of Roma. The action plans on health and employment have not yet been fully implemented. Health insurance coverage for Roma needs to improve significantly. The number of unemployed Roma remained high and their access to the labour market remains hampered by the lack of suitable qualifications. According to the Ministry for Human Rights and Refugees, as of September, there are still 84 500 internally displaced persons and 6 795 refugees in Bosnia and Herzegovina. Some action was taken to tackle the issue of sustainable return, particularly in connection with employment, education, social protection and healthcare at local level through the initiative of the ministry. The revised strategy for the implementation of Annex VII to the Dayton/Paris Peace Agreement still lacks coordinated implementation and appropriate allocation of resources. The lack of infrastructure, particularly for electricity, needs to be addressed. Returnees continue to face obstacles in access to healthcare and their sustainable return continues to be hampered by the lack of employment opportunities. Over 7 500 people are still accommodated in 45 collective centres across the country.

2.5.Regional issues and international obligations The implementation of the Dayton/Paris Peace Agreement continued. The government of the entity Republika Srpska continued to hold joint sessions with the Government of the Republic of Serbia under the framework of the Special and Parallel Relations agreement. The two governments committed themselves to several joint infrastructural projects and planned to further strengthen their cooperation across all sectors. Bosnia and Herzegovina’s cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) continued to be assessed as satisfactory in most areas. However, the Office of the Chief Prosecutor of the ICTY has expressed concern that the State Prosecutor's Office did not sufficiently follow up on repeated requests to complete the processing of war crimes cases partly investigated by the Tribunal and transferred to the jurisdiction of Bosnia and Herzegovina in 2008 for further investigation and possible prosecution (the ‘Category II’ cases), Concerning the domestic prosecution of war crimes, further progress was registered in tackling the large backlog of war crimes cases, in particular following the launch of the European Union's extraordinary budget support to judiciaries at all levels of the country, under the guidance of the Supervisory Body for Monitoring the Implementation of the National War Crimes Strategy. The number of indictments increased, with 98 confirmed indictments against 177 suspects in 2014. In the first half of 2015, courts in BiH confirmed 44 indictments against 86 suspects. The reduction in the backlog was achieved as planned, but the State-level authorities failed to allocate regular public funds complementing EU assistance. The adoption of the country-wide justice sector reform strategy for the 2014-2018 period in September 2015 allows Bosnia and Herzegovina to meet the condition for the release of the second tranche of the EU direct budget support. Improvements were noticeable in the prosecution of cases of wartime sexual violence, due to an increased specialisation by prosecutors, judges, police investigators and witness support staff. The courts completed 6 war crimes cases involving sexual violence over the reporting period. However, more efforts are needed to end impunity particularly against the backdrop of a large number of potential cases. A comprehensive legal and policy framework to improve the status of victims of rape and sexual violence has still to be achieved. A State-level programme to improve the status of victims of war crimes involving sexual violence has yet to be adopted. Further progress on providing in-court victims and witnesses support remained possible primarily thanks to international financial support. The long-term sustainability of the system was called into question by the obvious lack of domestic budget support. Psychological support to victims and witnesses before, during and after war crimes trials remained insufficient. The implementation of the national war crimes strategy objectives continued. This involved in particular the reallocation of cases by the State judiciary to other judicial levels, and the State judiciary taking over 40 complex cases from other jurisdictions. However, the initial deadline to have the most complex cases solved by 2015 has not be met. Additional efforts by authorities at all levels remain necessary in order for the strategy to be successfully implemented. Conclusions issued by the strategy’s supervisory body have yet to be consistently implemented by the authorities. The 2003 Bosnia and Herzegovina-US bilateral immunity agreement granting exemptions from the jurisdiction of the International Criminal Court continued to be in force. The agreement is not compliant with the EU Common Positions on the integrity of the Rome Statute or the related EU guiding principles on bilateral immunity agreements. Bosnia and Herzegovina still needs to align with the EU position on this issue. Bosnia and Herzegovina, Serbia, Croatia and Montenegro have continued to closely cooperate under the Sarajevo Declaration Process, which aims to find sustainable solutions for 74.000 people who became refugees and displaced persons as a result of the armed conflicts in the former Yugoslavia during the 1990s. All countries need to further step up efforts to deliver on the implementation of the agreed housing solutions. Bosnia and Herzegovina made some progress on implementing the regional housing programme with the delivery of 19 housing solutions out of the 1,868 approved so far. Efforts are needed to further ensure a quality beneficiary selection process conducive to a speedy implementation of the housing projects. The unresolved fate of missing persons from the conflicts of the 1990s remains a humanitarian concern in the Western Balkans. As of February 2015, a total of 10 814 persons were still missing according to the International Committee of the Red Cross. Of these, 7 019 cases relate to the conflict in Bosnia and Herzegovina. Ascertaining the fate of missing persons remains vital for reconciliation and stability in the region. Bosnia and Herzegovina’s Missing Persons Institute continued to lack sufficient support from the authorities and was subject to further reductions in its budget and political pressures. A reform of the institute is pending. A support fund for the families of missing persons, which is provided for by the Law on Missing Persons, has still not been established. The lack of local forensic capacity, especially in the Federation, continued to hamper the process of identifying missing persons. Regional cooperation and good neighbourly relations form an essential part of Bosnia and Herzegovina's process of moving towards the EU. The country continued to participate actively in regional initiatives, including the South-East European Cooperation Process, the Regional Cooperation Council, the ‘Western Balkans Six’ initiative and the Energy Community Agreement. In May 2015, Bosnia and Herzegovina took over the chairmanship of the Council of Europe Committee of Ministers. It continued to actively support the RECOM (Coalition for Reconciliation Commission) and Igman initiatives on regional reconciliation. A fresh impetus has been given to regional cooperation through the 'Berlin process' and the Western Balkan Six initiative notably regarding the EU’s connectivity agenda. In April, the Western Balkan Six countries reached an agreement on the core transport network and in June 2015 on extending three Trans-European Transport Networks core corridors to the Western Balkans. They also identified the priority projects to be implemented by 2020. The countries agreed to implement before the next summit in Paris a number of 'soft' measures such as aligning and simplifying border crossing procedures, road safety and maintenance schemes. On regional judicial cooperation, the fight against impunity in the area of war crimes resulted in its first arrests and issuing of indictments in line with the Protocol of the Prosecutor's Office of Bosnia and Herzegovina and the Office of the War Crimes Prosecutor of the Republic of Serbia on Cooperation in Prosecution of Perpetrators of War Crimes, Crimes against Humanity and Genocide. Similar Protocols signed with the Croatian and Montenegrin Prosecutor’s Offices are yet to produce concrete results. In March 2015, Bosnia and Herzegovina ratified an agreement on the exchange and mutual protection of classified information with Albania In July an agreement allowing their citizens to travel between the two countries with ID cards only was signed. An agreement on the exchange and mutual protection of classified information was ratified with the former Yugoslav Republic of Macedonia in March. Overall relations continue to develop. An Agreement on cooperation in consular protection and visa issues with Montenegro was ratified in March 2015. A bilateral border agreement with Montenegro was signed in August which largely improved bilateral relations. Relations with Serbia remained good. The chair of Bosnia and Herzegovina’s Presidency visited Belgrade and the Serbian Prime Minister visited Sarajevo in May. Serbian Prime Minister was attacked during the Srebrenica genocide commemoration in July by some participants and investigations are ongoing to find the perpetrators. A few days later, the three members of the Presidency travelled to Belgrade upon the invitation of the Serbian Prime Minister. There are no official relations with Kosovo, as Bosnia and Herzegovina does not recognise Kosovo as an independent state. The Ministry of Foreign Affairs maintained its practice of issuing individual short-term visas to citizens of Kosovo only if they have an invitation from a foreign diplomatic mission or international organisation accredited in Bosnia and Herzegovina, or for humanitarian reasons. An amendment to normalise the visa procedure for all citizens of Kosovo remained pending. Bilateral relations with Turkey are good. An agreement on military financial cooperation and its implementing protocol were ratified in June 2015. Member of the Presidency Bakir Izetbegovic paid an official visit to Turkey in March 2015. A visit to Bosnia and Herzegovina by the Turkish President took place in May 2015. Relations with Croatia remained good. Members of the Presidency of Bosnia and Herzegovina took part in the inauguration of the Croatian President, who subsequently paid her first visit abroad to Bosnia and Herzegovina. The Croatian Prime Minister visited Bosnia and Herzegovina in December 2014. The agreement signed by Bosnia and Herzegovina with Croatia in June 2015 in Brussels on border crossings, border traffic and free transit together with the joint statement should enable the smooth transport of goods form Croatia in transit through the Neum corridor in accordance with the applicable acquis. No progress was made towards resolving further outstanding bilateral issues, including property issues and border demarcation.

3. Economic criteria Key economic figures 2013 2014 Gross domestic product per capita (% of EU28 in PPS) 29 28 GDP growth (%) 2.5 1.1 Unemployment rate (female; male) (%) 27.6 (29.1; 26.7) 27.6 (31.2; 25.3) Economic activity rate for persons aged 20–64: proportion of the population aged 20–64 that is economically active (female; male) (%) 58.7 (45.1; 72.1) 59.2 (46.0; 72.4) Current account balance (% of GDP) -5.7 -7.6 Foreign direct investment (FDI) (% of GDP) 1.6 3 Source: Eurostat In line with the conclusions of the European Council in Copenhagen in June 1993, EU accession requires the existence of a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union. The monitoring of these economic criteria should now be seen in the context of the increased importance of economic governance in the enlargement process. In order to improve their economic governance, in 2015 the enlargement countries were asked to prepare Economic Reform Programmes (ERPs), which set out a medium-term macro-fiscal policy framework together with key structural reforms aimed at supporting the framework and boosting competitiveness. The ERPs were the basis for country-specific recommendations jointly adopted by the EU and the Western Balkans and Turkey in the Economic and Financial Dialogue meeting on 12 May 2015. 3.1.The existence of a functioning market economy Bosnia and Herzegovina is at an early stage in developing a functioning market economy, although some progress has been made. In particular, steps have been taken to strengthen policy coordination and to improve the business environment, particularly on the ease of market entry and the granting of construction permits. Despite the setback from the spring floods, economic growth remained positive. However, stronger and sustainable economic growth will require the development of a more dynamic private sector. This requires strong political support and the timely implementation of much-needed structural reforms. In line with the ERP recommendations and the Reform Agenda and in order to support long-term growth, in the coming year Bosnia and Herzegovina should pay particular attention to: → increasing the quality of public finance, for example by providing for more fiscal space, in particular for capital investment; → improving its budget management framework; → taking steps to advance restructuring and privatisation and to improve the business

environment. Economic policy essentials The consensus on economic policy essentials has increased. A broad agreement has been reached on economic reforms, but the government now needs to show strong reform commitment by starting to implement the planned reforms. The consensus between the authorities at different levels of government on the economic policy essentials has broadly gained momentum with the adoption of the global framework for fiscal policies and balances 2016-2018 by the Fiscal Council. In February 2015, Bosnia and Herzegovina submitted its Economic Reform Programme covering the 2015-2017 period. The programme sets out an overly ambitious fiscal strategy based on reductions in expenditure but lacks initiatives that would stimulate growth. In addition, although some major obstacles for growth were identified, the structural reform strategy is vague on medium-term measures beyond 2015. There is ample room for improvement in terms of policy coordination. Following the adoption of the Reform Agenda in July, Bosnia and Herzegovina is encouraged to take further steps towards its implementation, including with the help of the ERP recommendations set out below, which reflect Reform Agenda priorities The IMF Stand-By Arrangement (SBA), agreed in 2012, expired on 30 June 2015 but the last loan tranche disbursement was made in July 2014. The programme went off-track due to delays in implementation of previously agreed structural reforms. Negotiations for a new IMF programme have been ongoing. Macroeconomic stability Economic growth remained resilient in spite of external shocks. However, the short-ter