EUROPEAN COMMISSION Brussels, 9.11.2016 SWD(2016) 365 final COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2016 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 2016 Communication on EU Enlargement Policy {COM(2016) 715 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 pressures 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.Anti-money laundering 4.3.3.Drugs

4.3.4.Police 4.3.5.Fighting organised crime 4.3.6.Fight against terrorism 4.3.7. 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 renewed approach to Bosnia and Herzegovina (BiH), which provides for the re-sequencing of the conditionalities in order for the country to progress towards the EU and address the socio-economic challenges it faced. Following the adoption of a written commitment to reforms by the Bosnia and Herzegovina institutions and leadership, the renewed approach led to the entry into force of the Stabilisation and Association Agreement (SAA) between Bosnia and Herzegovina and the EU on 1 June 2015, replacing the Interim Agreement (IA) which had been in force since 2008. In July 2015, the country adopted a Reform Agenda aimed at tackling the difficult socio-economic situation and advancing the rule of law and public administration reforms. Its implementation has continued with meaningful progress. In September 2016, the EU Council invited the European Commission to submit its opinion on the EU membership application of Bosnia and Herzegovina, submitted in February. Regular political and economic dialogue takes place between the EU and Bosnia and Herzegovina in the framework of the SAA/IA structures. Bosnia and Herzegovina initialled in July 2016 a protocol for the technical adaptation of the SAA/IA, to take into account its bilateral traditional trade with Croatia. The signing of the protocol is pending. The suspension of the Autonomous Trade Measures will be lifted once the protocol on the adaptation of the SAA is provisionally applied. Shortcomings in the judiciary continued to be discussed in the Structured Dialogue on Justice. 1.2. Summary of the report As regards the political criteria, the electoral legislation was improved, with a number of OSCE-ODIHR recommendations being followed and local elections organised broadly in an orderly manner, despite incidents in some municipalities which need to be investigated. Despite efforts to resolve the Mostar issue, elections could not take place there this year. The Bosnia and Herzegovina Parliamentary Assembly and the entities’ parliaments made progress towards adopting outstanding reform priorities, in particular those stemming from the Reform Agenda. Cooperation between state-level, entity-level and Brčko district parliaments has improved. However their role and capacities in the EU integration process need to be further improved. Cooperation between the BiH Council of Ministers and the entities' governments was effective as regards the Reform Agenda, the implementation of which needs to continue. The coordination mechanism on EU matters was adopted by the Council of Ministers in August. A strategic programme for the country’s legal approximation with the EU acquis has yet to be adopted. Bosnia and Herzegovina’s constitution remains in breach of the European Convention on Human Rights, as per the ruling in the Sejdić-Finci case. Constitutional Court decisions have yet to be fully enforced throughout the country. While some progress has been made in establishing institutional mechanisms for cooperation between governments and civil society organisations (CSOs), a strategic framework for cooperation with civil society needs to be developed. Bosnia and Herzegovina is at an early stage with the reform of its public administration. Backsliding has been recorded with the changes to the Federation entity's legal framework for the civil service, increasing the risk of politicisation. A harmonised approach to policy development and coordination between different parts of the administration is still largely lacking. The adoption of a new strategic framework for public administration, as well as a strategy on public financial management are needed. Bosnia and Herzegovina’s justice system has some level of preparation. Some progress was made on accountability and integrity. The action plan needed to implement the 2014-2018 justice sector reform strategy has yet to be adopted. Politically motivated threats on the judiciary by some politicians in the country continued. Judicial independence remains to be strengthened. Bosnia and Herzegovina has some level of preparation in the fight against corruption. Some progress was made with the adoption of action plans at various levels of governance but their fragmentation makes implementation less effective. Corruption remains prevalent in many areas and continues to be a serious problem. The declared political commitment on this subject did not translate into concrete results. Regarding the fight against organised crime, Bosnia and Herzegovina has some level of preparation. Some progress was made notably to improve inter-agency cooperation. However, financial investigations need to be stepped up. Fighting organised crime remains fundamental to countering criminal infiltration of the political, legal and economic system of the country. Bosnia and Herzegovina still needs to meet international standards on anti-money laundering and countering the financing of terrorism. Bosnian and Herzegovina has been seriously affected by the phenomenon of foreign terrorist fighters and radicalisation. Bosnia and Herzegovina has already taken important measures to deal with this problem which needs to be complemented by further steps to identify, prevent and disrupt the flow of foreign terrorist fighters travelling to conflict areas such as Iraq and Syria. More work is required addressing human rights and minorities’ issues. Some progress was achieved in particular with the adoption of amendments to the antidiscrimination law. The strategic, legal, institutional and policy frameworks for the observance of human rights remain in overall need of substantial improvement. There is some level of preparation on freedom of expression. However, no progress was made in this area. Cases of political pressure and intimidation against journalists need adequate legal follow up. The financial stability of the public broadcasting system remains to be addressed, as well as the issue of the lack of transparency of media ownership. With regard to regional cooperation, the country continued to participate actively in regional initiatives. Bosnia and Herzegovina took over the chairmanship of the Central European Initiative in January. As regards the economic criteria, Bosnia and Herzegovina is still at an early stage in developing a functioning market economy. Some progress has been made in modernising the labour legislation, improving the business environment and addressing weaknesses in the financial sector in the framework of the agreed Reform Agenda. However, the public sector is inefficient and private sector development is slow. Strong and continuing political support for the swift implementation of much-needed structural reforms, in line with the agreed Reform Agenda, will be key. Bosnia and Herzegovina is at an early stage in building the capacity to cope with competitive pressure and market forces within the Union. There was no progress in improving the country's competitiveness, but implementation of Reform Agenda measures is ongoing. Regarding approximation with European standards, there is some level of preparation in the fields of public procurement and internal market. The country achieved some level of preparation in the transport area; the adoption of a Framework Transport Strategy at State-level in July is a step forward towards the country benefitting from the connectivity agenda. Country-wide strategies in the areas of agriculture, energy and environment are yet to be adopted. Further sustained efforts are also needed 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. The results of the population and housing census conducted in October 2013 were published on 30 June 2016, in line with international standards and recommendations. 2.POLITICAL CRITERIA 2.1.Democracy

Elections The electoral legislation was improved, with several OSCE-ODIHR recommendations being followed. Local elections were organised in October 2016 and were broadly conducted in an orderly manner. However, some incidents were recorded and will need to be adequately addressed. Due to a lack of political agreement, the 2010 Constitutional Court decision concerning the respect of the basic democratic right of the citizens of Mostar to vote in local elections has yet to be implemented. Municipal elections were organised in October 2016 and were broadly conducted in an orderly manner. However, a number of incidents took place in some municipalities and resulted in the closing of the polling stations in one municipality and a temporary closing in several others. Bosnia and Herzegovina authorities need to investigate these incidents and ensure the appropriate judicial follow up. The election legislation was amended in May and June 2016 to incorporate the gaps identified by OSCE/ODIHR and GRECO on campaign financing, the party and independent candidate deregistration process, the increase in the threshold for distribution of mandates on candidate lists, and increased fines for violating the election process. A number of municipalities struggled to collect the necessary funding to hold the elections. Despite renewed efforts, an agreement on implementing the 2010 Constitutional Court’s decision on elections in Mostar has yet to be reached, and after 6 years the citizens of Mostar still cannot exercise their democratic rights. The Constitutional Court decision needs to be implemented as a matter of priority. Parliament The Bosnia and Herzegovina Parliamentary Assembly and the entities’ parliaments made progress towards adopting outstanding reform priorities, in particular those stemming from the Reform Agenda. While cooperation between state-level, entity-level and Brčko District parliaments improved, their role and capacities in the EU integration process need to be further improved. The Parliamentary Assembly of Bosnia and Herzegovina further delivered on its legislative agenda, with a focus on legislation stemming from the Reform Agenda. The oversight role of the assembly improved as its committees repeatedly organised specific sessions to review the activities of the executive. During the reporting period the assembly also adopted several multiannual strategic documents to increase legislative efficiency, transparency, public outreach, dialogue and cooperation. The Secretariat of the Parliamentary Assembly also started to share its capacities with entity and Brčko District parliaments. The Stabilisation and Association Parliamentary Committee (SAPC) was established in November 2015 as part of the Stabilisation and Association Agreement (SAA) bodies. However, it failed to adopt its Rules of Procedures due to insistence by some delegates from Bosnia and Herzegovina for the inclusion of a voting mechanism provision which would not comply with European standards. The Republika Srpska National Assembly continued to adopt legislation to implement the Reform Agenda. The assembly’s EU Integration Committee was active and fostered cooperation with other parliamentary institutions in Bosnia and Herzegovina and abroad. However, fast-track procedures were often used for law-making, which raises questions about the quality of the adopted legislation. In October 2015, the assembly adopted conclusions which included the possibility for representatives to be sanctioned through Republika Srpska entity courts for their political activities at state level, a provision not in line with European standards. The work of the Federation of Bosnia and Herzegovina (FBiH) Parliament resumed after the new parliamentary majority was established in October 2015. Coordination with cantonal assemblies improved, in particular on shared powers. While the parliament adopted a number of Reform Agenda-related legislation, the overall decision-making process was slow due to disagreements in the coalition. The Federation House of Peoples remained short of three Serb delegates, including the Deputy Chair, which had a negative impact on the legislative process. The functioning of the parliament also continued to be hampered by the lack of space in its rented premises and insufficient capacity to deal with European integration-related issues. The work of the Brčko district assembly committees, including the Committee for European Integration, remained problematic due to frequent lack of quorum at meetings and the limited capacity of the district assembly’s services. The Committee for European Integration held only two meetings. The four parliaments adopted a joint concept of cooperation on EU matters. This led to an improvement in inter-parliamentary cooperation, including through the work of the parliamentary forum on European integration, which held quarterly meetings on EU issues. Members of sectoral committees of the four parliaments were also active in joint activities about the Bosnia and Herzegovina EU integration process. Governance Bosnia and Herzegovina institutions further addressed reform priorities. Cooperation between the Bosnia and Herzegovina Council of Ministers and the entities’ governments was effective as regards Reform Agenda implementation. The coordination mechanism on EU matters was adopted by the Council of Ministers in August. A strategic country-wide programme for the country’s legal approximation with the EU acquis has yet to be adopted. Bosnia and Herzegovina’s constitution remains in breach of the European Convention on Human Rights, as per the ruling in the Sejdić-Finci case and subsequent judgments. Constitutional Court decisions have yet to be fully enforced throughout the country. The Dayton/Paris Peace Agreement put an end to the 1992-1995 war. The country’s constitution, which is Annex 4 to the Agreement, 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 Bosniaks, Croats or Serbs from standing as candidates for the Presidency and the House of Peoples of the Parliamentary Assembly. The Sejdić-Finci, Zornić and Pilav decisions of the European Court of Human Rights recognised this as a breach of the European Convention on Human Rights. A large number of Constitutional Court decisions are yet to be implemented at various levels across the country. The Presidency of Bosnia and Herzegovina played its role in the EU integration process, including in the submission of the EU membership application in February. The Protocol on adaptation of the SAA to take into account Croatia's accession to the EU was initialled in July. The Council of Ministers remained proactively committed to advancing the country’s EU integration agenda. In October 2015, it adopted the action plan for implementing the Reform Agenda at the state level, which led to reforms being adopted in areas such as debt management, anti-money laundering, customs policy and fight against organised crime. In August, the Council of Ministers adopted the Decision on the coordination mechanism in EU matters. Countrywide strategies in areas such as agriculture energy and environment have yet to be adopted. These strategies will help the country to fully benefit from EU pre-accession assistance. The role and capacity of the Directorate for European Integration will need to be further improved. Its new Director was appointed in November 2015, but due to political disagreements the Directorate could not fully assume its coordinating role in the framework of the SAA. Pending an agreement on the coordination mechanism and the establishment of relevant structures, only two SAA sub-committees could be held. A national programme for the country’s legal approximation with the EU acquis has yet to be adopted; the programme is a legal obligation under the SAA. The Federation of Bosnia and Herzegovina Government continued to deliver on reform priorities as defined in the Reform Agenda. This included the adoption of legislation in areas such as labour market, fiscal responsibility and business environment. The appointments to the supervisory boards of public companies, which initially had led to the break-up of the post-election ruling coalition, proceeded smoothly. The Federation Office for European Integration still lacks administrative capacity to coordinate EU affairs across the different levels of government within the Federation entity and with the rest of the country. The Federation Government and the cantons cooperated on EU integration issues only sporadically. The Republika Srpska Government adopted a number of laws in the framework of the Reform Agenda, notably in the areas of labour market, fiscal responsibility, bankruptcy and combating the grey economy. However, the government also adopted conclusions including provisions on direct reporting to the European Commission, a practice which directly challenges the need for the country to ensure a single channel of communication with the EU. At the same time, the entity government refrained from participation in developing countrywide strategies until the establishment of the coordination mechanism on EU matters, with a major negative impact on programming and implementing the EU’s financial assistance in key sectors. Republika Srpska Government organised in September 2016 a referendum, ignoring the Bosnia and Herzegovina Constitutional Court decision to suspend the referendum until it decides on its constitutionality The Brčko District Government held three sessions on European integration. In November, the government adopted an action plan on the implementation of measures arising from the Reform Agenda, and adopted reforms in areas such as public internal financial control and assets seizure.

Entity legislation remained largely in line with the European Charter of local self-government. However, a lack of clarity remained 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 continued to lack adequate human resources and faced serious financial constraints, which were detrimental to its overall performance. This makes it harder for the office to carry out its functions, including on the implementation of the anti-discrimination legislation. Systematic cooperation between the Ombudsman’s Office and the civil sector remained limited. The new Ombudsmen were appointed in November through a transparent and fair parliamentary selection process that included civil society representatives and was compliant with European standards and the Paris Principles. Civil society There was some progress in establishing institutional mechanisms for cooperation between governments and civil society organisations (CSOs), as well as for public financing of CSOs. However, a strategic framework for cooperation with civil society needs to be developed and full use should be made of the e-consultation web platform. Transparent procedures are needed for allocating public funding to CSOs at all governance levels. An empowered civil society is a crucial component of any democratic system and should be recognised and treated as such by the institutions. An institutional mechanism for consultations, the e-consultation web platform, was launched in April and involved 9 ministries and 14 agencies at state level. Twenty-three institutions at all levels of government designated specific bodies or contact points in charge of dialogue and co-operation with CSOs. Sector-specific consultations with CSOs were occasionally organised through dedicated working groups. However, for the legal framework to be implemented efficiently government representatives and CSOs need an expanded role and there needs to be greater political commitment to the process. A strategic framework for cooperation with civil society has yet to be established at all levels of government. Some progress was noted at local level, where an additional seven municipalities adopted a legal framework for transparent funding of CSOs on the basis of clearly defined criteria and monitoring and evaluation tools. However, the distribution of public funds to CSOs is not fully transparent and systematic. On civilian oversight of the security forces, the Joint Parliamentary Committee for Security and Defence played an active role in ensuring democratic control over the armed forces of Bosnia and Herzegovina. The Parliamentary Military Commissioner continued to oversee the protection of human rights and freedoms in the armed forces and the Bosnia and Herzegovina Ministry of Defence. The armed forces continued to dispose of unstable ammunition while building sustainable capacity to manage the rest of the stockpiles. The large stockpiles of weapons and ammunition under the responsibility of the armed forces and the widespread presence of weapons held illegally by the population remained 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 and backsliding has been recorded with the amendments to the legal framework for the civil service in the Federation entity, increasing the risk of politicisation. The insufficient political support for countrywide reforms and the fragmentation of the public service are hampering efforts to carry out institutional and legislative reforms. A harmonised approach to policy development and coordination is still largely lacking. In the coming year, Bosnia and Herzegovina should in particular address the Commission’s recommendations from last year: → develop, adopt and start implementation of a new countrywide strategic framework for public administration reform with strong political leadership and guidance; → ensure implementation of an effective human resources management system, in particular in recruitment, and amend civil service legislation in an inclusive and evidence-based process to reduce the risk of politicisation of the civil service at all administrative levels; → adopt a countrywide reform programme for public financial management that is aligned with the new strategic framework on public administration reform. Policy development and coordination The policy-making system in Bosnia and Herzegovina is very fragmented. A ‘whole-of-government’ approach is provided for in the legislation but challenges remain over how to put it into practice. There was some progress in moving towards countrywide strategy development, including an agreement between the state and the entities' governments to set up an inter-institutional structure for public administration reform strategy development. At the same time, coordination between the state and the entities’ institutions still needs to be substantially improved. At state level, the first medium-term work programme and action plan of the Council of Ministers for 2016-2018 was adopted in January, in line with the 2014 decision on mid-term planning, monitoring and reporting procedure. The entity governments have similar legislation in place to ensure financial sustainability of government programmes. Nevertheless, the lack of countrywide medium-term planning remained a major weakness. A coordination mechanism on EU matters was adopted and its effective implementation is necessary for improved planning and monitoring of the European integration process. In July the BiH Council of Ministers adopted a decision on the procedure of harmonisation of legislation with the EU acquis. Next steps should include the adoption of a national plan for the approximation to the acquis. Some aspects of inclusive and evidence-based policy and legislative development are in place, but the quality of policy and legislative proposals should be further improved. Public consultations are regulated by law but are still not fully implemented. At state level, an e-platform for public consultation on legislative proposals was launched in April, but the improvements are yet to be assessed. Regulatory impact assessments are enshrined in law but are not carried out systematically due to insufficient staff capacity. Financial impact assessments are carried out for draft legislative proposals but not for strategic documents. The lack of countrywide medium-term policy planning is a serious obstacle to public scrutiny of government work. At state and entity levels some transparency is ensured through publicly available reports and the publication of government agendas and summaries of decisions. However, publicly available reports do not allow comparing achievements with specific policy objectives. Public financial management Bosnia and Herzegovina continued to address public finances on a sub-system basis by adopting separate debt management or internal financial control strategies in the absence of an all-encompassing public financial management reform programme (PFM). However, ministries of finance at all levels expressed commitment to preparing a comprehensive PFM strategy. In June, the Republika Srpska entity adopted the information note on development of a 2016-2020 PFM strategy for Republika Srpska and tasked its Ministry of Finance with participating in the development of the countrywide PFM strategy after the entity strategy has been adopted. In July, the BiH Council of Ministers adopted a decision on establishment of a working group with a view of producing a countrywide PFM reform strategy. A budget preparation and management information system is used in the different levels of the administration for budget planning and for the medium-term budget framework while the public investment management information system is still being brought up to its full capacity. Budget preparation and adoption timelines improved in 2016, except in the Brčko District where the 2016 budget was adopted after the legal deadline. The institutions at all levels have considerable weaknesses in internal control and public procurement, making the systems vulnerable to inefficiency and waste. Social contributions and pension entitlements, which account for a significant portion of public funds, are managed by extra-budgetary funds that are neither integrated into the budget process nor into budget documentation such as the medium-term or annual budgetary outlooks. The inclusion of the pension fund in Republika Srpska’s treasury system as of January 2016 to stabilise its liquidity has yet to produce the expected results.

Bosnia and Herzegovina has not yet achieved sufficient budget transparency. Annual budgets are published and annual reports on budget implementation are produced by the Ministry of Finance and Treasury and audited by the Supreme Audit Institution. Similar provisions also apply in the entities and in the Brčko District. The lack of harmonisation on the charts of accounts at state level and in the entities hampers access to consolidated data. In the context of budget scrutiny, follow-up on external audit findings and recommendations needs improvement. In-year reporting is insufficient, as is citizens’ participation in the budget process. There has been no attempt to prepare a citizens’ budget at any of the government levels. Public service and human resources management The legal framework on public service in Bosnia and Herzegovina is very fragmented, with different laws applying to the civil service at different levels of government. In December 2015 the Federation entity amended its law on civil servants, removing senior and middle management positions from the remit of the civil service. This was a significant setback on ensuring the political neutrality of the civil service, as it enables the Federation entity to make political appointments and dismissals at senior and middle management level. Similar provisions were also adopted by the Sarajevo canton in August, although to a lesser extent. Currently, the application of two articles on recruitment of the Federation law has been temporarily suspended pending a Constitutional Court decision on the merit of a case challenging the law on procedural and substantive grounds. The principle of merit-based recruitment and promotion for civil servants is generally enshrined in legislation, but its application is hampered by unclear legal provisions, formalistic application of procedures and low capacity of selection committees. The criteria for dismissals and disciplinary procedures, including the possibility to appeal, are also enshrined in the laws. In practice the number of dismissals is low. Human resources management (HRM) remained fragmented and inefficient due to absence of a central policy-making institution at state and entity levels. There are four main civil service agencies which perform centralised HRM functions, but they are not empowered to lead and monitor implementation of the civil service policy and legal framework. HRM units have been established only in a small number of institutions. HRM information systems have been put in place at different levels of administration, but are not used as tools for decision-making and planning due to lack of complete information and legal obstacles over data protection. Further efforts are needed to establish a unified personnel database. The remuneration system is not transparent and does not ensure equal pay for equal work because different salary regulations are in force at different levels of administration. Additional fees for participation in committees are still paid in the Federation entity. A fair and objective job evaluation and classification system is still to be implemented. The right to professional development is not fully ensured or monitored. The state and the entities have training strategies in place, but without external donor funding resources are insufficient to cover the needs. Performance appraisals are regulated and carried out regularly. However, a close link has yet to be established between performance appraisal and professional development and mobility. Integrity in public service is relatively well addressed at state level through anti-corruption and integrity plans, codes of conduct for civil servants, rules on incompatibility of office and the work of the Agency for Prevention of Corruption and Coordination of the Fight Against Corruption. However, the Agency has limited power to enforce these plans and the perception of corruption remains high. Accountability of the administration The overall organisation of the public administration in Bosnia and Herzegovina is affected by complex constitutional arrangements that are 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 over 40 institutions that report directly to the Council of Ministers rather than to their line ministries. Within institutions, managerial accountability is not yet rooted in the administrative culture (See Financial control). The institutional set-up and resources to protect the citizens’ right to good administration are insufficient. The Ombudsman’s Office is relatively active in issuing recommendations, although it rarely acts on its own initiative. However, the rate at which the public administration implements such recommendations is low. The right to access public information is regulated by law 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 not given access to public information, administrative inspection is authorised to act upon the complaint and penalise the responsible person or institution. There is also a second-instance body to review appeals and issue final decisions at the level of the state institutions. However, there is no independent body to deal with appeals. 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. The right to seek compensation in cases of wrongdoing is rarely exercised due to the lack of a legal framework on public liability. Service delivery to citizens and businesses Due to the country’s highly decentralised responsibilities for service delivery, there is a need for an increased focus on user-oriented administration. Public satisfaction with government services is not regularly measured. The e-signature does not function at state level due to incomplete secondary legislation and therefore the scope of available e-services is limited to providing information. An operational plan to establish the interoperability framework at the level of Bosnia and Herzegovina institutions was adopted in December 2015. However, further development of e-services is held back by the lack of a countrywide approach and differences in how the state, the entities and the Brčko District apply the legal framework for e-signatures, develop e-government portals and implement an interoperability framework. The Constitutional Court of the Federation entity invalidated the monopoly of notaries in the conduct of legal-civic matters, thus potentially extending the scope of eligible service providers for citizens and business. The current legal framework at different levels enshrines the key principles of good administrative behaviour, but there is room for further simplification of administrative procedures. Special administrative procedures still need to be reviewed and either abolished or brought in line with the law on administrative procedure. Exemptions should be minimised and allowed only when they are duly justified. Strategic framework for public administration reform Since the countrywide strategy for public administration reform (PAR) expired in 2014, Bosnia and Herzegovina has embarked on developing a new strategy, in line with the objectives of the Reform Agenda. Governments displayed political support to the reform by approving the Information Note on the Operational Plan paving the way for the actual drafting process. Members to the inter-institutional working groups responsible for drafting the strategy have been nominated at all levels. The development of the strategy is at an early stage. Despite the expiry of the 2014 strategy and its action plan, the Public Administration Reform Coordinator’s Office continued to implement projects financed with the PAR Fund. The annual report for 2015 declared a 65 % rate of implementation but the current monitoring framework lacks clear performance indicators that would make it possible to determine how far reform objectives have been achieved.

The public administration reform sector coordination mechanism under the previous strategy continues to provide an effective structure for cooperation with entity and Brčko District levels. However, the PAR strategy implementation is not financially sustainable. Cost estimates for human resource needs and other costs of implementation are not reflected in the annual budgets and the medium-term expenditure frameworks at all levels. 2.3.Rule of law Functioning of the judiciary Bosnia and Herzegovina’s justice system has some level of preparation. Some progress was made in addressing some of last year's recommendations on accountability and integrity in the judiciary, namely through the adoption by the High Judicial and Prosecutorial Council of a set of guidelines on conflict of interest, drafting of integrity plans and disciplinary measures. However, a number of recommendations were not fulfilled. The action plan needed to implement the 2014-2018 justice sector reform strategy was not adopted. The slow reduction of the utility-cases backlog in the courts and inadequate procedures for execution of court decisions continued to harm judicial efficiency. Sanctions for breaching disciplinary and ethical rules were not yet much of a deterrent. Politically motivated threats on the judiciary continued. Judicial independence, including from political influence, remains to be strengthened. In the coming year Bosnia and Herzegovina should in particular: → adopt the action plan needed to implement the 2014-2018 justice sector reform strategy and establish a clear monitoring system; → implement the guidelines adopted by the High Judicial and Prosecutorial Council on conflict of interest, disciplinary sanctions and integrity in the judiciary; introduce more qualitative criteria for appointment and appraisal of judges and prosecutors; continue developing training programs, notably for the initial level and managerial positions, including on ethical and disciplinary matters; → reform the execution procedure laws to reduce effectively the utility-cases backlog in courts and introduce court-annexed mediation in selected pilot courts. Strategic documents and budget The action plan accompanying the 2014-2018 countrywide justice sector reform strategy, with new adjusted timelines for implementation, has not yet been adopted by the BiH Council of Ministers. A ministerial conference, encompassing justice ministers at all levels and including representatives of the Brčko District Judicial Commission (BDJC) and the High Judicial and Prosecutorial Council (HJPC) is responsible for supervising the implementation of the justice sector reform strategy. The conference held a meeting in March, but has not yet adopted its rules of procedure, which are a prerequisite for the establishment of the technical structures monitoring the implementation of the various areas of the strategy. Implementation of some specific activities under the strategy did nevertheless start. The authorities need to take more decisive action to implement the strategy, notably by adopting its action plan and by providing adequate budgetary allocations for each activity envisaged therein. Management bodies/judicial/prosecutorial council The High Judicial and Prosecutorial Council is the key institution managing the judiciary throughout the country. The HJPC’s annual reports are widely published online and presented before legislative bodies at all levels. Shortcomings remain in the law on the HJPC, notably concerning appointment and disciplinary procedures, conflict of interests, declaration of assets as well as the right to appeal HJPC final decisions. These need to be addressed in the light of the opinion of the Venice Commission and the recommendations issued by the European Commission as part of the EU-BiH Structured Dialogue on Justice. Other improvements regarding transparency of the HJPC sessions, strengthening voting procedures as well as disqualification and relocation of judges and prosecutors need to be addressed through changes in the relevant rules of procedures. 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, although not in the Bosnia and Herzegovina constitution. There are no established procedures carrying penalties against undue influence or threats to judicial independence. Politically motivated threats against courts and prosecutor’s offices continued, particularly at state level. Such practices need to be addressed forcefully. The constitutional and legal framework needs to ensure full protection against unlawful pressure on the independence, impartiality and autonomy of judges and prosecutors. There is a need to broaden the grounds for appeal against final HJPC decisions including those on appointments of judges and prosecutors and their transfers as well as in disciplinary proceedings. Accountability To complement existing legislation and improve the overall accountability of judicial office holders, in July - in the context of the implementation of the Reform Agenda - the HJPC adopted guidelines related to the prevention of conflict of interest in the judiciary, the drafting of integrity plans in the judiciary and the improvement of disciplinary proceedings. Conversely, the very loose regulations on declarations of assets require some financial statement from judges and prosecutors, but no publicity or verification mechanism exists. This has yet to be adequately addressed through the improvement of the legislative framework. Efforts need to be stepped up to ensure efficiency and effectiveness of the disciplinary procedure, also by revising the existing legal framework. The scope of some disciplinary offences is still to be clarified and the sanctioning policy needs to be stricter as deterrent sanctions in disciplinary rulings against judges and prosecutors remained rare. Over the reporting period, the Office of the Disciplinary Prosecutor registered 899 complaints against holders of judicial and prosecutorial functions and issued 912 decisions on merits, including the last years' remaining cases. It initiated 31 disciplinary proceedings which resulted in 28 sanctions being imposed, mainly written/public reprimands or salary reductions and only one dismissal. Decisions not to prosecute need to be based on a clear reasoning and there needs to be a possibility for effective legal remedy. The HJPC can still reverse the final decision of the Disciplinary Prosecutor, which has limited possibilities for appeal. As disciplined judges and prosecutors may still get promoted, there is the need for taking disciplinary measures duly into account in the promotion system.

Codes of ethics for judges and prosecutors exist, but there is no formal enforcement mechanism with the power to initiate disciplinary cases. Corruption in the judiciary still needs to be more forcefully addressed. Professionalism and competence Procedures regulating the entry into or advancement in judicial careers based on merit and promotion are in place and focus on candidates’ professionalism and performance assessed against some objective indicators. However, there are a number of shortcomings that need to be addressed as a matter of priority, mostly through revision of by-laws to ensure that the appointment and career management of judges and prosecutors become more transparent, efficient and professional. This requires, in particular, publishing the questionnaire for the entry-level exam, rationalising the number of competitions, conducting more quality-based performance appraisal, including for top-managerial posts at all levels and introducing integrity checks. Moreover, the legislator has to address the lack of effective legal remedy against the final decision on appointment and performance evaluation. Dismissal is regulated by objective criteria under the law on the HJPC. 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 have their own budget. They have not yet undertaken a regular, comprehensive and analytical training needs assessment on the basis of career development, job competencies and regular performance reports. Multiannual training programmes need to be systematically developed and an independent monitoring and assessment system needs to be introduced. The content, methodology and delivery of training need upgrading, particularly on building specific capacity to handle complex cases. Monitoring and measuring of the day-to-day activities of courts and prosecutors’ offices take place through the ‘case management system’, which evaluates the performance of judges based on the annual workload. All courts and prosecutors’ offices regularly produce statistical reports for the HJPC and an annual activity report, which is submitted to their respective justice ministries and to the HJPC. Over the reporting period, 38 196 new case access codes were issued to professionals for the ‘online access to court cases’ web service while the system recorded more than 420 000 user logins. While courts’ work is increasingly transparent, access is still limited to interested parties and requires payment of a fee. This includes access to electronic versions of selected decisions. To achieve greater transparency, the conditions for recording court proceedings need to be improved and selected court decisions need to be made available to a larger number of parties, while also fully complying with data protection legislation. In order to increase the consistency of jurisprudence across the country, in the absence of a state-level supreme court, the three joint panels of the highest-level courts in Bosnia and Herzegovina held seven meetings. This has helped to achieve better harmonisation of case-law in civil and administrative matters, but not yet for criminal law. On alternative dispute resolution methods, the use of in-court and out-of-court mediation requires qualitative improvement. Judicial conciliation continues to be used more frequently than mediation. Only two cases went to mediation, compared with 6 280 cases adjudicated using judicial conciliation, meaning that barely 1 % of cases were solved through alternative dispute resolution methods. A proposal was made for better court-annexed mediation, and the opening of pilot courts with this type of mediation is under way. The aim is to bring the mediation system in Bosnia and Herzegovina into line with European standards and best practices. The budget allocated to courts and prosecutors’ offices throughout the country and the HJPC in 2016 was EUR 119.35 million (slightly higher in absolute terms than in 2015), i.e. 0.81 % of the country’s GDP, which is, however, slightly less than in 2015 when the allocation corresponded to 0.85 % of the GDP. Efficiency The average length of court proceedings during the first six months of 2016 fell for first instance cases, with an average of 354 days taken to complete a case (404 in 2015 and 437 in 2014). For second instance, the average length rose again slightly to 273 days (269 in 2015 and 239 in 2014). In 2015, there were 420 883 incoming cases and 452 485 completed cases in all courts across the country. This gives a clearance rate (i.e. the percentage of completed cases compared to newly filed cases) of 108 %. The backlog for pending court cases by end of June 2016 was reduced by 5 % compared with 2015 with a total of 356 019 pending cases. As a result of the implementation of their backlog reduction plans, courts completed 111 282 old cases out of the 187 118 cases that were planned in 2016, achieving 60 % of the plans’ targets already in the first six months of 2016. The average duration of pending non-utility-related civil cases before first instance courts in Bosnia and Herzegovina in the first half of 2016 was 511 days, a fall of 10 days compared to end of 2015. These achievements are the direct result of the HJPC’s attempts to improve judicial efficiency. The bulk of the case backlog was made up of over 1.7 million of unpaid utility bills cases as of June 2016. The HJPC launched a system to improve registration of unpaid utility bills cases in 22 municipal/basic courts and 14 utility companies. The system allows for the immediate processing of these cases during the last stage of enforcement. By 30 June 2016, there were 547 146 cases registered into the system with 289 923 (52,97 %) still pending To make serious inroads into this specific backlog, the system will need to be supplemented by more comprehensive legislative and institutional measures, in particular with regard to amending execution procedure laws in the entities and making the debt collection more efficient. Fight against corruption Bosnia and Herzegovina has some level of preparation in the fight against corruption. Some progress was made to address last year's recommendations with the adoption of action plans at various levels of governance. However, the legal and institutional framework remained inadequate and the fragmentation of the action plans makes their implementation less effective. The lack of enforcement of the legislation had a detrimental effect on citizens and institutions. Corruption remains prevalent in many areas and continues to be a serious problem. The declared political commitment on this subject did not translate into concrete results. In the coming year, Bosnia and Herzegovina should in particular: → adopt consistent action plans and ensuring the implementation and monitoring of anti-corruption strategies, particularly at state- and Republika Srpska entity levels;

→ establish prevention bodies, where not yet set up, and ensure that they cooperate with the Agency for Prevention of Corruption and Coordination of the Fight against Corruption; → amend legislation to ensure effective monitoring of conflicts of interest at state, Federation entity and Brčko District levels and improve legislation governing asset declarations and protection of whistle-blowers; → ensure the implementation of tougher penalties for corruption-related crimes in order to achieve a more deterrent effect. Track record In 2015, there were a total of 140 investigations at state level into financial crimes and corruption, out of which 77 (55 %) were finalised and 23 sent to the Bosnia and Herzegovina Prosecutor’s Office. There were no final convictions in high-profile cases in the reporting period. From 1 September 2015 to 15 August 2016 there were a total of 296 confirmed indictments countrywide, while the number of convictions was 173, a majority of which were suspended sentences. Most of the convictions were for abuse of office or authority. Audit reports, tax administration reports and financial investigations continue not to be used in a systematic and complementary way to fight corruption. The political authorities should ensure that law enforcement bodies are fully empowered to act effectively and impartially when investigating corruption allegations. According to HJPC data, in 116 cases a total of EUR 1 015 365 was confiscated. There is still no track record of effective control of political party and electoral campaign financing and some of the GRECO (Group of states against corruption) recommendations still need to be addressed. Asset declarations remained governed by separate and uncoordinated pieces of legislation, making their implementation ineffective, including the penalties imposed. The Commission for Determination of Conflict of Interest in Republika Srpska adopted 36 decisions, while in 14 cases a conflict of interest was found. Implementation of conflict of interest rules in other parts of the country remained uneven. Due to administrative impediments, the state level commission has not decided in any case since its formation. The conflict of interest has not been monitored in the Federation entity. In the Brčko District, the authorities entrusted the task of deciding on conflict of interest cases to the Brčko District Election Commission. However, legal impediments prevent that body from performing its tasks, making changes to the law necessary. There is no policy in place to prevent corruption in the private sector. Corruption risk assessments analyses in the health and education sectors were made. These areas remain particularly prone to corruption and conducting risk assessments in a more systematic manner is a first positive step that should lead to further measures to effectively address corruption. There are different laws governing access to information, but common flaws in their implementation were reported, including the lack of automated statistical information. 223 cases of information complaints were referred to the Ombudsman in 2015, as opposed to 218 in 2014. Following the entry into force of the law on whistle-blowers in 2014, a total of three individuals were granted the status of whistle-blowers, while eight requests were rejected. However, the law covers only the state-level public sector. Institutional framework The state level Anti-Corruption Agency is almost fully staffed, has an appropriate budget and has moved to new premises. At entity level, Republika Srpska has a dedicated body. The members of the prevention body within the Federation entity were appointed in April. Dedicated corruption prevention bodies were set up in several cantons, notably Sarajevo, Central Bosnia, Una-Sana, Bosnian-Podrinje Goražde, and Herzegovina-Neretva, and in the Brčko District. On law enforcement, the capacity to investigate economic, financial and public procurement-related crimes remained weak. Greater specialisation is needed within the police and judiciary in order to fight corruption. Legal framework The legal framework was changed to some extent. The Federation of Bosnia and Herzegovina Parliament adopted amendments to the entity law on conflict of interest, which handed over implementation to a state-level commission. In the Brčko District, amendments are needed to the law on conflicts of interest to ensure that it is properly implemented. In March, amendments to the Federation entity criminal code were adopted, to regulate crimes related to influence peddling. In May, amendments to the law on Political Parties Financing, addressing some of GRECO recommendations were adopted. The Federation entity law on suppression of corruption and organised crime has not started being implemented. A new Republika Srpska entity law on suppression of corruption, organised crime and the most serious forms of commercial crimes was adopted in April. Cantons have limited or no specific anti-corruption legal framework. There is still no effective criminal justice policy including on penalties, which do not act as a deterrent. Rules are in place on the immunity of members of parliaments in criminal procedure and procedures governing the lifting of immunity. Rules on personal data protection by the police are not sufficient and generally not implemented, while penalties for breaches are not dissuasive. Strategic framework During the first year of implementation of Bosnia and Herzegovina Anticorruption Strategy, out of 98 activities 25 were implemented completely, 63 are in the process of implementation while the implementation of 10 activities have not yet started. Policy documents for the 2013-2017 period are in place in Republika Srpska. In September 2016 the government of the Federation entity adopted a 2016-2019 Anti-Corruption strategy as well as the Action Plan for its implementation. Policy documents were adopted in Sarajevo Canton in October, Canton 10 in March, Bosnian-Podrinje Canton Goražde in May and Tuzla Canton in September. To overcome the fragmentation of powers across the country’s various administrative layers, the fight against and the prevention of corruption require dedicated and specialised bodies at all levels of government with appropriate coordination channels and a holistic vision. In this context, the Anti-Corruption Agency issued a set of recommendations on prevention structures and policy documents to ensure coherence and efficiency. Strategic documents need to be improved by including in particular a solid risk assessment and clear identification of benchmarks. Robust monitoring mechanisms have yet to be established. Corruption risk assessments in the health and education sectors were made. These areas remain particularly prone to corruption and conducting risk assessments in a more systematic manner is a first positive step that should lead to further measures to effectively address corruption.

Fight against organised crime Bosnia and Herzegovina has some level of preparation on the fight against organised crime. Some progress was made to address last year's recommendations, by improving to some extent inter-agency cooperation. However, financial investigations remained underused. Fighting organised crime remains fundamental to countering criminal infiltration of the political, legal and economic system of the country. In the coming year Bosnia and Herzegovina should in particular: → strengthen 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; → improve regulation on mutual access to databases and the exchange of information between law enforcement agencies and prosecutors’ offices, stipulating procedures and mutual access rights in more detail; → further develop effective asset confiscation and recovery systems at all levels, including capacity for conducting financial investigations, fully implementing adopted joint minimum standards for assets seizure system in Bosnia and Herzegovina, based on the EU minimum standards. Track record There have been 30 convictions against 116 persons for organised crime. In the same period, 43 organised crime investigations against 238 suspects were ordered, while 84 persons were indicted in 19 cases for organised crime. Some large-scale operations took place, including in cooperation with EU Member States. In 2015 criminal assets worth EUR 1 015 365 were subject to confiscation orders in a total of 116 cases. Bosnia and Herzegovina remained a country of origin, transit and destination for human trafficking for labour exploitation, sexual exploitation, begging and forced marriages. The number of identified victims of human trafficking increased threefold, of which 80 % were women and girls. The Federation entity did not make changes to the criminal code that would ban all forms of human trafficking. This limits the ability of the country as a whole to prosecute trafficking crimes. There is no overall policy for carrying out financial investigations on a systematic basis and the precautionary freezing of assets during the early phase of investigations is rarely applied. Specialised anti-terrorism, human trafficking, drugs, cybercrime and financial investigations units are broadly in place at state and entity level, though with insufficient capacity. A Financial Investigation Unit has yet to be established at Federation entity level. The joint counter-terrorism task force is not functioning properly and its operational capacity has to be further strengthened. Institutional capacity to effectively address various forms of organised crime needs substantial improvement. Arrangements for practical cooperation 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. There is no operational countrywide DNA database and DNA profiling capacity remains limited. Swift exchange of forensic data with other countries does not take place. The automated fingerprint information system (AFIS) is outdated and of limited use. Joint minimum standards on civil possession and the carrying of weapons which were adopted in July 2015 started being turned into respective laws across the country. Full implementation will bring a harmonised legal framework within Bosnia and Herzegovina and improve alignment with relevant EU standards in this field. The Operational and Strategic Agreement with Europol was signed in August. Institutional and operational capacity There is the need throughout Bosnia and Herzegovina to further improve capacities for financial investigations and assets seizure in order to tackle organised crime and corruption. In the Federation entity the agency responsible for managing seized assets is not yet fully operational. Legal framework 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 the legislation across the country. The Brčko District adopted a new Assets Seizure law in July 2016. The Federation entity faces serious delays in applying the legislation on asset seizure. Strategic framework

The 2014-2016 strategy on the combat of organised crime is in place. However, there is a lack of efficient mechanism to overview the implementation of the high number of action plans by the various law enforcement agencies across the country and to secure a consistent approach in tackling organised crime. Inspired by the Europol methodology, a serious and organised crime threat assessment (SOCTA) 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 new strategy on the combat of organised crime for the following period and the new SOCTA need to be drafted. Activities to implement the country’s 2013-2016 strategy for controlling small arms and light weapons (SALW) continued. A new SALW strategy for 2016-2020 was adopted in September 2016. 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. Computer emergency response team (CERT) capacities need to be introduced at the state level and for the Federation entity, while existing CERT capacities in the Republika Srpska entity need to be enhanced. The additional Protocol to the Council of Europe Convention on Cybercrime concerning the criminalisation of acts of a racist and xenophobic nature committed through computer systems, needs to be implemented was ratified by Bosnia and Herzegovina and entered into force in 2006. It needs to be implemented effectively. The fight against terrorism In June, new members to the body to oversee the implementation of the Bosnia and Herzegovina strategy for the prevention of and fight against terrorism for 2015-2020 strategy were appointed by the Council of Ministers. However, the body is not yet fully operational. The action plan to implement the Strategy was adopted in October 2016. Bosnia and Herzegovina has been seriously affected by the phenomenon of foreign terrorist fighters and radicalisation. The phenomenon needs a dedicated response strategy by the intelligence and law enforcement community and a coherent judicial policy towards offenders. Efforts need to be stepped up to identify, prevent and disrupt the flow of foreign terrorist fighters travelling to conflict areas such as Iraq and Syria. Pockets of radicalisation have been identified across the country, in particular in the Wahhabi community. De-radicalisation and prevention of radicalisation programmes are to be developed and introduced. Provisions in the state criminal code criminalising acts of joining foreign para-military and para-police forces (‘foreign fighters’) started to be used in criminal proceedings with 8 cases being investigated. In one case, three persons were convicted with prison sentences. In 2016, for the terrorism criminal offences 34 investigations were ordered against 43 persons. In two cases, the Bosnia and Herzegovina Court imposed a total of nine convictions for terrorism related criminal offences. The capacities of the counter-terrorism task force have yet to be significantly strengthened. The task force’s operational component is still awaiting rules on its financing and confirmation of the formal status of its members. The counter-terrorism capacity of the Bosnia and Herzegovina’s Prosecutor’s Office increased with the appointment of eight new prosecutors dedicated to terrorism cases. Bosnia and Herzegovina still needs to meet international standards of the Financial Action Task Force (FATF) on anti-money laundering / countering the financing of terrorism (see also 4.1.3 and 4.3.2). 2.4. Human rights and the protection of minorities Some progress was achieved over the reporting period in addressing last year’s recommendations on effectively addressing human rights and minorities’ issues, in particular with the adoption of relevant amendments to the anti-discrimination law. The strategic, legal, institutional and policy frameworks for the observance of human rights are in need of substantial improvement. The provision on the death penalty in the constitution of the Republika Srpska entity still needs to be repealed. In the coming year, Bosnia and Herzegovina should in particular: Adopt a countrywide strategy for human rights and non-discrimination. Introduce a harmonised, consistent, effective and free legal aid system across the country and ensure non-discriminatory access to justice. Revise the Roma action plan on employment, housing and healthcare in line with the operational conclusions from the Roma seminars, including the necessary budget to implement agreed actions. Bosnia and Herzegovina has ratified all major European and international human rights instruments. However, it has not yet fully implemented the 128 accepted recommendations from the 2014 Universal Periodic Review. This includes recommendations on constitutional changes to recognise the equality of all citizens, prevent discrimination against minorities and gender-based violence, ensure non-discrimination, inclusive education, criminal code reform on war crimes and harmonisation of law and policy at all levels of government. Since September 2015, the European Court of Human Rights (ECtHR) has found at least one violation of the European Convention on Human Rights (ECHR) in three cases, relating to the right to liberty and security and to prohibition of discrimination. A total of 838 new applications were allocated to a decision-making body, bringing the number of pending applications to 1 027. The remaining outstanding cases relate mainly to repossession of occupancy rights, missing persons and discrimination on ethnic grounds. No progress was made in implementing the Court’s judgments on the Sejdić-Finci and Zornic cases. There is still no overarching policy document on promotion and enforcement of human rights. The Ombudsman still lacks adequate human and financial resources to perform its functions as national human rights institution. Training on the ECHR and ECtHR case-law continued for judges, prosecutors, legal associates and advisers of the Constitutional Court and the Court of Bosnia and Herzegovina.

On the right to life, the provision on the death penalty in the Republika Srpska entity constitution has still not been repealed. A national preventive mechanism for prevention of torture and ill treatment in line with the Optional Protocol to the Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment has still not been established. Reports of ill treatment of suspects in some police stations and of prisoners in some prisons and detention facilities remain a matter of serious concern which needs to be addressed. A state law on the rights of civilian victims of torture during the war, in compliance with the Convention against Torture, has yet to be adopted. Legislation on the prison system is not sufficiently harmonised throughout the country. The psychiatric institution in Sokolac, intended to provide mandatory psychiatric treatment requested during criminal proceedings, is not operational as funds were never allocated for its functioning. Execution of criminal sentences was hampered by the lack of coordination and harmonisation of procedures across the country. The backlog in the execution of criminal penalties in the Federation entity was considerably reduced, with 196 cases awaiting execution as of April. Existing penitentiary legislation still needs to be aligned with European standards and effectively implemented. Healthcare services in prisons remained deficient due to insufficient resources and medical staff. Protection of personal data in Bosnia and Herzegovina is partially harmonised with European standards. The number of complaints received by the Agency for Personal Data Protection decreased to 121 in 2015 from 140 in 2014. The Agency provided 259 expert opinions and conducted 90 inspections. There is still no legal obligation to consult the Agency for Personal Data Protection on draft laws that include provisions on personal data. The staffing of the Agency needs to be strengthened. The constitutional and legal guarantees on the freedom of thought, conscience and religion continued to be generally upheld. While religious tolerance was symbolically promoted on some well-publicised occasions, cases of discrimination on religious grounds continued to occur, as well as incidents targeting religious sites. Freedom of expression There is some level of preparation on freedom of expression. However, no progress was achieved in this area and no progress was made in addressing last year‘s recommendations. The financial stability of the public broadcasting system was not addressed. Political pressure and intimidation towards journalists, including physical and verbal attacks, continued during the reporting period, without appropriate judicial follow-up. There was no attempt to address the issue of the lack of transparency of media ownership. In the coming year, Bosnia and Herzegovina should in particular: → ensure sufficient protection of journalists and an appropriate law enforcement response to cases of threats to journalists; → finalise the reform of the public broadcasting system, including securing the funding of public broadcasters, harmonising relevant entity broadcasting legislation with the state-level law, and securing political neutrality of the steering boards; → adopt appropriate legislation on media ownership transparency, including for online media. Intimidation of journalists Political and financial pressure on the media continued. Cases continued to be reported, mainly involving intimidation and threats to journalists, verbal and physical attacks, hacking of websites, political, institutional and economic pressure and defamation. In March, members of an extremist group registered in the Republika Srpska entity and in Serbia, physically and verbally attacked N1 and RTV TV crews. The Republika Srpska authorities did not condemn the attack in public and the Republika Srpska police issued only two minor offence orders to perpetrators. Legislative environment Legal provisions guaranteeing freedom of expression are in place. However, political and ethnic lines continue to divide the public sphere and drive the development of legislative proposals in the media sector. The Republika Srpska National Assembly adopted amendments to the Radio and Television of Republika Srpska (RTRS) law in May. The amendments further distance the entity’s broadcasting legislation from the state-level law and disrupt the functioning of the three public service broadcasters within the public broadcasting system of Bosnia and Herzegovina. Implementation of legislation/institutions The political, institutional and financial independence of the Communications Regulatory Agency (CRA) continued to be an issue of concern. The Council of Ministers of Bosnia and Herzegovina confirmed the appointment of the acting Director of the CRA as Director of the regulatory authority in April. The CRA’s political neutrality, independence and its public perception as a neutral body have yet to be ensured. The Bosnia and Herzegovina Council of Ministers' decision on the use of the surplus revenues of the CRA may further harm the Agency’s financial and operational independence. There were shortcomings in the implementation of the freedom of access to information act, in particular on remedies when access is denied. The institutions do not run the test of public interest before limiting the right to access to information, interpreting the legal provisions in a way that protects private rather than public interests. The Central Election Commission refused to publish the asset disclosure statements of the officials running in elections, in line with the interpretation given by the Agency for Protection of Personal Data. This was contrary to the Bosnia and Herzegovina election law. The Reform Agenda commitment to start publishing asset disclosure forms of officials holding judicial functions has yet to be implemented. Public service broadcaster

All types of broadcasting are licensed by the CRA in accordance with the law on communications of Bosnia and Herzegovina. However, the independence of the three public service broadcasters within the country’s public broadcasting system has yet to be ensured. The public broadcasters in the two entities continued to be exposed to political influence. In March, the Federation Parliament launched the procedure to change the law on RTV, which would allow the appointment of steering board members of Radio-Television of the Federation entity in one year without holding the CRA vacancy procedure. The Federation entity failed to adopt appropriate amendments to harmonise the entity’s broadcasting legislation with the state-level law and secure depoliticised, merit-based selection and appointment of the steering board. Due to the lack of a politically independent steering board, RTV remained open to political influence. The appointment of the RTRS steering board could not yet be completed due to political disagreement in the ruling coalition at the Republika Srpska National Assembly. The steering board of RTRS remained politically affiliated and the entity broadcaster remained under the firm political control of the ruling party and with a deterioration of the RTRS editorial policy. Due to political obstruction, the statute of the state-level public service broadcaster Radio and Television of Bosnia and Herzegovina (BHRT) was not amended and the statute of the public broadcasting corporation was not adopted as provided for under the law on the public broadcasting system of Bosnia and Herzegovina. Economic factors Transparency of media ownership has yet to be fully achieved and the accessibility to full information is yet to be secured due to problematic legal provisions hampering systematic insight into ownership structures. This is especially problematic for online media, which are often not registered as media businesses. The rules on government financing of the media need to be improved. The country still lacks a law on media ownership transparency. Public broadcasters that are not part of the public broadcasting system are financed from municipal and cantonal budgets and remain under strong political influence. Legislation addressing State aid and competition includes provisions that seriously hinder broadcasters’ independence and ability to operate, which harms freedom of expression in the country. At entity level, Republika Srpska has a legal possibility to fund both public and private media. Lack of transparency and clear criteria in the distribution of subsidies are a serious concern. Media integrity is also harmed by the advertising practices of public companies and advertising agencies linked to political parties. Professional organisations, professional conditions The Bosnia and Herzegovina Journalists’ Association is the most active civil society organisation in the field of freedom of expression, the freedom of the media, the protection of journalists and media integrity. The complaints commission of the Press Council of Bosnia and Herzegovina continued to work and mediate between readers and the media, making sure that readers' complaints are addressed by editors. Freedom of assembly and association are enshrined in the constitutions and legislation at different levels of authority in the country. These rights were generally upheld. There is no common register of political parties but 103 political parties officially registered for the 2016 local elections. On property rights, the Commission for Real property Claims of Displaced persons and Refugees has not yet resumed operation. There are 7 ongoing administrative disputes before the Court of Bosnia and Herzegovina in which this Commission is a respondent party. Concerning non-discrimination policies, some initial steps were undertaken at state-level to develop comprehensive human rights and anti-discrimination strategies. In August amendments were adopted to the Bosnia and Herzegovina law on prohibition of discrimination to include age, sexual orientation, gender identity and disability as grounds for discrimination. 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 office in the House of Peoples and the Presidency of Bosnia and Herzegovina. No progress was achieved in eliminating the ‘two schools under one roof’ phenomenon, which is in breach of the relevant ruling of the Federation Supreme Court. The common core curriculum is not yet applied throughout the country. Amendments to the Federation criminal code concerning hate crimes were adopted in April. The amendments provide a definition of a hate crime, with a comprehensive list of protected grounds including race, colour, religious beliefs, nationality or ethnicity, language, disability, sex, sexual orientation and gender identity. At least 146 alleged bias-motivated incidents were reported to the police in Bosnia and Herzegovina in 2015. The number of reported incidents decreased in comparison with the previous year. The prevailing forms of bias were nationality, ethnicity, religion and sexual orientation. A mechanism to collect data on hate crimes and discrimination cases has still not been established. In 2015 no verdicts on hate crime charges were issued by courts; there needs to be consistent judicial follow-up and a systematic and comprehensive monitoring of hate crimes. Relevant legislation on hate speech regarding in particular the elements of incitement, intention, the public nature and the contents of the crime still needs to be harmonized. A Declaration condemning hate speech was adopted by the National Assembly of the Republika Srpska entity in October 2016. Legal provisions providing equality between women and men are broadly in place but their implementation continues to be ineffective. Gender impact assessments of policy and legislative processes are not implemented, although they are provided for in legislation. Women are still underrepresented in politics and public life. Permanent gender equality bodies have not yet been established under the aegis of cantonal governments. Annual operative plans to implement the gender action plan were adopted in the Republika Srpska entity in December. Lack of effective implementation of legislation on the prevention of and protection from gender-based violence, in particular domestic violence, remains a concern. Relevant legislation is still not harmonised with the Istanbul Convention on preventing and combating violence against women and domestic violence. Statistical data is still not robust enough to provide enough insight on how the law is implemented. A harmonised system for monitoring and data collection on cases of violence against women is still lacking. Entities’ domestic violence laws are not yet harmonised. There are no departments specialised in gender-based violence cases in relevant institutions, including in the police and the public sector. Access to free legal aid and court representation is very limited. The number of protective measures issued remained low, and the general system of response and support to victims needs to be improved. Existing safe houses remained in most cases strongly underfunded, in breach of existing legislation, with some having closed down as a result. On the rights of the child, no specific budget was allocated to implement the 2015-2018 action plan for children adopted last year. Children with disabilities represent 70 % of the total number of children placed in institutional care, which is a matter of concern. Use of foster care and alternative solutions need 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 remained weak, resulting in few cases being brought before the courts. Only one case was investigated by the Ombudsman’s Office in 2015. Not all children in Bosnia and Herzegovina are covered by compulsory health insurance and concerns continued over the regression of these rights and the exclusion of marginalised groups such as Roma children and other social categories. The legal framework on juvenile justice is in place but requires further harmonisation across the country. Appropriate by-laws on protection and treatment of children and juveniles in criminal proceedings are now in place, but lack of capacity still impedes meaningful implementation. The country has no strategy against juvenile offending in place. The absence of separate units for juveniles during pre-trial detention and in police stations across the country is a breach of international standards. The use of alternative measures to juvenile detention needs to be stepped up, as detention should only be a last resort. Support to juveniles upon release from an institution is still insufficient, with only limited reintegration measures undertaken. The Orašje educational-correctional facility has been operational since June. Proceedings in civil and administrative cases are still not conducted in a child-friendly consistent and harmonised manner across the country and measures for child victims and witnesses, while in place, are not applied in a reliable way.

The rights of persons with disabilities are still not effectively protected. The status-based approach continued to result in significant financial inequalities among different categories and detracted from the financial sustainability of social protection, making this category of people very vulnerable. On the rights of lesbian, gay, bisexual, transgender and intersex (LGBTI) persons, the Federation entity adopted amendments to its criminal code in April which include hate crimes on several grounds including sexual orientation and gender identity. The Republika Srpska and Federation entities adopted in December and March respectively annual operational plans based on the gender action plan for 2016, including also LGBTI-related measures. There have still been no indictments over the 2014 attack on the Merlinka Festival. Another public attack on LGBTI persons occurred in March in Sarajevo, leading to one person being injured. The attacks were not classified as hate crimes but as misdemeanours. Same-sex couples are continuously discriminated against through the legal system, which fails to provide them with any of their social and economic rights. The transgender community remained marginalised and no efforts were taken to simplify the procedure of legal sex change, which would enable legal gender recognition without having to complete medical transition. Issues of labour and trade union rights are covered in section 4.1.8. The fragmented, overall incomplete and un-harmonised legal and institutional framework does not ensure equitable procedural rights and maintains discrimination in access to justice. Without clear minimum common standards for free legal aid applicable to the various levels of authorities, this right continues to be upheld in an uneven way, particularly to the detriment of the most vulnerable groups. Free legal aid agencies have not yet been established in two cantons. Legislation on free legal aid is yet to be adopted at state and Federation entity levels and in two cantons. A comprehensive transitional justice strategy and unified legal basis for a compensation mechanism for wartime gross human rights violations across the country have yet to be adopted. 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. The state-level and Republika Srpska entity councils of national minorities are operational and the Federation entity Council of National Minorities in Bosnia and Herzegovina was reactivated in March. However, no progress was achieved to implement existing laws due to the continued lack of coordination between the state and the entities. The state-level strategic platform on national minorities has not yet been adopted. National minorities continued to have a low presence and participation in political and public debates and in the media. 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 and complex appointment procedures also undermine the legitimacy and ability of the councils to operate properly. The Roma remained the country’s most vulnerable and disadvantaged minority. The lack of reliable data hampers effective policy-making on this issue. A more comprehensive and integrated approach needs to be adopted for the social inclusion of Roma. The number of school drop-outs and unemployed Roma remained very high and access to the labour market remained hampered. Work started on revising the 2013-2016 Roma action plans on housing, employment and healthcare. In 2015, the Bosnia and Herzegovina Ministry of Human Rights and Refugees reduced the budget for implementing the Roma action plans on healthcare, employment and housing from EUR 1.5 million to EUR 1 million. This reduction did not reflect lower needs due to an improvement of the situation on the ground. No progress was observed on measures to preserve and promote Romani language, culture and history. The Romani language was not offered as an elective subject in any school in the country, nor was any other alternative provided for learning the language. In March, the Joint Human Rights Committee of the Bosnia and Herzegovina Parliamentary Assembly adopted a conclusion proposing 8 April as Roma Day and 5 November as Romani language Day. Progress continued on implementing the Roma action plan on housing. However, the Roma community continued to experience major difficulties in accessing healthcare services and the labour market. The civil registration process has yet to be fully completed with 57 people remaining at risk of statelessness. On refugees and internally displaced persons, some progress was made on the Annex VII Dayton Peace Agreement strategy, in the areas of repossession of property and occupancy rights, reconstruction of houses and infrastructure for returnees and IDPs. However, significant attention is still required on damage compensation for property that cannot be returned, access to healthcare and to employment, health and social protection, safety and demining, and education. Some 7 500 people are still accommodated in 45 collective centres throughout Bosnia and Herzegovina and continue to live in difficult conditions. 2.5.Regional issues and international obligations Implementation of the Dayton/Paris Peace Agreement continued. The Republika Srpska entity Government continued to hold joint sessions with the Serbian government as part of the Special and Parallel Relations agreement. The country’s cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) is satisfactory. The Office of the Prosecutor of the ICTY noted that, save for one case, the State Prosecutor's Office has taken prosecutorial decisions in all war crimes cases that had been transferred to the jurisdiction of Bosnia and Herzegovina before confirmation of an indictment (the ‘Category II’ cases). On the domestic prosecution of war crimes, the backlog of war crimes cases was further tackled. The number of indictments increased with 92 filed indictments against 169 suspects between September 2015 and 15 August 2016. Over the same period, courts in Bosnia and Herzegovina confirmed 80 indictments against 150 suspects and concluded 62 cases at first instance against 91 suspects. There was a continued positive trend in the successful prosecution of war crimes cases involving sexual violence. Final convictions amounted to 25 cases. A large number of potential cases remain and more efforts are required, particularly to ensure institutional understanding to improve victims’ confidence in the judicial system and avoid re-traumatisation of victims and witnesses. The societal and economic stigmatisation of conflict-related sexual violence victims with low socioeconomic status and limited access to justice remains a matter of concern in the absence of a state-level programme to improve their status. Such a programme, which should also include a comprehensive legal and policy framework, is yet to be adopted. Women who were victims of the war do not have the same status in the two entities. There was an increase in the use of predominantly in-court victim and witness support. However, its long-term sustainability remains at risk due to insufficient domestic financing. Judges and prosecutors are increasingly aware of the benefits of proper support structures. Psychological support to victims and witnesses before, during and after war crimes trials increased, predominantly due to international financing, but remained insufficient to cover the magnitude of people involved, particularly in entity courts. The implementation of the national war crimes strategy objectives continued, including through the transfer of less complex cases by the state-level judiciary to other judicial levels and the state-level judiciary taking over the most complex cases from other jurisdictions. The initial deadline of 7 years to have the most complex cases solved by December 2015 was not met and a new revised deadline has yet to be agreed, alongside a reinforcement of the role of the Supervisory Body to ensure the successful implementation of the strategy. As of end-December, 335 of the most complex cases were completed, leaving 358 pending. Some 450 less complex cases were completed, 426 of which through transfer to other judicial levels, while 357 remained to be completed.

Bosnia and Herzegovina still maintains a bilateral immunity agreement with the United States, granting US citizens exemptions from the jurisdiction of the International Criminal Court. In doing so, it does not comply with the EU common positions on the integrity of the Rome Statute or with the related EU guiding principles on bilateral immunity agreements. The country needs to align with the EU position. Bosnia and Herzegovina, Serbia, Croatia and Montenegro 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. Some progress was made on implementing the regional housing programme in Bosnia and Herzegovina, with a number of housing solutions provided. 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 remained a matter of concern in the Western Balkans. The Central Records on Missing Persons of Bosnia and Herzegovina indicate that 6 808 people are still missing as a result of the conflict. Ascertaining the fate of missing persons remains vital for reconciliation and stability in the region. While the Missing Persons Institute of Bosnia and Herzegovina is financially sustainable, its ability to fulfil its mandate is impeded by political pressures. 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 entity, continued to hamper the process of identifying remains. In April, Bosnia and Herzegovina ratified the Protocol on cooperation with Serbia in the search for the 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, CEFTA and the ‘Western Balkans Six’ initiative. In November, Bosnia and Herzegovina successfully concluded its first 6-month Chairmanship of the Committee of Ministers of the Council of Europe. In January, Bosnia and Herzegovina took over the Chairmanship of the Central European Initiative. The impetus given through the ‘Berlin process’ and the Western Balkan Six initiative, notably on the EU’s connectivity agenda, continued to foster increased regional cooperation. In December, a prioritised list of investment projects in the transport sector was endorsed by the Bosnia and Herzegovina National Investment Committee. On regional judicial cooperation, the Protocol signed between the Prosecutor’s Office of Bosnia and Herzegovina and the Office of the War Crimes Prosecutor of Serbia on cooperation in prosecution of perpetrators of war crimes, crimes against humanity and genocide continued to provide results, with two additional indictments for war crimes filed and further confirmed during the reporting period in Bosnia and Herzegovina, one indictment confirmed and a guilty plea agreement reached in Serbia and one case transferred to Serbia from Bosnia and Herzegovina. The two protocols signed with the Croatian and Montenegrin Prosecutor’s Offices are yet to produce concrete results. Relations with Albania remained friendly and without open issues. The Albanian President paid an official visit to Bosnia and Herzegovina in February. There are no official relations with Kosovo, as Bosnia and Herzegovina does not recognise Kosovo as an independent state. Bosnia and Herzegovina maintains a strict visa regime vis-à-vis Kosovo. The Ministry of Foreign Affairs continued 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 was still pending. An agreement on the collocation of diplomatic and consular offices with the former Yugoslav Republic of Macedonia was ratified in March 2016. In April, the Agreement on the state border between Bosnia and Herzegovina and Montenegro entered into force. A Protocol on cross-border supervision was signed in December. Overall, relations with Serbia remained good. In November, the Council of Ministers of Bosnia and Herzegovina and the Serbian government held their first joint session, which was followed by the signing of several bilateral agreements and memoranda, including on missing persons, the environment and telecommunications, construction of the inter-state bridge across Drina river, on international road transport of passengers and cargo, in the field of radiation and nuclear safety. The agreements were subsequently ratified by the country’s Presidency. Bosnia and Herzegovina Presidency members and the Minister of Foreign Affairs visited Belgrade in December. The Serbian Prime Minister took part in an investment forum in Srebrenica in November. Relations with Turkey remained good. A number of bilateral agreements were ratified, such as the Agreement on international carriage of passengers and goods by road, the Agreement on cooperation in the area of veterinary medicine and the Agreement on cooperation in the area of science and technology. Bilateral contacts have been frequent, with the Presidency and a delegation of the Council of Ministers of Bosnia and Herzegovina paying official visits to Turkey in December and April, respectively. The Turkish Prime Minister attended the opening of the rebuilt Ferhadija Mosque in Banja Luka in May. Relations with Croatia remained good, with frequent bilateral visits. In March the Presidency of Bosnia and Herzegovina paid an official visit to Croatia. In October, Bosnia and Herzegovina ratified the Agreement on rights and obligations for use of water from public water supply systems that cut across the state border. An Agreement on European Partnership between the two countries was signed in May 2016. However, no progress was made towards resolving further outstanding bilateral issues, including property issues and border demarcation. 3. ECONOMIC CRITERIA Key economic figures 2014 2015 Gross domestic product per capita (% of EU28 in PPS) 29 29 GDP growth (%) 1.1 3.0 Unemployment rate (female; male) (%) 31.2/25.3 30.9/25.9 Economic activity rate for persons aged 20–64: proportion of the population aged 20–64 that is economically active (%) 59.2 59.2 Current account balance (% of GDP) -7.5 -5.6 Foreign direct investment (FDI) (% of GDP) 2.6 1.4 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 be seen in the context of the central importance of economic governance in the enlargement process. Each enlargement country prepares an Economic Reform Programme (ERP) annually, which sets out a medium-term macro-fiscal policy framework and a structural reform agenda aimed at ensuring competitiveness and inclusive growth. The ERPs are the basis for country-specific policy guidance jointly adopted by the EU and the