Förslag till RÅDETS BESLUT om principerna, prioriteringarna och villkoren i det europeiska partnerskapet med Bosnien och Hercegovina {SEK(2004) 375}

(framlagt av kommissionen)

MOTIVERING

Vid sitt möte i Thessaloniki den 19-20 juni 2003 gav Europeiska rådet åter uttryck för sin beslutsamhet att fullt ut och effektivt stödja ett europeiskt perspektiv för länderna på västra Balkan och angav att de länderna "kommer att bli en integrerad del av EU när de uppfyller de uppställda kriterierna". Europeiska rådet ställde sig också bakom rådets slutsatser av den 16 juni 2003 om västra Balkan, inklusive bilagan "Thessalonikiagendan för västra Balkan: i riktning mot en europeisk integration", vilken syftar till att - bl.a. genom upprättande av europeiska partnerskap - ytterligare förstärka förbindelserna mellan EU och västra Balkan, varvid även erfarenheterna av utvidgningsprocessen skall utnyttjas. Kommissionen har uppmanats att lägga fram den första omgången europeiska partnerskap för beslut av rådet tillsammans med de kommande årsrapporterna om stabiliserings- och associeringsprocessen vilka skall läggas fram i slutet av mars 2004.

Det europeiska partnerskapet med Bosnien och Hercegovina bygger på bestämmelserna i rådets förordning (EG) nr 533/2004. I partnerskapet anges prioriteringarna på kort och medellång sikt för Bosnien och Hercegovinas förberedelser för en närmare integrering i Europeiska unionen, vilka framgår av kommissionens årsrapport 2004, och det fungerar som en checklista mot vilken framstegen kan mätas. Det europeiska partnerskapet med Bosnien och Hercegovina återspeglar det stadium i vilket landet för närvarande befinner sig i sina förberedelser och är särskilt utformat efter dess behov. Bosnien och Hercegovina förväntas i gengäld utarbeta en plan med en tidsplan för och uppgifter om hur landet ämnar ta itu med prioriteringarna i det europeiska partnerskapet. Kommissionen kommer regelbundet att övervaka framstegen i genomförandet av prioriteringarna, särskilt i samband med årsrapporterna om, och genom de strukturer som inrättats inom ramen för, stabiliserings- och associeringsprocessen.

Prioriteringarna i det europeiska partnerskapet bör utgöra grunden för programplaneringen av de ekonomiska resurser som gemenskapsstödet består av och som liksom tidigare kommer att utgöras av det stöd som tillhandahålls inom ramen för de befintliga finansiella instrumenten, i synnerhet rådets förordning (EG) nr 2666/2000 av den 5 december 2000 (Cards).

Förslaget till rådsbeslut får inga konsekvenser för budgeten.

Kommissionen föreslår med hänvisning till ovanstående att rådet antar det bifogade beslutet.

Förslag till RÅDETS BESLUT om principerna, prioriteringarna och villkoren i det europeiska partnerskapet med Bosnien och Hercegovina

EUROPEISKA UNIONENS RÅD HAR BESLUTAT FÖLJANDE

med beaktande av Fördraget om upprättandet av Europeiska gemenskapen,

med beaktande av rådets förordning (EG) nr 533/2004 om upprättandet av europeiska partnerskap inom ramen för stabiliserings- och associeringsprocessen [1], särskilt artikel 2 i denna,

[1] EUT L

med beaktande av kommissionens förslag, och

av följande skäl:

(1) Vid sitt möte i Thessaloniki den 19-20 juni 2003 ställde sig Europeiska rådet bakom "Thessalonikiagendan för västra Balkan: i riktning mot en europeisk integration" i vilken utarbetandet av europeiska partnerskap nämns som ett sätt att intensifiera stabiliserings- och associeringsprocessen.

(2) Enligt rådets förordning (EG) nr 533/2004 skall rådet med kvalificerad majoritet och på kommissionens förslag besluta om de principer, prioriteringar och villkor som skall ingå i de europeiska partnerskapen och om alla senare anpassningar av dessa.

(3) Det anges i rådets förordning (EG) nr 533/2004 att genomförandet av de europeiska partnerskapen kommer att följas upp genom de mekanismer som inrättats inom ramen för stabiliserings- och associeringsprocessen, särskilt årsrapporterna.

(4) I kommissionens genomförbarhetsstudie från 2003 och årsrapport 2004 görs en objektiv analys av Bosnien och Hercegovinas förberedelser för en närmare integrering i Europeiska unionen och utpekas ett antal prioriterade områden inom vilka ytterligare insatser bör göras.

(5) För att förbereda för en närmare integrering i Europeiska unionen bör Bosnien och Hercegovina utarbeta en plan med en tidsplan för och uppgifter om vilka åtgärder landet avser vidta i detta syfte.

HÄRIGENOM FÖRESKRIVS FÖLJANDE.

Artikel 1

Principerna, prioriteringarna och villkoren för det europeiska partnerskapet med Bosnien och Hercegovina anges, i enlighet med artikel 1 i rådets förordning (EG) nr 533/2004, i bilagan till detta beslut vilken utgör en integrerad del av beslutet.

Artikel 2

Genomförandet av det europeiska partnerskapet skall granskas genom de mekanismer som inrättats inom ramen för stabiliserings- och associeringsprocessen.

Artikel 3

Detta beslut träder i kraft den tredje dagen efter det att det har offentliggjorts i Europeiska unionens officiella tidning.

Utfärdat i Bryssel [...]

På rådets vägnar

Ordförande

BILAGA

1. Inledning

I Thessalonikiagendan fastställs olika tillvägagångssätt för hur stabiliserings- och associeringsprocessen skulle kunna förstärkas. Upprättande av europeiska partnerskap anges som ett möjligt tillvägagångssätt.

Syftet med det europeiska partnerskapet med Bosnien och Hercegovina är att, på grundval av kommissionens årsrapport, fastställa vilka åtgärder som skall prioriteras för att inom en sammanhängande ram hjälpa landet att närma sig Europeiska unionen. Prioriteringarna är anpassade till Bosnien och Hercegovinas särskilda behov och till det stadium på vilket landet befinner sig i sina förberedelser och kommer vid behov att uppdateras. Det europeiska partnerskapet ger också vägledning när det gäller ekonomiskt stöd till Bosnien och Hercegovina.

Bosnien och Hercegovina förväntas anta en plan med en tidsplan för och uppgifter om hur landet ämnar ta itu med prioriteringarna i det europeiska partnerskapet. Det bör i denna plan också anges hur man avser att fullfölja Thessalonikiagendan, de prioriteringar för bekämpning av organiserad brottslighet och korruption som utpekades vid konferensen i London 2002 och vid ministermötet i Bryssel den 28 november 2003 inom ramen för forumet på hög nivå mellan EU och länderna på västra Balkan samt de åtgärder som vart och ett av länderna på västra Balkan lade fram vid mötet i Belgrad den 5 november 2003 som en uppföljning av konferensen i Ohrid om integrerad gränsförvaltning.

2. Principer

Stabiliserings- och associeringsprocessen fortsätter att utgöra ramen för länderna på västra Balkan på deras väg mot EU ända fram till deras framtida anslutning.

De prioriteringar som främst utpekats för Bosnien och Hercegovina rör landets förmåga att uppfylla de kriterier som fastställdes av Europeiska rådet vid dess möte i Köpenhamn 1993 och de villkor som fastställts för stabiliserings- och associeringsprocessen, särskilt de villkor som rådet utpekade i sina slutsatser av den 29 april 1997 och den 21-22 juni 1999, innehållet i slutförklaringen från toppmötet i Zagreb den 24 november 2000 och Thessalonikiagendan.

3. Prioriteringar

I kommissionens årsrapport görs en bedömning av de framsteg som gjorts och konstateras på vilka områden landet måste göra ökade insatser. Prioriteringarna i det europeiska partnerskapet har valts ut mot bakgrund av att Bosnien och Hercegovina realistiskt sett kan förväntas genomföra dem eller göra betydande framsteg under de närmaste åren. Man skiljer mellan prioriteringar på kort sikt, vilka förväntas bli genomförda inom ett eller två år, och prioriteringar på medellång sikt, vilka förväntas bli genomförda inom tre till fyra år.

I det europeiska partnerskapet anges på grundval av analysen i genomförbarhetsstudien och årsrapporten 2004 de främsta prioriterade områdena när det gäller Bosnien och Hercegovinas förberedelser för en närmare integrering i Europeiska unionen. När det gäller anpassningen av lagstiftning bör det erinras om att införlivandet av gemenskapens regelverk med den nationella lagstiftningen inte är tillräckligt i sig, utan man måste också förbereda dess fullständiga genomförande.

3.1 PRIORITERINGAR PÅ KORT SIKT

Politisk situation

Demokrati och rättsstat

* Förbereda val - Bosnien och Hercegovina bör axla det fulla organisatoriska och finansiella ansvaret för kommunalvalen 2004.

* Effektivare styrelseformer - Genomföra lagen om ministerrådet och lagen om ministerierna. Utlysa ministerrådsmöten och parlamentsmöten med sådan regelbundenhet att frågor som rör offentlig verksamhet snabbt kan behandlas. Se till att de nya statliga ministerier och institutioner som upprättats genom 2002 års lag om ministerrådet kommer igång med sin verksamhet. Till fullo genomföra "handlingsplanen för prioriterade reformer" för 2003-2004, och för 2004 (och de följande åren) upprätta en samlad arbetsplan på förvaltningsnivå med en anpassning mellan de politiska prioriteringarna och budgetmedlen. (Rekommendation från genomförbarhetsstudien)

* Uppföljning av reformerna av säkerhetssektorn - Genomföra lagen om försvaret. Anta och börja tillämpa lagen om underrättelse- och säkerhetstjänsten.

* Effektivare offentlig förvaltning - Göra ytterligare ansträngningar för att upprätta en effektiv offentlig förvaltning, bl.a. utarbeta en omfattande, kostnadsberäknad handlingsplan för reform av den offentliga förvaltningen med tydlig behörighetsfördelning (till exempel för polisen och hälso- och sjukvården). Finansiera offentliga myndigheter på statlig nivå och på entitetsnivå samt samarbeta med dessa. (Rekommendation från genomförbarhetsstudien)

* Ett effektivt rättsväsen - Anta lagstiftning om inrättande av ett enda högt domar- och åklagarråd för Bosnien och Hercegovina i syfte att stärka inflytandet över tjänstetillsättningar inom entiteternas rättsväsen och stärka domstolarnas oberoende i hela landet. Förse den nationella domstolen med nödvändiga personalresurser och finansiella resurser. (Rekommendation från genomförbarhetsstudien)

Mänskliga rättigheter och skydd av minoriteter

* Effektiva bestämmelser om mänskliga rättigheter - Anta och sätta i kraft lagstiftning till stöd för flyktingars återvändande. Särskilt införa, anta och genomföra lagstiftning om den nationella fonden för flyktingars återvändande. Slutföra överföringen av människorättsorganen till Bosnien och Hercegovina. Sörja för att ännu icke avgjorda ärenden vid byrån för mänskliga rättigheter (Human Rights Chamber) handläggs och att byråns ansvarsområden överförs till författningsdomstolen. Ställa tillräckliga medel till förfogande för domstolen. Påta sig det fullständiga nationella ansvaret för den nationella ombudsmannen och göra framsteg när det gäller sammanslagningen av den nationella ombudsmannen och entiteternas ombudsmän. (Rekommendation från genomförbarhetsstudien)

Regional integration och regionalt samarbete

* Uppfylla befintliga villkor och fullgöra befintliga internationella förpliktelser - Till fullo samarbeta (detta gäller särskilt Republika Srpska) med Krigsförbrytartribunalen för f.d. Jugoslavien (ICTY) och se till att personer som är anklagade för krigsförbrytelser ställs inför rätta vid tribunalen [...] Slutföra ännu inte åtgärdade punkter i färdplanen. Uppfylla fredsavtalen från Dayton och Paris. Vidta åtgärder för att genomföra de kriterier som Bosnien och Hercegovina måste uppfylla efter sin anslutning till Europarådet, särskilt de kriterier som gäller demokrati och mänskliga rättigheter. (Rekommendation från genomförbarhetsstudien)

Ekonomisk situation

Fri marknadsekonomi och strukturreformer

* Sörja för makroekonomisk stabilitet - Bibehålla en stabil makroekonomisk ram i enlighet med Internationella valutafondens program och visa att landet följer de internationella finansiella institutens rekommendationer.

* Förbättra företagsklimatet - Främja privatiseringen av företag. Anta och genomföra reformer som ett led i det så kallade Bulldozer-initiativet. Anta lagstiftning om företagsstyrning.

* Tillförlitlig statistik - Genomföra lagen om statistik så att det upprättas ett fungerande statistiksystem med en klar och tydlig fördelning av ansvarsområden och tydliga samordningsmekanismer. (Rekommendation från genomförbarhetsstudien)

Förvaltning av de offentliga finanserna

* Budgetlagstiftning - Anta och börja tillämpa en budgetlag med bestämmelser om flerårig budgetplanering och fleråriga budgetprognoser samt börja utarbeta konsoliderade offentliga räkenskaper. (Rekommendation från genomförbarhetsstudien)

* Budgetpraxis - Vidta åtgärder för att alla inkomster hos offentliga myndigheter på olika förvaltningsnivåer skall redovisas, även gåvobistånd och andra former av internationellt bistånd. (Rekommendation från genomförbarhetsstudien)

Europeiska standarder

* Europeisk integration - Se till att direktoratet för europeisk integration fungerar väl inom alla sina ansvarsområden, även i fråga om förmågan att samordna biståndet. (Rekommendation från genomförbarhetsstudien)

Inre marknad och handel

* Respektera internationella normer - Sörja för att samtliga frihandelsavtal som landet förhandlat fram genomförs snabbt, fullständigt och noggrant.

* Utveckling av ett enda ekonomiskt område i Bosnien och Hercegovina - Upprätta konkurrensrådet. Införa bestämmelser om ömsesidigt erkännande av produkter i Bosnien och Hercegovinas lagstiftning samt tillämpa ett konsekvent och effektivt system för offentlig upphandling i hela landet. Undanröja alla dubbleringar av krav på licenser, tillståndsbevis och andra tillståndskrav så att tillhandahållare av tjänster (inbegripet finansiella institut) kan bedriva verksamhet i hela Bosnien och Hercegovina utan att behöva uppfylla onödiga administrativa krav. Upprätta ett enda system för företagsregistrering som erkänns i hela Bosnien och Hercegovina. (Rekommendation från genomförbarhetsstudien)

* Konsekvent handelspolitik - Fastställa en konsekvent och heltäckande handelspolitik samt se över den befintliga lagstiftningen i syfte att se till att lagstiftningen om frizoner blir konsekvent. I syfte att främja export men också förbättra standarder och stärka det gemensamma ekonomiska området upprätta sådana certifieringsförfaranden och andra förfaranden på statlig nivå för export av animalieprodukter som är förenliga med gemenskapens regelverk samt ett organ för fytosanitära frågor, även det förenligt med gemenskapens regelverk. (Rekommendation från genomförbarhetsstudien)

* Reform av tull- och beskattningsväsen - Fortsätta att genomföra rekommendationerna från kommissionen för indirekt beskattning. Sörja för att parlamentet antar lagen om myndigheten för indirekt beskattning, inbegripet därmed sammanhängande lagstiftning. Se till att lagen genomförs, att det tillsätts en direktör för myndigheten för indirekt beskattning och att den nya tullmyndigheten fungerar. Uppvisa framsteg i arbetet med att förbereda införandet av mervärdesskatt så att det kan ske som planerat. (Rekommendation från genomförbarhetsstudien)

* Ursprungsintyg - Sörja för att alla Bosnien och Hercegovinas ursprungsintyg är tillförlitliga.

Sektorspolitik

* Integrerad energimarknad - Genomföra entiteternas åtgärdsplaner för omstrukturering av elmarknaden. (Rekommendation från genomförbarhetsstudien)

* System för radio och TV i allmänhetens tjänst - Anta lagstiftning som överensstämmer med europeiska normer och med fredsavtalen från Dayton och Paris samt vidta åtgärder för att trygga ett långsiktigt livskraftigt, finansiellt och redaktionellt oberoende nationellt system i Bosnien och Hercegovina för radio och TV i allmänhetens tjänst, där de programföretag som ingår i systemet delar en gemensam infrastruktur. (Rekommendation från genomförbarhetsstudien)

Samarbete på området för rättsliga och inrikes frågor

* Bekämpning av brottslighet, särskilt organiserad brottslighet - Bygga upp kapaciteten hos de rättsvårdande organen på statlig nivå genom att anslå de resurser och den utrustning som krävs för att det statliga informations- och skyddsorganet och det nationella säkerhetsministeriet skall kunna fungera helt och fullt. Fortsätta att genomföra strukturreformerna när det gäller polisväsendet i syfte att rationalisera polisens verksamhet. (Rekommendation från genomförbarhetsstudien)

* Administrationen på asyl- och migrationsområdet - Se till att det byggs upp en organisation för handläggning av asyl- och migrationsfrågor och att denna kommer igång med sin verksamhet. (Rekommendation från genomförbarhetsstudien)

* Åtgärda terrorismen - Öka det internationella samarbetet och genomföra relevanta internationella konventioner om terrorism. Förbättra samarbetet och informationsutbytet mellan polisen och säkerhetstjänsten inom landet och med andra länder. Förhindra finansiering och förberedande av terrorhandlingar.

3.2 PRIORITERINGAR PÅ MEDELLÅNG SIKT

Politisk situation

Demokrati och rättsstat

* Förbereda val - Axla det fulla organisatoriska och finansiella ansvaret för valen år 2006 och andra val.

* Påta sig ansvaret för landets styre - Sträva efter att påta sig det fullständiga nationella ansvaret för politikutformning och beslutsfattande. Alla ministerier på statlig nivå bör få adekvat finansiering och det bör upprättas verksamhetsplaner för de institutioner som krävs för ett framtida stabiliserings- och associeringsavtal och för vidare europeisk integration. Sörja för ordentlig policysamordning mellan alla nivåer av den offentliga förvaltningen.

* Ytterligare förbättra den offentliga förvaltningens verksamhet - Genomföra den samlade handlingsplanen för reform av den offentliga förvaltningen och förbättra förvaltningsförfarandena. Förbättra förmågan till utformning av politiken och till samordning och bygga upp utbildningskapacitet för offentliganställda tjänstemän i Bosnien och Hercegovina (bl.a. för dem som handhar frågor om europeisk integration).

* Ytterligare stärka rättsväsendet - Sörja för att det tillämpas likvärdiga normer för tillsättning, befordran, utbildning och tjänsteföreskrifter när det gäller domare och åklagare i hela Bosnien och Hercegovina. Sörja för att Bosnien och Hercegovina påtar sig det fulla ansvaret för den nationella domstolen, åklagarämbetet och det höga domar- och åklagarrådet när det gäller finansiering, förvaltning och personal.

* Främja reformen av polisväsendet - Genomföra rekommendationerna om översyn av polissektorns organisation och verksamhet och sörja för samordning mellan de rättsvårdande organen.

* Förbättra bekämpningen av korruption - Göra framsteg när det gäller bekämpningen av korruption och visa att landet fullgör relevanta internationella åtaganden. Anta och genomföra en strategi för bekämpning av korruption, sörja för att lagen om intressekonflikter genomförs och stärka förmågan att bedriva undersökningar och väcka åtal vid korruption.

Mänskliga rättigheter och skydd av minoriteter

* Sörja för att de mänskliga rättigheterna respekteras - Sörja för att de mänskliga rättigheterna skyddas i samma utsträckning som eller bättre än under internationell övervakning och uppvisa effektivt skydd av minoriteters, bl.a. romers, rättigheter. Sörja för att lagen om nationella minoriteters rättigheter genomförs på alla områden.

* Slutföra åtgärderna för flyktingars återvändande - Slutföra processen rörande flyktingars återvändande och göra det lättare för flyktingar att återintegreras ekonomiskt och socialt.

* Befästa ombudsmannens kontor - Slutföra sammanslagningen av den nationella ombudsmannen och entiteternas ombudsmän och se till att den nya institutionen fungerar.

Regional integration och regionalt samarbete

* Sörja för att krigsförbrytelser åtalas - Uppvisa framsteg när det gäller att gripa personer som anklagas för krigsförbrytelser i f.d. Jugoslavien och att avveckla de nätverk som stöder sådana personer. Sörja för att Internationella tribunalen för f.d. Jugoslavien kontinuerligt får tillgång till all dokumentation, allt material och alla vittnen som den behöver för de pågående undersökningarna eller åtalen. Påta sig det administrativa och finansiella ansvaret för den nationella domstolens avdelning för krigsförbrytelser.

* Fortsätta med det regionala samarbetet - Sträva efter att finna lösningar på de ännu olösta bilaterala gränsfrågorna mellan Bosnien och Hercegovina och dess grannländer.

* Fullgöra internationella åtaganden - Sörja för att Thessalonikiåtagandena när det gäller samarbete inom rättsliga och inrikes frågor, handel, energi, transport och miljö fullgörs.

Ekonomisk situation

Fri marknadsekonomi och strukturreformer

* Främja ytterligare strukturella reformer - Ytterligare förbättra företagsstyrningen, minska stelheten på arbetsmarknaden och se till att handelsdomstolarna tillämpar konkurslagstiftningen. Ge marknadskrafterna ökat spelrum genom att minska statlig inblandning och minska den andel som statens utgifter utgör av BNP.

* Underlätta företagandet, särskilt utvecklingen av små och medelstora företag - Ytterligare utveckla samordningen av politiken gentemot små och medelstora företag och fortsätta att genomföra principerna i Europeiska stadgan för små och medelstora företag.

* Ytterligare utveckla den statistiska kapaciteten på statlig nivå - Utarbeta och genomföra en flerårig verksamhetsplan för statistik och regelbundet göra välgrundade uppskattningar av den nominella och reala BNP:n samt tillhandahålla sammanhängande uppgifter om arbetslöshet, inflation, betalningsbalans, löner och industriell produktion. Sörja för samarbete med Eurostat.

Förvaltning av de offentliga finanserna

* Sörja för konsoliderade offentliga räkenskaper - Sörja för konsoliderade offentliga räkenskaper inom finansministeriet.

* Utveckla kapacitet i fråga om ekonomisk planering - Fortsätta med och stärka processen för en ekonomisk ram på medellång sikt för alla budgetanvändare. Sörja för att budgeten genomförs genom öppna förfaranden och se till att det regelbundet görs finansiella rapporter.

* Ytterligare stärka budgetförberedelserna - Införliva medel som (för närvarande) ligger utanför budgeten och säkra en förnuftig budgetering av medel på grundval av realistiska uppskattningar av inkomster. Stärka budgetförberedelserna i alla ministerier.

* Ta itu med den inhemska skuldsättningen - Se till att den omfattande plan beträffande den inhemska skuldsättningen som överenskommits med Internationella valutafonden efterlevs.

Europeiska standarder

* Europeisk integration - Genomföra en strategi för europeisk integration. Utveckla kapaciteten för stegvis harmonisering av lagstiftningen med gemenskapens regelverk och utöka Bosnien och Hercegovinas roll i programplaneringen för och genomförandet av Cards, med det långfristiga syftet att möjliggöra decentralisering av biståndet.

Inre marknad och handel

* Inre marknad och företagande - Visa att konkurrensrådet och entiteternas kontor för konkurrensfrågor och konsumentskydd fungerar effektivt. Ytterligare stärka tillämpningen av ett konsekvent och effektivt system för offentlig upphandling och se till att byrån för offentlig upphandling och tillsynsorganet på upphandlingsområdet fungerar. Fortsätta att sörja för fri rörlighet för varor och tjänster inom Bosnien och Hercegovina. Sörja för att instituten för standarder, metrologi och immateriella rättigheter fungerar helt och fullt och underlätta kontakten och informationsutbytet med offentliga och privata företag. Sörja för att lagstiftningen på detta område genomförs på ett konsekvent sätt (särskilt lagstiftningen om immateriella rättigheter).

* Förvaltning av handelsfrågor - Stärka planeringen och förhandlingskapaciteten inom ministeriet för utrikeshandel och ekonomiska förbindelser.

* Standarder på handelsområdet - Vidareutveckla den statliga veterinärmyndigheten och sörja för att organet för fytosanitära frågor fungerar helt och fullt i syfte att uppnå EU:s standarder. Utarbeta regler för tekniska standarder samt immateriella och industriella rättigheter i enlighet med EU:s normer.

* Tull och beskattning - Visa att frizonerna förvaltas i enlighet med EU:s regelverk. Slutföra sammanslagningen på tullområdet och sörja för att reformplanen för tullen genomförs till fullo. Göra om styrelsen för myndigheten för indirekt beskattning till ett skatteråd med förmåga att fastställa riktlinjer för politiken. Ytterligare stärka den administrativa kapaciteten för såväl tull som beskattning. Övervaka införandet av mervärdesskatt på statlig nivå och fortsätta att utarbeta strategier för uppbörd och kontroll för att stegvis minska skattebedrägerierna i fråga om såväl direkt som indirekt beskattning.

Sektorspolitik

* System för radio och TV i allmänhetens tjänst - Till fullo genomföra de reformer som överenskommits på detta område. Sörja för att tillsynsorganet på kommunikationsområdet bibehåller sitt oberoende.

* Integrerad energimarknad - Se till att lagstiftningen på energiområdet harmoniseras, att det upprättas ett enda statligt tillsynsorgan samt att lagen om bildandet av ISO och TRANSCO genomförs. Fullgöra åtagandena i 2003 års samförståndsavtal i Aten.

* Miljö - Stärka förmågan att handlägga miljöfrågor på statlig nivå genom att se till att det finns en fungerande statlig miljöbyrå.

Samarbete på området för rättsliga och inrikes frågor

* Gränsförvaltning - Fullgöra de internationella åtaganden som gjordes vid konferensen i Ohrid om gränssäkerhet och gränsförvaltning i maj 2003 och genomföra de åtgärder som lades fram vid ministermötet om rättsliga och inrikes frågor mellan EU och länderna på västra Balkan i november 2003. Godta och genomföra en strategi för integrerad gränsförvaltning. Underlätta det regionala samarbetet och den regionala handeln genom att förbättra gränsförvaltningen och transportmöjligheterna. Ytterligare utveckla samarbetet mellan den statliga gränsförvaltningen, tullen, polisen och åklagarämbetet för att stoppa och rättsligt beivra illegal handel och annan gränsöverskridande brottslighet. Fortsätta att tillämpa den nationella planen för bekämpning av illegal handel. Förbättra den administrativa kapaciteten när det gäller utfärdande av viseringar, särskilt behandlingen av ansökningar om visering.

* Organiserad brottslighet - Visa att alla åtgärder som fastställs i den åtgärdsplan mot organiserad brottslighet som lades fram vid ministermötet om rättsliga och inrikes frågor i Bryssel i november 2003 har genomförts helt och fullt.

* Migration och asyl - Genomföra lagen om utlänningars rörlighet och uppehåll och om asyl. Visa att den nationella förvaltningen av asyl- och migrationspolitiken fungerar och rapportera om insatser. Fortsätta att förhandla fram och ingå avtal om återtagande.

4. Programplanering

Gemenskapsstödet till länderna på västra Balkan inom ramen för stabiliserings- och associeringsprocessen kommer att tillhandahållas via de befintliga finansieringsinstrumenten, särskilt rådets förordning (EG) nr 2666/2000 [2]. Det här beslutet får således inga konsekvenser för budgeten. Bosnien och Hercegovina kommer dessutom att få tillgång till finansiering från program som omfattar flera länder och från övergripande program. Kommissionen samverkar med Europeiska investeringsbanken (EIB) och de internationella finansiella instituten, särskilt Europeiska banken för återuppbyggnad och utveckling och Världsbanken, i syfte att underlätta samfinansiering av projekt med anknytning till stabiliserings- och associeringsprocessen.

[2] EGT L 306, 7.12.2000, s. 1.

5. Villkorlighet

Gemenskapsstödet till länderna på västra Balkan inom ramen för stabiliserings- och associeringsprocessen ges på villkor att det görs ytterligare framsteg när det gäller att uppfylla de politiska Köpenhamnskriterierna och i synnerhet när det gäller att genomföra de särskilda prioriteringarna i detta europeiska partnerskap. Om dessa allmänna villkor inte uppfylls kan rådet komma att vidta lämpliga åtgärder på grundval av artikel 5 i förordning (EG) nr 2666/2000.

För gemenskapsstödet skall också gälla de villkor som fastställdes av rådet i dess slutsatser av den 29 april 1997 och den 21-22 juni 1999, särskilt vad gäller mottagarländernas åtagande att genomföra demokratiska, ekonomiska och institutionella reformer.

6. Övervakning

Uppföljningen av det europeiska partnerskapet ombesörjs genom de mekanismer som inrättats inom ramen för stabiliserings- och associeringsprocessen och särskilt genom årsrapporterna om stabiliserings- och associeringsprocessen.

COMMISSION STAFF WORKING PAPER

BOSNIA AND HERZEGOVINA

Stabilisation and Association - Report 2004

{COM(2004)205 final}

BOSNIA AND HERZEGOVINA

Stabilisation and Association - Report 2004

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY

2. POLITICAL SITUATION

2.1. Points covered in the Feasibility Study

2.2. Other Priorities Areas identified in the 2003 SAP Report

2.3. General Evaluation

3. ECONOMIC SITUATION

3.1. Points covered in the Feasibility Study

3.2. Other Priorities Areas identified in the 2003 SAP Report

3.3. General Evaluation

4. IMPLEMENTATION OF THE STABILISATION AND ASSOCIATION PROCESS

4.1. Points covered in the Feasibility Study

4.2. Other Priorities Areas identified in the 2003 SAP Report

4.3. General evaluation

5. EC FINANCIAL ASSISTANCE

6. PERCEPTIONS OF THE EU

PREFACE

On 18 November 2003 the European Commission published a Feasibility Study which reviewed Bosnia and Herzegovina's (BiH) readiness to open negotiations on a Stabilisation and Association Agreement (SAA) with the European Union (EU). The Study concluded that in the light of reform up to October / November 2003, the Commission hoped that it would be in a position to recommend to the Council the opening of SAA negotiations in 2004. However, such a recommendation would be conditional on BiH making significant progress in addressing the 16 reform areas identified in the Study.

In reaching this conclusion, the Feasibility Study provided an analysis of BiH's current situation. It thus covered much of the ground normally reviewed by the annual report on the Stabilisation and Association Process (SAP). This Report does not repeat that analysis, but instead focuses on initial progress on the 16 priority reform areas since November 2003.

The Feasibility Study also pointed out that BiH is engaged in a number of other reforms which are important for the stabilisation of peace under the Dayton - Paris Peace Accords. Since some of these lie outside the scope of a future SAA, they were not addressed in the Feasibility Study. Nevertheless, they have a bearing on BiH's ability to function as a modern democratic state and thus as a potential candidate for EU membership. A secondary aim of this report is to look briefly at these areas, particularly those mentioned as "Priorities needing Attention in the next 12 Months" in the 2003 SAP Report, and to provide a brief analysis of progress over the past year.

The Thessaloniki Agenda for the Western Balkans identified ways of intensifying the SAP, including the drawing-up of European Partnerships. The Commission now submits to the Council for approval the first European Partnership with BiH, inspired by the Accession Partnerships for the candidate countries. The European Partnership identifies short- and medium-term priorities for action to support efforts to move closer to the European Union. These priorities provide an objective basis on which to measure progress. The Feasibility Study identified 16 priority reform areas to be addressed over the course of 2004. These 16 priority reform areas constitute the most important short-term priorities of the 2004 Partnership. The medium-term priorities build on the 16 short-term priorities. Whilst these reform areas represent the most urgent reform targets for 2004, future partnerships will review priorities in the light of progress made and the evolution of the situation.

1. EXECUTIVE SUMMARY

The 16 priority reforms identified in the Feasibility Study relate to BiH's current political situation, to its economic perspectives and to its progress in meeting the technical requirements of the SAP.

On those of the 16 points relating to the political situation, progress has been moderate. Government at State level remains under-developed, while tensions between State and Entities still affect government business and reform. Public administration reform has just begun. On respecting human rights provisions and the conditionality associated with the International Criminal Tribunal on former Yugoslavia (ICTY), limited progress has been recorded since end 2003. The Feasibility Study suggested that "a new [reform] dynamic may be emerging within the BiH body politic". Further sustained reform efforts are needed to make this a reality and to ensure that progress made in state-building is not reversed.

The Feasibility Study further pointed out that "economic growth coupled with the reduction of wasteful expenditure would provide the resources for the institutional reform BiH needs". BiH faces major economic challenges. As international assistance declines, private investment must be the motor for growth. However, government needs to do its part by establishing a framework favouring investment and enterprise and by effective management of the funds at its disposal. For this reason, the Feasibility Study highlighted the adoption and implementation of a State-level budget law, the recording of all income accruing to public authorities and the implementation of the statistics law as measures which could be achieved in 2004. On budgetary issues some progress has been made, but reliable statistics, the basis of all effective policy-making, remain worryingly elusive. The short-term steps highlighted in the Feasibility Study must be complemented by further decisive structural reform if BiH is to avoid further economic distress.

In terms of meeting the technical SAP requirements, the judgement of the Feasibility Study remains valid: " ... a pattern of intermittent progress, interspersed with areas where crucial reform has not been completed, or in some cases even begun". Thus, recent successes in areas such as Council of Ministers' approval of an Action Plan for Feasibility Study issues, first BiH convictions for human trafficking and initial steps in setting up the Indirect Tax Authority are diminished by failures in other areas. No point relevant to this section has yet been fully completed. Moreover, it remains a concern that in too many areas where progress has been achieved, that progress has come only thanks to international pressure.

For its part, the EU will deploy all means at its disposal to support BiH reform, ranging from technical and financial support to meet acquis standards, guidance from the EU Special Representative and actions under the European Security and Defence Policy (ESDP) to ensure a stable environment in which reform can proceed. As soon as it ascertains that significant progress has been made in meeting the 16 requirements established in the Feasibility Study, the European Commission will decide on a recommendation for a Council decision to open SAA negotiations. Conversely, if progress is insufficient, the Commission will not be in a position to recommend proceeding with such negotiations. Only BiH can ensure success. By successfully addressing the 16 priority points during 2004, BiH would reinforce a dynamic in part established by the Feasibility Study and would create the confidence both at home and abroad that it can address an ever wider and more demanding reform agenda.

2. POLITICAL SITUATION

2.1. Points covered in the Feasibility Study

"More effective governance - Implement the Law on the Council of Ministers and the Law on Ministries. Convene meetings of the Council of Ministers and of Parliament with sufficient regularity to tackle government business expeditiously. Ensure that new State ministries and institutions created by the 2002 Law on the Council of Ministers become properly operational. Implement fully the 2003 - 2004 "Action Plan for Priority Reforms" and establish for 2004 (and following years) a consolidated State-level government work plan matching policy priorities with budgetary resources."

Consolidation of the new State-level ministries and agencies proceeds slowly. Ministry rulebooks have been adopted but recruitment has been limited, concentrating at senior civil servant level. A Secretary-General has been appointed to the Council of Ministers, but little other progress has been made on making other government services operational. Budgetary constraints for 2004 will negatively effect recruitment and thus operational capacity. All new ministries and agencies have problems identifying suitable premises. Nevertheless, some new ministries have been active in drafting legislation - with international input. Cross-ministerial coordination meetings have been initiated, but coordination between the State, Entities and the Brcko District remains weak. There is no evidence yet that the output of government and parliament has improved significantly. Delays by the Council of Ministers in addressing and forwarding to parliament legislation on a number of core laws appear symptomatic of under-developed management capacity and diverging political agendas within government.

Continuing BiH determination to realise the national Action Plan for Implementing Priority Reforms [3] is welcome. In practice, progress is moderate, not least because a number of the reforms have been only partly implemented. Further, partly as a result of disagreement between State and Entity governments on how to finance new State institutions, the 2004 State budget has not yet been adopted. Late adoption has retarded reform and delayed the adoption of a consolidated government work plan for 2004.

[3] This government Action Plan was adopted in August 2003. It is not identical with the subsequent January 2004 Action Plan designed to address the issues and reform priorities identified in the Feasibility Study.

More effective public administration - Make further effort towards creating an effective public administration, including developing a comprehensive and cost-estimated Action Plan for public administration reform with a clear distribution of competences (for example in the areas of police and health). Fund and co-operate with the Civil Service Agencies at State and Entity levels.

At the March 2003 meeting of the Peace Implementation Council, BiH undertook to develop a comprehensive, country-wide public administration reform (PAR) strategy by autumn 2004. In this context a National Co-ordinator, an Inter-Governmental Task Force (IGTF) and number of working groups meeting in regular session have been formed. In November 2003 the three prime ministers signed a Memorandum of Understanding (MoU) with the European Commission setting up a Functional Review Steering Committee to guide the systemic and functional reviews which will feed into the PAR Action Plan for autumn 2004. Meeting PAR reform targets will certainly throw up difficult questions about the organisation of the public service throughout BiH. To achieve effective administrative reform, effective BiH leadership and clear strategic guidance are required.

The Civil Service Agencies (CSA) of both BiH and Republika Srpska (RS) have been operational since February 2003 and October 2002 respectively. The leadership of the agency in the Federation of Bosnia and Herzegovina (FBiH) was appointed only in March 2004 after months of disagreement between the governing parties. The agency itself is not yet functional. Politically motivated civil service appointments still occur at all levels.

"Effective judiciary - Adopt legislation establishing a single High Judicial and Prosecutorial Council for BiH with the aim of consolidating appointment authority over the Entity judiciaries and strengthening the independence of the judiciary throughout BiH. Provide appropriate staff and funding for the State Court."

A law foreseeing a single High Judicial and Prosecutorial Council (HJPC) at State level has been drafted. The Entities have approved the transfer of authority to the State, but in the case of RS with significant reservations and a delay of over six months. Since the mandate of the existing three Councils expires in spring 2004, the adoption of relevant legislation is urgent. Moreover, it is essential that adequate funding is foreseen in the 2004 and subsequent State budgets to support the Council.

The reselection of judges and prosecutors has continued with the aim of completing the process by end March 2004. Over half the process has been completed. A shortage of qualified personnel remains a constraint.

The BiH State Court and the Prosecutor's Office are now operational in suitable premises, although they remain dependent on international funding and staff.

"Effective human rights provisions - Adopt and bring into force outstanding legislation supporting refugee returns. In particular, introduce, adopt and implement legislation on the BiH Refugee Return Fund. Complete the transfer of the human rights bodies to BiH control. Ensure that unresolved cases of the Human Rights Chamber are dealt with and that the Chamber's responsibilities are transferred to the Constitutional Court. Provide adequate funding for the Court. Assume full national responsibility for the State Ombudsman and make progress on the merger of the State and Entity Ombudsmen."

Early 2004 reports criticised BiH's human rights record (and in some cases that of the international community) for inadequacies on minority (including Roma) rights, gender equality, access to social services, workers' and detainees' rights, unwarranted electronic surveillance, people trafficking, etc. However, successes have also been registered. In January 2004 BiH formally assumed responsibility for refugee returns. Returns continue, albeit at a lower rate, while property law implementation nears completion in all but a few municipalities. Significantly, RS implementation rates have caught up with those in FBiH. In November 2003 amendments to the Law on Refugees and Displaced persons entered into force and a BiH Return Fund was established, although the latter, without a director or funds, has not yet begun to operate. As required by the law, a new Commission for Refugees and Displaced Persons and four new regional centres (replacing Entity agencies) have been established. The regional centres are not yet operational. Moreover, the Entities and Brcko District have not yet harmonised their legislation on that of the State.

The "exit strategies" of the three Dayton-mandated human rights institutions are currently being implemented, effectively putting human rights protection under BiH control. The transfer of Commission for Real Property Claims (CRPC) assets and responsibilities to BiH has been delayed due to FBiH opposition. The mandate of the Human Rights Chamber expired in December 2003; its case backlog was transferred in January 2004 to a temporary Human Rights Commission within the BiH Constitutional Court. The latter, reinforced by a funding increase to cover its increased workload, has started dealing with new cases. The mandate of the International Ombudsman expired in December 2003; the national BiH Ombudsman office now comprises three national members. There is Entity opposition to merging existing Ombudsman institutions into a single BiH body.

Comply with existing conditionality and international obligations - Fully co-operate with ICTY, particularly on the part of RS, notably in bringing indicted war criminals to justice before the international tribunal ...Complete outstanding Road Map steps. Comply with the Dayton-Paris Peace Accords. Take steps to implement BiH's Council of Europe post-accession criteria, especially in areas of democracy and human rights."

Co-operation with the International Criminal Tribunal on former Yugoslavia (ICTY) remains inadequate. RS personnel have taken part in recent actions with the international Stabilisation Force (SFOR), but their participation was no more than nominal. Thus, while local law enforcement capacity may have improved, it is not yet clear that such operations can or would be organised, realised or followed up without international involvement. In December 2003, a commission, initially delayed by RS reticence but now with RS, international and victims' family participation, was established to investigate the Srebrenica events of July 1995. The commission has met regularly, but has been accused of political bias in its working methods and findings.

Preparations continue with BiH support for the specialised War Crimes Chamber within the State Court. A Joint Executive Board for the War Crimes Chamber was established with the involvement of the BiH ministries of Justice, Security, Treasury, and Foreign Affairs. A first meeting took place in December 2003. BiH will in future need to assume increased political, administrative and financial responsibility for the Chamber. Its establishment also implies the need for BiH investigative capacity in this sector.

In early 2004, a number of Road Map steps still require action: implementation of public service broadcasting reform, improved State and RS implementation of the decisions of the human rights institutions (including better reporting to international human rights bodies) and further steps towards a single market in BiH (cf. section 4.1).

In the context of its post-accession criteria for the Council of Europe, BiH continues to make progress. However, the process of amending the BiH Election Law and addressing the constituent identity of each people has not yet begun.

2.2. Other Priorities Areas identified in the 2003 SAP Report

Since the 2003 Report, four reform commissions staffed by BiH nationals and chaired by a representative of the international community have been operative. These developed reform proposals on indirect taxation (cf. section 4.1), defence, the intelligence services and the Mostar City administration.

The work of the Defence Reform Commission responded, at least in part, to the failings evidenced by the Orao scandal. Investigations lent weight to arguments in favour of military reform and the strengthening of the State's ability to control military import and export licences. The Defence Commission, established in May 2003, proposed a legislative package, adopted by parliament in December 2003, defining State-level defence structures, a BiH Ministry of Defence, State-level command and control, parliamentary oversight and a significant reduction in armed force numbers. There have been delays in implementing the law. The creation of coherent BiH military structures will contribute to generally improving internal security and provide a favourable environment for SFOR troop reductions. Remaining security concerns may nonetheless require an international security presence. An EU follow-on mission to SFOR would thus provide important support to the SAP integration process.

Progress was slower in the case of two other reform initiatives. In the intelligence sector a commission produced proposals for a single State-level intelligence agency. Owing to political disagreement, the Council of Ministers did not consider the law. The High Representative thus took a decision requiring the Council to forward the draft to parliament. Here, the law was adopted in March 2004, but in versions requiring harmonisation. In the case of reform of the Mostar city administration divided ethnic and party interests meant that no final agreement on a new city statute was reached. Regrettably, imposition again proved the only way to overcome divided and apparently irreconcilable ethnic and party interests.

The 2003 Report further identified a need to co-operate fully with the EU Police Mission (EUPM). EUPM relations with local police are good; local forces accept EUPM mentoring and the BiH Police Steering Board has functioned successfully. A further requirement related to the need to ensure respect for the freedom and security of journalists. Although abuses occur (e.g. alleged FBiH intelligence service "bugging" of journalists), infringements seem more incidental than systemic. On the other hand, BiH journalists have been criticised for inadequate objectivity and for ignoring decisions of the BiH Press Council.

BiH continues to promote regional co-operation. Its active chairmanship of the South East Europe Co-operation Process (SEECP), with a focus on justice and rule of law, deserves particular mention. Continued participation in Stability Pact initiatives is welcome. (Cf. Strategy Paper, section 4.5 Regional Initiatives.) In terms of bilateral relations with states of the region, the Serbian and Montenegrin president's November 2003 public apology to BiH citizens for wrongs committed during the 1992-1995 war was welcome and was followed by agreements on scientific and technical co-operation and border-crossing facilitation. A December 2003 meeting with Croatia brought agreements on improved bilateral co-operation, but no agreement on Ploce. With both Croatia and Serbia Montenegro visa requirements were eliminated from January 2004. On the negative side, there is a danger that bilateral relations with both countries could suffer from BiH's current failure to implement free trade commitments (cf. section 4.1).

2.3. General Evaluation

For 2004 the Feasibility Study set a substantial reform agenda. The seemingly heavy reform programme appears less demanding when it is remembered that few of the reforms identified are new. It is welcome that the Council of Ministers, with DEI support, has adopted a structured and methodical approach to reform. In late December 2003 an action plan for addressing the Feasibility Study priorities was adopted and in January 2004 presented to parliament. The document outlines deadlines and responsibilities among the BiH institutions. Its existence is testimony to both organisational will and structured thinking. The aim is to address most of the issues before the end of the summer 2004 - a realistic but certainly ambitious schedule. A February 2004 multi-party declaration in favour of European integration is also welcome - but must be followed by action.

The first ten months of 2003 saw welcome reform. Advances came inter alia in establishing a new Council of Ministers, initiating public administration reform, introducing a new Criminal Code and Criminal Procedure Code, starting the functioning of the State Court, providing important input to the Feasibility Study, continuing refugee returns and further improving property legislation, etc. At the end of the year, the passage of laws on indirect taxation and on defence - after international prompting - was also welcome, marking advances towards a self-sustaining BiH state. However, on the negative side, late 2003 and early 2004 saw opposition to intelligence reform, to a new Mostar statute and other unwelcome steps (see section 4 below). The concern is thus twofold. First, hope for a new and clear reform dynamic has not been clearly confirmed, indeed political obstruction of reform is still frequent. Secondly, BiH "ownership" of reform remains limited; in most advances, international initiative, input and pressure was key. Inadequate domestic political will and capacity inevitably have an adverse impact on the implementation of adopted reforms. This would not be an adequate basis on which to build a SAA.

3. ECONOMIC SITUATION

3.1. Points covered in the Feasibility Study

Reliable statistics - Implement the Law on Statistics, aiming at the creation of a functioning system of statistics with clear lines of responsibility and co-ordination mechanisms.

Despite a November 2003 agreement between the three statistics agencies to move to a single BiH statistics system, there has been very little progress. The (imposed) Law on Statistics has not yet been adopted in national parliamentary procedure and the planned Statistics Council not yet established. The Entities have persistently objected to a stronger role for the State-level institution. Director and Deputy Director posts have been advertised at the State agency, but political disagreements have prevented appointment. In January 2004 the agency did, however, initiate a household consumer survey leading eventually to a BiH consumer price index.

From January 2004 the BiH Central Bank began releasing new monthly BiH foreign trade commodity data at BiH level. This is a welcome development made possible by the processing of data provided by the ASYCUDA system in the customs administrations (although it is, arguably, a task which the Statistics Agency should fulfil).

Budget legislation - Adopt and start to implement a budget law covering multi-annual budget planning and forecasting and start to elaborate a consolidated government account.

BiH currently has no State-level budget law regulating budget preparation and financial management and no consolidated government account. A first draft finance law (which benefited from comments by the international financial institutions) has been established. The new finance legislation would provide a legal framework for multi-annual budget planning, execution and control. Future budgets would be based on a medium-term (three-year) financial plan, with fiscal responsibilities clearly separated and provisions for both sound execution and control. At Entity level, existing budget laws need to be revised (e.g. by incorporating multi-annual planning), but so far no action has been taken in this respect.

Up to now the Central Bank has ensured the compilation of general government data. Although this task should normally be that of the (State) Ministry of Finance, the authorities have pointed out that this can only be done when a full Treasury system is implemented at all sub-Entity levels (cantons and municipalities). On a more institutional level, the International Monetary Fund (IMF) has pointed out that BiH lacks an institution to establish an annual consolidated fiscal balance and to apportion targets to the State and Entities, thus ensuring the realisation of a consolidated balance target throughout the year. The Fund further pointed out that the Governing Board of the Indirect Tax Authority (ITA) could be developed into a Fiscal Council able to assume this role. It appears that within the ITA Governing Board a consensus has emerged on this suggestion.

Budget practice - Take steps to record all income accruing to public authorities at different levels of government, including grants and other forms of international assistance.

The integration of extra- and off-budget resources into the budget is essential for the appropriate preparation and control of BiH budgets. Currently, many revenues and resources linked to grants and foreign donations are not included in the budget (only budgetary support is). Tentative estimates suggest that around 40% of Entity and sub-Entity resources remained unaccounted for. Recently, however, some progress has been recorded. A system of registering donations has reportedly been established at State level and in the Entities, closely linked to the treasury system. The system should be introduced in FBiH cantons by April 2004, while in RS a similar pilot project is underway in five municipalities.

3.2. Other Priorities Areas identified in the 2003 SAP Report

To facilitate economic reform, the IMF and the European Commission (cf. also section 5) provide budget support to the BiH State and Entities. In 2003, under the IMF Stand-by Arrangement (SBA - adopted in 2002 and worth around EUR100 million), BiH continued macro-economic stabilisation and achieved significant fiscal consolidation while maintaining price stability through adherence to the Currency Board. Latest data point to a consolidated budget deficit of 3.4% of GDP (with a slight surplus after grants) and a country-wide inflation rate of around zero.

As required by the SBA, the Currency Board continues to operate, since August 2003 with a new Governing Board. Also, in the context of the IMF programme, banking supervision was strengthened by enforcing current prudential regulations; new capital requirements apply since January 2003 and have been met by all banks. Moreover, regulations on banks' foreign currency exposure were amended to include assets and liabilities indexed to foreign currencies. In June 2003 both the second and third tranches of the SBA were disbursed, totalling around EUR33 million. As a result of delays in preparing a comprehensive plan on domestic debt and a proposed RS wage increase, the programme had to be extended to February 2004, when the fourth and final tranche was successfully disbursed.

Economic reform was also supported through a second package of Community macro-financial assistance (EUR60 million, including EUR20 million loan and EUR40 million grant). As for the first package, implementation is linked to progress in economic and structural reforms. The first grant tranche of EUR15 million was disbursed in February 2003. Over the year BiH made slow but continuous progress on conditionality for the second trance. This eventually led to the payment of a EUR10 million grant in December and a EUR10 million loan in January 2004.

The 2003 report also highlighted the need to make progress in implementing reforms scheduled for year one outlined in the Reform Agenda for the economy, notably in the area of improving the business environment, attracting foreign investors and product certification. While commendable progress has been made with Bulldozer Initiative (cf. section 4.2), other aspects of improving the economy and the business environment have had more mixed results: a single business registration system has yet to be established and the privatisation of large strategic companies has stalled. (At end 2003 only 18 out of 56 strategic companies had been sold in FBiH and 4 out of 80 in RS). Apparent lack of political will, problems of corporate governance and corruption continue to discourage investors.

Adequate transfers were made from Entities to the State during 2003.

3.3. General Evaluation

In the context of improving macro-economic management, the Feasibility Study identified the short-term need to implement reform of the statistics sector, to revise budget legislation and improve budget practice. Concrete progress in these areas still needs to materialise. The recommendations of the 2003 SAP Report in the economic area have, however, been broadly satisfied.

Despite some success in macro-economic stabilisation, BiH is not yet firmly on the path of self-sustaining growth. As pointed out in the Feasibility Study, productive capacity and thus exports remain weak; FDI, though improving, is insufficient to compensate for large current account imbalances. Private sector development needs to be encouraged through an improved business environment, better corporate governance, reduced labour rigidities, revived privatisation and the creation of an environment which facilitates market exit and entry. Even if / when BiH addresses the limited short-term priorities identified in the Feasibility Study, it will still have a challenging medium-term agenda to address. This underlines the need for coherent, but urgent action.

4. IMPLEMENTATION OF THE STABILISATION AND ASSOCIATION PROCESS

4.1. Points covered in the Feasibility Study

European integration - Ensure the proper and full functioning of the Directorate for European Integration, including its aid co-ordination capacities.

The Directorate for European Integration (DEI) has developed an important role within the BiH Council of Ministers and has emphasised to State and Entity bodies the importance of meeting the 16 Feasibility Study reform areas on time. In December 2003, on a DEI proposal, the Council of Ministers agreed mechanisms to improve co-ordination on European integration issues at State-level and between State and Entity bodies. BiH has also begun work on a European integration strategy (which will presumably reflect BiH's unilaterally declared aim of preparedness for EU accession by 2009).

The CSA conducted a review of DEI staff, and recruitment at lower levels has progressed. However, the three DEI departmental heads are not yet in place. As a result DEI's aid co-ordination and legal co-ordination capacity remain below par.

Develop the BiH single economic space - Establish the Competition Council. Introduce provisions on the mutual recognition of products in the legal order of BiH and implement a consistent and effective public procurement regime throughout the country. Remove all duplicate licences, permits and similar authorisation requirements to allow service providers (including financial institutions) to operate throughout BiH without having to fulfil unnecessary administrative requirements. Create a single business registration system that is recognised throughout BiH.

Although the BiH Competition Law was adopted in October 2001, this was followed by years of inactivity. Today the law remains unimplemented and Entity offices for competition and consumer protection remain to be established. However, State, RS, and FBiH authorities have now committed themselves to nominate members to the Competition Council and to fill these positions by April 2004. A single, acquis-compatible public procurement law was drafted in late 2003. The draft law has uniform rules, but leaves responsibility for procurement with the contracting authorities. The single draft law has the advantage of being compatible with EU and WTO requirements; it would reduce operating costs, eliminate anti-competitive practice and promote the single market. Although rapid and full adoption of the law is essential if BiH is to manage public resources more effectively, the RS authorities, in a worrying development, withdrew their initial support for the law. Laws establishing separate institutes for standards, for metrology and for intellectual property have been adopted by the Council of Ministers, but not yet by parliament. The appointment of the Director of the BiH Institute for Standards has been outstanding for years, but the Director and Deputy Director for the Accreditation Institute have been appointed and in December 2003 assumed their duties.

Over the reporting period, no progress on removing duplicate licences, permits and other authorisation requirements has been made. Problems with the recognition of administrative documents by various jurisdictions still create barriers for businesses wishing to operate throughout the country. A draft law creating a single business register, a long-standing commitment, is under consideration, but so far no action has been taken. That the BiH single market remains incomplete was demonstrated in early 2004 by the reported experience of a consumer product company investing in BiH which, allegedly because of "legal obstacles" could distribute its product only in FBiH.

Consistent trade policy - Establish a coherent and comprehensive trade policy and revise existing legislation to ensure a consistent policy on free zones. Establish at State-level certification and other procedures for the export of animal products and a phytosanitary office that are EC-compatible, with a view to promoting exports, but also enhancing standards and the single economic space.

BiH has a persistent merchandise trade deficit (in 2002 estimated at over 35% of annual GDP). Responding to this concern, the Poverty Reduction Strategy Paper (PRSP) exercise produced a study entitled "Strategic Trends in the Development of Foreign Trade and Encouraging Exports" and submitted it to the Council of Ministers for adoption in late 2003. The document is welcome but unfortunately does not address weaknesses such as BiH's limited impact assessment and negotiating capacities.

BiH continues to pursue World Trade Organisation (WTO) membership. However, in the context of regional trade, 2004 saw unwelcome developments. Despite commitments under existing free trade agreements (FTAs), but in response to domestic lobbying, BiH unilaterally postponed for three months tariff reductions on agricultural goods from Croatia and Serbia and Montenegro. This development, though purportedly temporary, is worrying: it demonstrates less than full compliance with international commitments and thus raises questions about BiH's will to respect future SAA and WTO commitments. It further indicates poor FTA preparation and limited ex ante evaluation capacity.

Since November 2003 there has been no further progress in addressing the problems associated with BiH's free zones: legal inconsistencies remain, activities which are incompatible with EU standards (e.g. customs clearance of goods not physically present on BiH territory) persist, and inadequate monitoring of activity within / around free zones continues. Despite these problems, new free trade zones have been created. The authenticity of BiH certificates of origin still causes concern. Under the present set-up, abuse is possible, even likely, since the procedure is relatively new and there is no tradition of checking traders' accounts.

On product certification, partial progress can be reported. The State Veterinary Office is operational, but the Entities have failed to align their legislation with the State Veterinary Law and co-operation mechanisms remain embryonic. FBiH inability to provide funds for the veterinary sector, and in particular for an animal identification scheme, is a constraint. Further progress is required if BiH is to comply with EU Food and Veterinary Office recommendations. A BiH Phytosanitary Agency, replacing the current system of divided Entity jurisdiction, remains to be established. Initial steps have been taken in drafting framework laws on technical requirements and conformity assessment, market surveillance and general product and food safety.

Customs and taxation reform - Proceed with implementation of the recommendations of the Indirect Tax Policy Commission. Ensure parliamentary adoption of the Law on the Indirect Tax Authority, including the adoption of the related enabling legislation. Ensure implementation, including the appointment of a Director for the Indirect Tax Authority and the functioning of the new customs authority. Demonstrate progress in preparing the introduction of VAT with a view to beginning on schedule.

After initial progress, work on establishing the BiH Indirect Tax Authority (ITA) slowed down in late 2003 and 2004. Full parliamentary adoption of the ITA law and the appointment of an ITA Director were achieved in December 2003. The ITA Governing Board has been established and is operational, although three experts remain to be appointed. A customs merger team has been nominated. An operational budget has been agreed by State and Entities and this should allow the recruitment of senior staff. On the other hand, the creation of an IT strategy remains outstanding. No adequate headquarters building has yet been identified in RS. The ITA did not meet its original deadline for beginning work (January 2004). Operations now seem more likely to begin in summer 2004.

Delays have also affected the introduction of VAT; early 2006 is now the probable starting date. A VAT development team has been appointed, but is still not operational and thus no VAT implementation plan has been drawn up. No VAT registration threshold has been established. Delay means postponing the benefits and savings associated with reform and could endanger public finances (as other receipts from customs duties decline with the progressive introduction of free trade regimes).

Integrated energy market - Implement Entity Action Plans for the restructuring of the electricity market.

Initially, in 2003, there was Entity agreement on action plans to restructure the electricity sector. The BiH Council of Ministers adopted legislation establishing an Independent Systems Operator and a Transmission Company; this legislation is, however, still in parliamentary procedure and subject to protracted debate and attempts form several parties to dilute the substance of the law. In addition, the FBiH action plan was successfully challenged in the Entity Constitutional Court. Reform has thus come to a halt. This is a serious setback. In a further unwelcome early 2004 development, the High Representative felt compelled to intervene in FBiH because of the breakdown of negotiations between Aluminij Mostar and its electricity provider. The absence of a framework for resolving this situation threatened to undermine the electricity grid and could have led to the closure of BiH's largest exporter. Major donors are now reconsidering their support to the sector.

As part of its commitment to regional co-operation, in December 2003 BiH signed a MoU setting out rules and objectives for a regional energy market in south east Europe. (Cf. Strategy Paper, section 4.4 Co-operation in other sectors.) BiH committed itself to bring its laws, regulations and administrative practice into line with the MoU no later than July 2005.

Public broadcasting - adopt legislation in line with European standards and the Dayton - Paris Peace Accords and take steps to ensure the long-term viability of a financially and editorially independent single State-wide public broadcasting system for Bosnia and Herzegovina, whose constituent broadcasters share a common infrastructure."

Reform of the public broadcasting system (PBS) remains tortuous and slow. In early November 2003, the three Prime Ministers agreed reform: the establishment of three legally separate and complementary broadcasters, one providing State-wide services and the others serving their Entities, each with its own responsibility for determining content. A single, uniform and mandatory subscription system was foreseen. The RS government agreed and implemented relatively quickly a system of subscription collection, but in FBiH proper subscription fee collection has been slow to start. Despite existing model legislation, no State-level law has yet been approved by parliament.

Tackling crime, especially organised crime - Build up a State-level law enforcement capacity by allocating the necessary resources and facilities to ensure the full functioning of the State Information and Protection Agency and the BiH Ministry of Security. Proceed with structural police reform with a view to rationalising police services.

Under EUPM guidance, policing continues to improve, but structural reform of BiH's multiple police forces has barely begun. Enthusiasm for police reform is limited, particularly in RS.

In early 2004 the Council of Ministers approved and passed to parliament for consideration laws setting up the State Information and Protection Agency (SIPA). An executive SIPA, when established, would contribute to a coherent rule of law system which includes the State Court and State Prosecutors. Disagreements over the location of SIPA's headquarters (reflecting other political battles) delayed progress, but in December 2003 the Council of Ministers identified new temporary accommodation and committed itself to finding permanent premises. The operational capacity of the new BiH Ministry of Security continues to grow slowly.

Over the reporting period, BiH has recorded some success in fighting organised crime. The special chamber within the BiH State Court covering organised crime and corruption has brought trafficking cases to successful prosecution. Although trafficking continues, this indicates that there has been improvement in co-operation between the BiH public prosecutor, police and the State Border Service. At Entity level, first prosecutions for money laundering have been brought and some senior politicians have been prosecuted for corruption and business crime.

In the framework of the EU-Western Balkans Forum a first meeting of justice and home affairs (JHA) ministers took place in late November 2003 as a follow-up to the November 2002 London conference on organised crime. At the meeting BiH presented eight practical measures designed to support the fight against crime. These range from the establishment of new, specialised agencies to the exchange of information. Among the measures presented to the conference was an Action Plan against Organised Crime containing benchmarks, deadlines and resource requirements. An action plan against money laundering was included.

Managing asylum and migration - Ensure the establishment and operation of proper structures dealing with asylum and migration

A BiH Law on the Movement and Stay of Aliens and Asylum entered into force in October 2003. Related by-laws are currently in preparation. Responsibility for (im)migration and the personnel in this sector has been transferred to the Ministry of Security, but practical progress has been slow. Staffing remains a problem and there is little progress in transferring the Inspectors for Foreigners to Ministry of Security jurisdiction.

On asylum the Ministry of Security is now formally responsible for processing asylum requests (but there remains a worrying division of competence between the Ministry of Security and the Ministry of Human Rights and Refugees). In practice UNHCR still implements asylum policy. The Ministry of Security is due to take over responsibility for refugee status determination from UNHCR in July 2004, but so far little real capability is present.

4.2. Other Priorities Areas identified in the 2003 SAP Report

Since its launch in November 2002, the Bulldozer Initiative has sought to remove administrative and bureaucratic obstacles to business and investment. Success in the first phase, with 50 reforms adopted by government in May 2003, encouraged the establishment of a Bulldozer Phase II, launched in June 2003. A further 50 reform recommendations were submitted to government in November 2003. Partly as a result of this initiative, investment levels in BiH have continued to rise; FDI is expected to be confirmed at around EUR280 million (nearly 5% of GDP) in 2003.

The State Border Service (SBS) is now fully staffed and its deployment complete (although operational capacities remain constrained by financial and technical weaknesses). SBS, with EUPM support, co-operates with police services, customs authorities and the prosecution services. The introduction of intelligence- and investigation-led policing (focussing on traffickers rather than trafficking victims) has produced improved results in addressing human trafficking and other cross-border crimes. Implementation of the national anti-trafficking plan and the protection of trafficking victims have advanced. As a follow-up to the May 2003 Ohrid conference, BiH presented five measures designed to enhance border security and management at the November 2003 EU - Western Balkans ministerial Forum on JHA.

4.3. General evaluation

In this as, in other areas, BiH's record of progress is mixed. On those of the 16 points relevant to compliance with SAP technical standards some advances have been made. Thus, for example, full parliamentary adoption of the ITA law containing provisions for four regional offices is welcome. Also, as regards the recommendations of the 2003 Report, there have been advances with the Bulldozer Initiative and consolidation of the SBS. However, progress on the recommendations of the Feasibility Study has been incremental; none of the Feasibility Study recommendations has yet been fully completed. For BiH the technical reforms associated with the SAP are essential to conclude and implement a SAA.

Finally, to make definitive progress, reform needs to be both implemented by all relevant actors and consistently pursued over time. For example, RS refusal to support EU-compatible public procurement legislation is worrying; it may indicate a lack of commitment to reform. In addition, the effect of political agreement among prime ministers on PBS reform could be undermined by the unwillingness of FBiH public bodies to implement a subscription fee collection system for radio and television. Similarly, BiH has a good record on regional co-operation and is improving its relations with its neighbours. However, the unilateral, temporary postponement of FTA commitments vis-à-vis Croatia and Serbia and Montenegro gives cause for concern. Progress is welcome, but satisfactorily addressing the 16 priority areas identified in the Feasibility Study will require unity of political will and further determined effort.

5. EC FINANCIAL ASSISTANCE

Between 2000 and 2003 BiH benefited from around EUR391 million in EC assistance. Besides CARDS funding, the EC provided balance of payments support in the context of an IMF programme and democratisation funding.

For CARDS an EC Country Strategy Paper sets out the main assistance priorities for 2002 - 2006 and a Multi-Annual Indicative Programme defines detailed priorities for 2002-2004. In 2003, EUR71.9 million was allocated to BiH under CARDS, supporting reforms necessary for a future SAA. The programme focused on (i) Democratic stabilisation: Assistance helped BiH, which aims to take full responsibility for refugee returns, through the creation of a transparent system for identifying and financing return needs. The EC also supported legislative, institutional and technical strengthening of public broadcasting. (ii) Administrative capacity building: the EC-funded Customs and Fiscal Assistance Office (CAFAO) built capacity in the customs and tax services and highlighted weakness in management procedures. The EC also helped strengthen the Directorate for European Integration and the BiH Department for Civil Aviation. (iii) Economic and social development: CARDS support for the privatisation and restructuring of BiH enterprises in 2003 led to substantial investment commitment, job retention and job creation. The EC also helped develop BiH's economy though SME support, micro credit, rural credit, housing and NGO projects. An EC project fund was set up to help bring BiH's regional development framework into line with EU cohesion policy. EC social development targeted vocational education reform and, though the TEMPUS programme, co-operation in higher education. (iv) Environment and natural resources: EC support focused on upgrading the legal framework for environmental policy and on developing rural areas and the agricultural sector. (v) In justice and home affairs, support continued for judicial and prosecutorial reform through the Independent Judicial Commission, the High Judicial and Prosecutorial Councils, and the prosecutors' offices. Training and equipment was delivered to BiH police in co-ordination with EUPM. Technical assistance was provided on immigration and asylum, primarily through the BiH Ministry of Security. BiH continued to benefit from the CARDS Regional Programme providing support for integrated border management, democratic stabilisation, environmental development and building state institutions and regional infrastructure.

In 2004 BiH will receive support primarily in the area of administrative capacity building, notably assistance to CAFAO in following up key sector reforms. Public administration reform will be supported. Other areas of concentration will be economic reform and the fight against organised crime. 2004 funding reflects the additional funds that were allocated to BiH (EUR7 million) at the time of the June 2003 Thessaloniki European Council meeting.

In 2003 - 2004 EC macro-financial assistance (cf. section 3.2) continued. This assistance, which is conditional on progress in economic and structural reform, involved the disbursement of a first grant tranche of EUR15 million in February 2003 and a second tranche of EUR20 million (EUR10 million grant in December 2003 and EUR10 million loan in January 2004).

In 2003 the EC provided EUR12.2 million to support OHR, covering more than half its operating budget. EUR20 million was assigned from the CFSP budget in support of EUPM. BiH is also a "focus country" for the European Initiative for Democracy and Human Rights and it benefits from the LIFE environmental programme and from support through the NGO, YOUTH and horizontal demining budget lines.

A number of established aid co-ordination mechanisms exist. Regular co-ordination meetings are held with EU Member State missions and with other bilateral and multilateral donors to ensure coherent interventions. The national BiH co-ordinator for EC assistance, the Directorate for EU Integration has yet to become operational at national level, but in the closing months of 2003 the conditions for this to begin in 2004 were created.

6. PERCEPTIONS OF THE EU

EU issues retain a high profile in the BiH media. Frequent and close coverage of a number of EU-related events in 2003 brought home to BiH politicians, and to a lesser extent the BiH public, the potential for BiH integration into EU structures. No relevant opinion polls on EU issues have been conducted so far - the first is expected in spring 2004 - but the public perception of the EU is generally positive.

The coverage of EU-related issues in the BiH media is of variable quality. The media are divided between those supporting integration and those which are more sceptical. Some doubt the prospect of membership (although Slovenia's accession should reduce those doubts). The Thessaloniki summit, with its message that the map of Europe would not be complete without the Western Balkans, helped counteract scepticism. Moreover, the results of the Feasibility Study (which on publication dominated the media) showed that the EU does not want to postpone but rather encourage integration.

Media coverage of high-level EU visits and events like the Thessaloniki summit has improved public understanding of basic EU-related issues although, in BiH as elsewhere, the public remains most concerned with practical and more immediate issues. The need to obtain a visa for EU visits is the main concern for the general public, in particular among most young people.

Reforms have also highlighted the EU role in the public mind. A media campaign in favour of reform by the High Representative / EU Special Representative and others sensitised the BiH public to the need the need to make progress in a number of key areas. The reform most closely identified with the EU is that of customs and indirect taxation. (Here, the international community learned important lessons: clear messages to the media and to the general public with coordinated media appearances by members of the international community, helped overcome the objections by special interest groups and thus remove political obstacles to progress.)

Undoubtedly, the EU and in particular the SAP is complicated and difficult to communicate effectively to the BiH public. Among BiH institutions, the DEI has led the effort to communicate to the public a rationale for EU integration and the sometimes difficult challenges associated with it.