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Official Journal of the European Communities C 287 Volume 39 30 September 1996 English edition Notice No Information and Notices 96/C 287/01 Commission Special Report No 2/96 concerning the accounts of the Administrator and the European Union Administration, Mostar (EUAM) accompanied by the replies of the Commission and the Administrator of Mostar 1 Contents Page I II III Information Preparatory Acts Notices ISSN 0378-6986 
Official Journal of the European Communities C 287 Volume 39 30 September 1996 English edition Notice No Information and Notices 96/C 287/01 Commission Special Report No 2/96 concerning the accounts of the Administrator and the European Union Administration, Mostar (EUAM) accompanied by the replies of the Commission and the Administrator of Mostar 1 Contents Page I II III Information Preparatory Acts Notices ISSN 0378-6986
9.96 j EN I Official Journal of the European Communities > No C 287/1 πι (Notices) COURT OF AUDITORS SPECIAL REPORT No 2/96 concerning the accounts of the Administrator and the European Union Administration, Mostar (EUAM) accompanied by the replies of the Commission and the Administrator of Mostar (96/C 287/01) (Observations pursuant to Article 1 88c (4) second paragraph of the EC Treaty) TABLE OF CONTENTS INTRODUCTION..... '. 
9.96 j EN I Official Journal of the European Communities > No C 287/1 πι (Notices) COURT OF AUDITORS SPECIAL REPORT No 2/96 concerning the accounts of the Administrator and the European Union Administration, Mostar (EUAM) accompanied by the replies of the Commission and the Administrator of Mostar (96/C 287/01) (Observations pursuant to Article 1 88c (4) second paragraph of the EC Treaty) TABLE OF CONTENTS INTRODUCTION..... '.
Background relating to the European Union Administration, Mostar Paragraph Page Numbers 17 2 1 3 2 (EUAM) The Court's audit , : .....: : 4 812 1330 72 2 3 5 OBJECTIVES OF THE EUAM IMPLEMENTATION OF THE MISSION OF EUAM BUDGET AND EXPENDITURE OF THE EUAM 3139 31 34 5 35 39 6 EUAM budgetary resources EUAM expenditure ORGANISATION OF THE EUAM Establishment of the EUAM ...;... 
Background relating to the European Union Administration, Mostar Paragraph Page Numbers 17 2 1 3 2 (EUAM) The Court's audit , : .....: : 4 812 1330 72 2 3 5 OBJECTIVES OF THE EUAM IMPLEMENTATION OF THE MISSION OF EUAM BUDGET AND EXPENDITURE OF THE EUAM 3139 31 34 5 35 39 6 EUAM budgetary resources EUAM expenditure ORGANISATION OF THE EUAM Establishment of the EUAM ...;...
Structure of the EUAM .' 
Structure of the EUAM .'
DECISION MAKING STRUCTURES Observations on central decision making and management 4054 6 4047 6 4854 7 5584 8 61 79 9 62 68 9 69 79 10 80 12 81 84 12 8590 12 9193 13 · 19 Central decision making and 'management .'. 
DECISION MAKING STRUCTURES Observations on central decision making and management 4054 6 4047 6 4854 7 5584 8 61 79 9 62 68 9 69 79 10 80 12 81 84 12 8590 12 9193 13 · 19 Central decision making and 'management .'.
Observations concerning Financial Management" of the EUAM . . ; Monitoring and Supervision ..····' Arrangements for the end of the EUAM's mandate . . · ' CONCLUSIONS..... .........: RECOMMENDATIONS Thè replies of the Commission and the Administrator of Mostar Γ '....: ...: 
Observations concerning Financial Management" of the EUAM . . ; Monitoring and Supervision ..····' Arrangements for the end of the EUAM's mandate . . · ' CONCLUSIONS..... .........: RECOMMENDATIONS Thè replies of the Commission and the Administrator of Mostar Γ '....: ...:
No C 287/2 I EN Official Journal of the European Communities 30. 
No C 287/2 I EN Official Journal of the European Communities 30.
96 INTRODUCTION Background relating to the European Union Administration, Mostar (EUAM) 1. 
96 INTRODUCTION Background relating to the European Union Administration, Mostar (EUAM) 1.
In September 1993, during peace negotiations, the ,idea was launched and accepted in principle by all local parties in Bosnia and Herzegovina, that Mostar should be put under temporary European Union (EU) administration while a permanent solution to the problems of the city was sought. 
In September 1993, during peace negotiations, the ,idea was launched and accepted in principle by all local parties in Bosnia and Herzegovina, that Mostar should be put under temporary European Union (EU) administration while a permanent solution to the problems of the city was sought.
The matter was then left pending until an overall peace plan for the former Yugoslavia was introduced. 
The matter was then left pending until an overall peace plan for the former Yugoslavia was introduced.
Following an invitation extended to the European Union by the parties who signed the March 1994 Washington Agreement, the Council "formally decided on 16 May 1994 (') to carry out a Common Foreign and Security Policy (CFSP) Joint Action, under the terms of Article J.3 of the Treaty on European Union to cover support for the administration of the city of Mostar, one of the cities most affected by the fighting. 
Following an invitation extended to the European Union by the parties who signed the March 1994 Washington Agreement, the Council "formally decided on 16 May 1994 (') to carry out a Common Foreign and Security Policy (CFSP) Joint Action, under the terms of Article J.3 of the Treaty on European Union to cover support for the administration of the city of Mostar, one of the cities most affected by the fighting.
This Decision followed on from an earlier Council Decision of 8 November 1993 (2) to carry out a Joint Action to support the convoying of humanitarian aid in Bosnia and Herzegovina (3). 
This Decision followed on from an earlier Council Decision of 8 November 1993 (2) to carry out a Joint Action to support the convoying of humanitarian aid in Bosnia and Herzegovina (3).
The Council Decision of 16 May 1994 provided for an initial budget of up to ECU 32 million to be used to 'finance the initial establishment and the subsequent actions of a new European Union Administration of the city of Mostar (the EUAM). 
The Council Decision of 16 May 1994 provided for an initial budget of up to ECU 32 million to be used to 'finance the initial establishment and the subsequent actions of a new European Union Administration of the city of Mostar (the EUAM).
Subsequent decisions increased the total available budget to ECU 144 million (see paragraph 31). 
Subsequent decisions increased the total available budget to ECU 144 million (see paragraph 31).
The EUAM formally commenced operations on 23 July 1994, when the Administrator took up his appointment in Mostar. 
The EUAM formally commenced operations on 23 July 1994, when the Administrator took up his appointment in Mostar.
The EUAM's initial mandate was for a maximum of two years, ending, at the latest, on 22 July 1996 (4). 
The EUAM's initial mandate was for a maximum of two years, ending, at the latest, on 22 July 1996 (4).
The Court's audit 4. 
The Court's audit 4.
Pursuant to the Treaty(5) and following the invitation of the Council contained in Article 3 of the Council Decision of 16 May 1994, the Court of Auditors (') Council Decision 94/308/CFSP of 16 May 1994. 
Pursuant to the Treaty(5) and following the invitation of the Council contained in Article 3 of the Council Decision of 16 May 1994, the Court of Auditors (') Council Decision 94/308/CFSP of 16 May 1994.
(2) Council Decision 93/603/CFSP of 8 November 1993. 
(2) Council Decision 93/603/CFSP of 8 November 1993.
(3) The situation on the ground in Bosnia-Herzegovina in the winter of 1993/94, with the Bosnian Serb forces hindering access for the humanitarian aid convoys meant that the-initially proposed Joint Action could not be implemented. 
(3) The situation on the ground in Bosnia-Herzegovina in the winter of 1993/94, with the Bosnian Serb forces hindering access for the humanitarian aid convoys meant that the-initially proposed Joint Action could not be implemented.
C) Council Decision 94/790/CFSP of 12 December 1994, later . reaffirmed in Council Decision 95/517/CFSP of 4 December 1995. ' 
C) Council Decision 94/790/CFSP of 12 December 1994, later . reaffirmed in Council Decision 95/517/CFSP of 4 December 1995. '
(5) Article , 188 C of the Treaty establishing the European Community. carried out in 1995 an integrated audit of both the . operations of the EUAM and the accounts of the Administrator. 
(5) Article , 188 C of the Treaty establishing the European Community. carried out in 1995 an integrated audit of both the . operations of the EUAM and the accounts of the Administrator.
These accounts included finance directly provided by the EU Member States, as well as from the general budget of the European Union. 
These accounts included finance directly provided by the EU Member States, as well as from the general budget of the European Union.
The Court examined whether all revenue to 31 August 1995 was received and all expenditure to that date was incurred in a lawful and regular manner and whether the financial management was sound. 
The Court examined whether all revenue to 31 August 1995 was received and all expenditure to that date was incurred in a lawful and regular manner and whether the financial management was sound.
Two audit visits were undertaken to Mostar, comprising a preliminary visit from 3 to 5 July 1995, followed by a final visit from 23 to 31 October 1995. 
Two audit visits were undertaken to Mostar, comprising a preliminary visit from 3 to 5 July 1995, followed by a final visit from 23 to 31 October 1995.
During the audit, the progress of the EUAM towards meeting its objectives was reviewed, the EUAM's systems of internal control were examined, and an assessment made of their effective functioning. 
During the audit, the progress of the EUAM towards meeting its objectives was reviewed, the EUAM's systems of internal control were examined, and an assessment made of their effective functioning.
The audit of revenues was carried out on the basis of the amounts established" as due under the terms of the different Council Decisions and the amounts actually paid to the Administrator's account. 
The audit of revenues was carried out on the basis of the amounts established" as due under the terms of the different Council Decisions and the amounts actually paid to the Administrator's account.
The audit of expenditure was carried out on the basis of both commitments undertaken by the EUAM and payments made up to 31 August 1995. 
The audit of expenditure was carried out on the basis of both commitments undertaken by the EUAM and payments made up to 31 August 1995.
The visits on the spot enabled the Court to see at · first hand the difficult conditions in which the EUAM team was working, resulting from the continuing tensions between the different parties, sporadic shelling of the city, the ruined state of most of East Mostar, the suffering of the population during and after the phases of open-conflict, the breakdown of normal services and the collapse of the economy. 
The visits on the spot enabled the Court to see at · first hand the difficult conditions in which the EUAM team was working, resulting from the continuing tensions between the different parties, sporadic shelling of the city, the ruined state of most of East Mostar, the suffering of the population during and after the phases of open-conflict, the breakdown of normal services and the collapse of the economy.
The strong team spirit within the EUAM has contributed greatly to what has been achieved. . 
The strong team spirit within the EUAM has contributed greatly to what has been achieved. .
OBJECTIVES OF THE EUAM 8. 
OBJECTIVES OF THE EUAM 8.
The Memorandum of Understanding on the European Union Administration of Mostar ('the MoU'), signed on 5 July 1994, by the EU and Western European Union (WEU) Member States and the different parties involved in the former conflict, sets out various aims and objectives to be achieved by the EUAM. 
The Memorandum of Understanding on the European Union Administration of Mostar ('the MoU'), signed on 5 July 1994, by the EU and Western European Union (WEU) Member States and the different parties involved in the former conflict, sets out various aims and objectives to be achieved by the EUAM.
These were further developed in a strategy document dated 13 May 1995 prepared by the Administrator. 
These were further developed in a strategy document dated 13 May 1995 prepared by the Administrator.
The central objective set out in the MoU is to create the conditions leading to a unified city of Mostar. 
The central objective set out in the MoU is to create the conditions leading to a unified city of Mostar.
While the EUAM is not explicitly required to achieve a single administration for Mostar, this remains the fundamental target. 
While the EUAM is not explicitly required to achieve a single administration for Mostar, this remains the fundamental target.
The EUAM has therefore been working with local parties to overcome the present division of Mostar, and to create a suitable climate that could lead to a common administration of a multi-ethnic city, the holding of 
The EUAM has therefore been working with local parties to overcome the present division of Mostar, and to create a suitable climate that could lead to a common administration of a multi-ethnic city, the holding of
30. 9. 96 EN Official Journal of the European Communities No C 287/3 democratic elections (before the end of the EUAM's mandate), and a return to normal life for all of its citizens. 
30. 9. 96 EN Official Journal of the European Communities No C 287/3 democratic elections (before the end of the EUAM's mandate), and a return to normal life for all of its citizens.
The main criteria considered in the EUAM strategy document to be fundamental to the concept of a unified city include: ' (a) a population willing to live under a common set of ' rules; (b) a central municipal authority acceptable to the population; (c) a common legal framework and guaranteed rights IMPLEMENTATION OF THE MISSION OF EUAM 13. " 
The main criteria considered in the EUAM strategy document to be fundamental to the concept of a unified city include: ' (a) a population willing to live under a common set of ' rules; (b) a central municipal authority acceptable to the population; (c) a common legal framework and guaranteed rights IMPLEMENTATION OF THE MISSION OF EUAM 13. "
The information contained in paragraphs 14 to 30 is taken from progress reports of the EUAM and files of for all citizens; . 
The information contained in paragraphs 14 to 30 is taken from progress reports of the EUAM and files of for all citizens; .
At 31 October 1995, when the audit work on the spot was completed, Mostar, a city with a population of about 60 000, was still nearly totally divided into Muslim controlled Eastern 'and Bosnian Croat controlled Western parts. 
At 31 October 1995, when the audit work on the spot was completed, Mostar, a city with a population of about 60 000, was still nearly totally divided into Muslim controlled Eastern 'and Bosnian Croat controlled Western parts.
Despite ongoing attempts by the EUAM to negotiate and achieve more progress relating to freedom of movement, no consensus had been reached between the two sides. 
Despite ongoing attempts by the EUAM to negotiate and achieve more progress relating to freedom of movement, no consensus had been reached between the two sides.
250 persons on each side (excluding men of military age) were able to obtain permits to cross to the other side of Mostar each day. 
250 persons on each side (excluding men of military age) were able to obtain permits to cross to the other side of Mostar each day.
A small number of people belonging to certain professional groups were also able to obtain ID cards enabling them to cross the demarcation lines. 
A small number of people belonging to certain professional groups were also able to obtain ID cards enabling them to cross the demarcation lines.
West Mostar Police, however, created continual problems over the question of unobstructed access of people from Mostar East to the EUAM Headquarters, situated in Mostar West. 
West Mostar Police, however, created continual problems over the question of unobstructed access of people from Mostar East to the EUAM Headquarters, situated in Mostar West.
The EUAM has experienced major difficulties in achieving progress towards a unified police force. 
The EUAM has experienced major difficulties in achieving progress towards a unified police force.
Despite this having earlier been identified· as one of thè most important tasks agreed in the MoU, local forces in West Mostar steadfastly opposed the speedy development of . such a body. 
Despite this having earlier been identified· as one of thè most important tasks agreed in the MoU, local forces in West Mostar steadfastly opposed the speedy development of . such a body.
Phase 1 of the unified police programme has however, . been completed. 
Phase 1 of the unified police programme has however, . been completed.
This involved the establishment of a joint operations centre, improvements in police communications, and joint patrolling between WEU and East Mostar police, and WEU and West Mostar police on the demarcation line between both parts of the city. 
This involved the establishment of a joint operations centre, improvements in police communications, and joint patrolling between WEU and East Mostar police, and WEU and West Mostar police on the demarcation line between both parts of the city.
Under the terms of a signed agreement of 18 September 1995,· Phase 2 provided for the establishment of joint headquarters, the beginning of joint patrols between East and West Mostar and WEU police, and the intensification of the process designed to replace the existing police forces in Mostar West and East. 
Under the terms of a signed agreement of 18 September 1995,· Phase 2 provided for the establishment of joint headquarters, the beginning of joint patrols between East and West Mostar and WEU police, and the intensification of the process designed to replace the existing police forces in Mostar West and East.
Implementation of this phase was being blocked at the time of the audit. 
Implementation of this phase was being blocked at the time of the audit.
16.·. 
16.·.
Article 21 of the MoU provides that all funds which the local parties (i.e. the two. administrations for the West and East) have at their 'disposal for the administration of the city will be made available to the EUAM Department of Finance and Taxes, which will integrate them into the city's budget. 
Article 21 of the MoU provides that all funds which the local parties (i.e. the two. administrations for the West and East) have at their 'disposal for the administration of the city will be made available to the EUAM Department of Finance and Taxes, which will integrate them into the city's budget.
This has not, however, been respected. 
This has not, however, been respected.
Even though the. two administrations receive funds from outside they do not declare them to the EUAM. (d) a common public service, tax system, and police force; and, most importantly, (e) freedom of movement for all citizens residing in the city. '·'." 
Even though the. two administrations receive funds from outside they do not declare them to the EUAM. (d) a common public service, tax system, and police force; and, most importantly, (e) freedom of movement for all citizens residing in the city. '·'."
The principal assumptions against which the overall EUAM strategy document of 13 May 1995 was prepared, were that: . (a) the Federation between the Bosnians and the Bosnian-Herzegovinan Croats would remain intact, and develop further; (b) the United Nations Protection Force (Unprofor) would remain in the region with its existing strength unchanged; (c) the shelling of Mostar by the Bosnian' Serb Army (BSA) would not reach a level that rendered the task of the EU Administration impossible; and, (d) the EUAM would progressively gain the confidence of the citizens of Mostar, and not be totally obstructed in achieving its aims and objectives by any of the different parties. 
The principal assumptions against which the overall EUAM strategy document of 13 May 1995 was prepared, were that: . (a) the Federation between the Bosnians and the Bosnian-Herzegovinan Croats would remain intact, and develop further; (b) the United Nations Protection Force (Unprofor) would remain in the region with its existing strength unchanged; (c) the shelling of Mostar by the Bosnian' Serb Army (BSA) would not reach a level that rendered the task of the EU Administration impossible; and, (d) the EUAM would progressively gain the confidence of the citizens of Mostar, and not be totally obstructed in achieving its aims and objectives by any of the different parties.
In addition to the EUAM's main aim of creating 12. the conditions leading to a unified city of Mostar, there are other objectives, drawn from the MoU, and 'further developed in the EUAM's strategy document. 
In addition to the EUAM's main aim of creating 12. the conditions leading to a unified city of Mostar, there are other objectives, drawn from the MoU, and 'further developed in the EUAM's strategy document.
These cover the different areas of intervention of the EUAM, and are summarized in Annex 1. 
These cover the different areas of intervention of the EUAM, and are summarized in Annex 1.
Although the objectives in the MOU were not quantified, which makes evaluation of progress difficult, they, were wide-ranging and ambitious, in a situation of continuing conflict and ongoing mistrust and tension between the parties who were to come together. the Administration on its different activities, on-the-spot complemented and confirmed observations during the: audit missions. by 
Although the objectives in the MOU were not quantified, which makes evaluation of progress difficult, they, were wide-ranging and ambitious, in a situation of continuing conflict and ongoing mistrust and tension between the parties who were to come together. the Administration on its different activities, on-the-spot complemented and confirmed observations during the: audit missions. by
No C 287/4 I EN Official Journal of the European Communities 30. 9. 
No C 287/4 I EN Official Journal of the European Communities 30. 9.
96 17. 
96 17.
At the time of the audit, only limited progress had been made towards the objective of an unified' administration. 
At the time of the audit, only limited progress had been made towards the objective of an unified' administration.
Subsequent developments, for example the signing of the Bosnian peace accords in Paris on 14 December 1995 and the agreement on Mostar obtained in Rome on 18 February 1996, provide opportunities for a greater degree of cooperation between the parties and the EUAM. 
Subsequent developments, for example the signing of the Bosnian peace accords in Paris on 14 December 1995 and the agreement on Mostar obtained in Rome on 18 February 1996, provide opportunities for a greater degree of cooperation between the parties and the EUAM.