The 1995 Dayton Peace Accords, brokered primarily by the United States, ended three yearsof war in Bosnia and Herzegovina, which had cost hundreds of thousands of lives and created over2 million refugees and displaced persons. Under the Dayton Peace Accords, Bosnia-Herzegovinaremains an internationally recognized state within its pre-war borders. Internally, it consists of twosemi-autonomous "entities:" the (largely Bosniak and Croat) Federation of Bosnia-Herzegovina andthe (Bosnian Serb-dominated) Republika Srpska (RS). Under the accords, the Bosnian Federationreceived roughly 51% of the territory of Bosnia-Herzegovina, while the Republika Srpska receivedabout 49%. Each of the entities has its own parliament and government with wide-ranging powers, as well as its own armed forces. Each entity may establish "special parallel relationshipswith neighboring states consistent with the sovereignty and territorial integrity" ofBosnia-Herzegovina. Most powers are vested in the entities; the central government hasresponsibility for foreign policy, foreign trade and customs policy, monetary policy and a few otherareas. Central government decisions are nominally taken by a majority, but any of the three mainethnic groups can block any decision if it views it as against its vital interests. The Federation isfurther divided into ten cantons, each of which has control of policy in key areas such as policing andeducation. The Dayton Peace Accords also resulted in the deployment of a NATO-led peacekeepingforce which has been charged with providing a secure environment for the implementation of thepeace agreement. A U.N.-appointed High Representative, created by the Dayton accords, overseesthe civilian peace implementation efforts. Since 1997, this official has had the power to fire and takeother actions against local leaders and parties as well as to impose legislation in order to implementthe peace agreement and more generally bring unity and reform to Bosnia. The current holder of thispost is Paddy Ashdown of Great Britain. Ashdown also holds the post of the European Union'sSpecial Representative in Bosnia. (1) Figure 1. Map of Bosnia and Herzegovina In the more than nine years since the accords, the United States and other countries havescored significant achievements in Bosnia, including sharply reduced inter-ethnic violence, restoredfreedom of movement, and the return of many refugees and displaced persons to their homes. Theinternational community has also helped Bosnia hold largely free and fair elections and set up manyof the institutions of a modern democratic state. However, these successes in some areas have notadded up to the accomplishment of the overall goal of international efforts in Bosnia: the creationof a stable, united Bosnia, able to continue reforms on its own and integrate with Euro-Atlanticinstitutions. Almost all progress on reforms and on promoting greater unity in Bosnia continues torequire direct or indirect intervention by Ashdown and other representatives of the internationalcommunity. Reform efforts continue to be met by obstructionism or passivity by the nationalistparties which control Bosnian governments at all levels. Some observers also assert that thecumbersome institutions set up by the Dayton Peace Accords are unworkable. According to critics of current international policy on Bosnia, international interventionismhas led to dependency and irresponsibility among local elites. This problem is all the more seriousas the international commitment to Bosnia in troops and funding has decreased in recent years. Inaddition, the infringement of Bosnia's sovereignty represented by Office of the High Representative(OHR) may also prove to be an obstacle in the country's path toward European integration, accordingto some observers. Critics ask how a country lacking all the attributes of sovereignty can hope tojoin NATO or the EU one day, or, in the near term, participate meaningfully in such programs asNATO's Partnership for Peace program. They wonder if Bosnia can or should continue to operateindefinitely as a ward of the international community, as the rest of the region moves, howeverslowly in some cases, toward European integration. Another important issue is whether Bosnia is still important to U.S. interests, particularlygiven perhaps more pressing U.S. commitments in other countries and regions. The United Stateshas invested substantial sums to stabilize Bosnia. From FY1991 through FY2004, the United Statesspent over $13.6 billion in incremental military costs in Bosnia, mainly for the U.S. peacekeepingcontingent. (2) U.S. aid toBosnia over the same period amounted to more than $1.5 billion. (3) Some observers believe thatthe European Union is now capable of dealing with Bosnia's remaining problems on its own. Indeed,the EU already provides the bulk of financial aid and political guidance to Bosnia, and took over themilitary mission there from NATO in December 2004. However, many observers believe that theUnited States still has a stake in Bosnia's stability, as part of building a Europe "whole and free," theoverarching U.S. objective in the region. Continued U.S. involvement in Bosnia may be needed toarrest indicted war criminals, as well as to make sure that Bosnia is not used as a haven for organizedcrime or terrorists. Bosnia has achieved progress on some issues since 1995, but continues to fall short in manyothers. One relative success story has been the restoration of freedom of movement within Bosniaand the gradual return of refugees to their homes. According to the U.N. High Commissioner forRefugees (UNHCR), by October 2004, over 1 million of the 2.2 million refugees and displacedpersons had returned to their homes, including over 447,000 who returned to areas in which they arean ethnic minority. Over 92 percent of the legal claims of persons wanting to have their homesreturned to them have been resolved. (4) While ethnic relations are sometimes tense, and some acts of violence do occur, the mainobstacle to refugee returns is economic. The war often had the effect of destroying local industries,along with the jobs that made communities viable. Many returnees are elderly. Many young peoplewant to leave Bosnia for better opportunities elsewhere, up to two-thirds of them, according to somepolls. (5) At the end of2003, OHR handed over responsibility for refugee issues to the Bosnian human rights and minoritiesministry. A key focus of international efforts in Bosnia is to strengthen the rule of law. The rule of lawis particularly important in order to break down the parallel structures connecting nationalist politicalparties, certain enterprises and organized crime. Widespread corruption also retards economicdevelopment. According to an opinion poll commissioned by Transparency International, Bosniansview corruption as the second most serious problem the country faces, after unemployment. (6) High Representative Ashdown has undertaken several steps to promote the rule of law inBosnia. He pushed through a new criminal code and a criminal procedure code in 2003, and put intoplace a High Judicial and Prosecutorial Council (HJPC) which has vetted Bosnia's judges andprosecutors for integrity and professional competence, with ethnic representation proportionate tothe 1991 pre-war Bosnian census. The HJPC is also responsible for disciplinary actions as well asfor appointing new judges and prosecutors. Ashdown also forced the creation of the Bosnian StateCourt, with special panels dealing with organized crime. This court has both Bosnian andinternational judges and prosecutors. Until January 2003, police training was conducted by a U.N. police mission in Bosnia. Themission vetted policemen for their professional qualifications and participation in war crimes orillegal activity. An EU police mission, which replaced the UN mission, is continuing the advisoryand training functions of the U.N. mission. Ashdown successfully pushed for the establishment ofnew central government law enforcement institutions, including a Ministry of Justice, a Ministry ofSecurity, and a State Information and Protection Agency (SIPA), charged with dealing with issuessuch as money laundering and organized crime, as well as terrorism. In December 2004, a PoliceRestructuring Commission, composed of Bosnian and international officials, issued a report callingfor Bosnian central government institutions to take over responsibility for all police matters. Ashdown has also called for the elimination of entity Interior Ministries. Such proposals, ifimplemented, would mark a dramatic blow to the power of the entities within Bosnia, which hadpreviously controlled most police functions, and have been strongly resisted by Bosnian Serb leaders. However, it should be noted the implementation of these reforms has been slow. Theseinstitutions often do not function effectively, as they lack resources and sufficient staffing. However,there have been a few successes in the area of rule of law. Courts in both entities have prosecutedseveral cases against organized crime figures. In March 2004, the Bosnian State Court handed downa guilty verdict in Bosnia's biggest human trafficking case. Another area key to Bosnia's future stability is economic reform and poverty reduction. Hereagain, the situation is mixed. The International Monetary Fund has praised Bosnia for its successin establishing macroeconomic stability, including low inflation and a stable currency, due to acurrency board system that pegs the konvertibilna marka (KM) to the Euro. International officialshave pushed through laws to establish an Indirect Taxation Authority and a value added tax inBosnia. Rationalizing Bosnia's tax system is necessary in order to stimulate economic growth, aswell as to provide resources for Bosnia's underfunded central government institutions, as well as toassist Bosnia's EU integration. The international community is pressing Bosnian leaders to cut backthe size and expense of entity and lower level governments, as the central government's rule isstrengthened.