Bosnia: Political Stalemate Hampers Reforms

DIRECTORATE-GENERAL FOR EXTERNAL POLICIES POLICY DEPARTMENT

DG EXPO/B/PolDep/Note/201X_XX Month YYYY

EN

2013 COUNTRY BRIEFING

Bosnia and Herzegovina: Political stalemate hampers reforms

Abstract

In June 2013, the work of Bosnia and Herzegovina's state institutions was suspended for several weeks after protests erupted outside the national parliament in Sarajevo. Triggered by the legislature's failure to adopt a law on ID registration, the demonstrations highlighted the frustration of a growing segment of the population with the perceived incompetence of politicians.

In recent years, political reform in Bosnia and Herzegovina has been hampered by frequent political and institutional stalemates. After the 2010 parliamentary elections, nearly 16 months elapsed before political forces formed a coalition government, with most of the second half of 2012 then spent bickering over a reshuffle. Meanwhile, the Federation – one of the country's two constitutional entities – became mired in its own crisis, which has yet to be resolved.

Bosnia and Herzegovina is a potential candidate for EU membership. A Stabilisation and Association Agreement has been ratified by all EU Member States. Its entry into force was, however, frozen pending the country's adoption of key reforms, including constitutional amendments consistent with the European Convention on Human Rights. In April 2013, the European Commission cancelled the third meeting of the High-Level Dialogue on the Accession Process in response to the country's failure to reform.

FOR EUROPEAN PARLIAMENT INTERNAL USE ONLY

Policy Department, Directorate-General for External Policies

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This Country Briefing was requested by the European Parliament's Delegation for relations with the countries of South East Europe.

AUTHORS: Benjamin REY Contributor: Amalia SYEDA-AGUIRRE (trainee) on section 3.10 (Human Rights) Directorate-General for External Policies of the Union Policy Department WIB 06 M 81 rue Wiertz 60 B-1047 Brussels Editorial Assistant: Delphine FUMEY

CONTACT: Feedback of all kinds is welcome. Please write to: [email protected].

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PUBLICATION: English-language manuscript completed on 05 July 2013. © European Union, 2013 Printed inBelgium.

This Country Briefing is available on the intranet site of the Directorate-General for External Policies, in the Regions and countries or Policy Areas section.

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Table of contents

1 Key issues and developments 4

2 European Parliament–Bosnia and Herzegovina: Milestones 5

3 Political situation in Bosnia and Herzegovina 5

3.1 Overview 5

3.2 State Presidency 6

3.3 State Parliamentary Assembly 7

3.4 State Government 8

3.5 Political situation in the Federation 9

3.6 Political situation in the Republika Srpska 10

3.7 Municipalities 11

3.8 The constitutional reform debate 12

3.9 Judicial reform and fight against corruption 13

3.10 Human Rights 14

3.11 Foreign policy and regional cooperation 14

4 Economy, social indicators and trade 16

5 The EU and Bosnia and Herzegovina 17

5.1 International supervision and EU policy 17

5.2 EU integration process 18

5.3 EU assistance 18

5.4 Outlook for the European Parliament 19

6 Table 20

7 Map 21


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1 Key issues and developments

The Bosnia and Herzegovina (BiH) Parliamentary Assembly will participate in the 15th EU-BiH Inter-Parliamentary Meeting on 8-9 July 2013 despite the fact that its activities are currently suspended. On 6 and 7 June 2013, protests erupted outside the Assembly in Sarajevo, in reaction to its failure to adopt a law on ID registration. Parliamentarians were barred from leaving the building for several hours, leading the work of the Assembly and the BiH Council of Ministers to be halted out of security concerns.

In April 2013, the European Commission cancelled the third meeting of the High-Level Dialogue on the Accession Process (HLDAP) in response to the country's continued failure to implement the Sejdic/Finci judgement of the European Court of Human Rights. This judgement had found the country's constitution discriminatory towards ethnic groups which do not belong to any of the 'constituent peoples' (Bosniaks, Croats and Serbs). The HLDAP was launched in June 2012 to help the country prepare a credible application for EU membership. Implementing the Sejdic/Finci judgement is a precondition for the entry into force of the EU-BiH Stabilisation and Association Agreement, signed in 2008 and ratified by all EU Member States.

In its 2012 Progress Report, the European Commission noted the lack of a 'shared vision by the political representatives on the overall direction and future of the country and its institutional set up'. The country's institutions have proven dysfunctional. While the most recent parliamentary elections were held in October 2010, a state government led by Prime Minister Vjekoslav Bevanda (Croat Democratic Union of BiH) was only formed in February 2012. Three months later, disagreements within the coalition triggered a new crisis, leading the Party of Democratic Action (SDA, Bosniak) to be excluded from the government in October 2012.

The Federation – one of Bosnia and Herzegovina's two constitutional entities – is embroiled in its own political crisis. Its President, Zivko Budimir, was detained for one month in April-May 2013 on corruption charges, and his future remains uncertain. A tentative reshuffling of the Federation's government remains blocked, subject to complex political, ethnic and institutional intricacies. Against this background, and amid heightened political tensions between Bosniaks and Croats, the Federation's House of Representatives has started a difficult debate on constitutional reform. Meanwhile the authorities of Republika Srpska, the country's other constitutional entity, continue to openly challenge the legitimacy of Bosnia and Herzegovina's national institutions.

The country became a direct EU neighbour after Croatia joined the EU on 1 July 2013. On 19 June, Croatia and Bosnia and Herzegovina signed three border agreements during a trilateral meeting chaired by EU Commissioner Štefan Füle in Brussels. The agreements, which will facilitate the exchange of goods and people between the two countries, were hailed as a 'historical milestone' by Commissioner Füle.


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2 European Parliament–Bosnia and Herzegovina: Milestones

23 October 2008 The European Parliament gives its consent to the EU-Bosnia and Herzegovina Stabilisation and Association Agreement.

23 May 2013 European Parliament adopts a resolution on the 2013 Progress Report on Bosnia and Herzegovina:

'Strongly reiterates its support for the European integration of BiH [...]; is concerned at the lack of a shared vision for the overall direction of the country on the part of the political elites, which is putting BiH at risk of continuing to fall further behind the other countries of the region'.

3 Political situation in Bosnia and Herzegovina

3.1 Overview

Bosnia and Herzegovina plunged into a three-year civil war after declaring independence in 1992. The 1995 Dayton Peace Agreement ended the bloodshed and established a new, complex constitutional structure.

Bosnia and Herzegovina declared its independence from a collapsing Yugoslavia in a referendum held on 1 March 1992. In this referendum, most of the country's Bosniaks and Croats voted for independence, while most Serbs opted for a boycott. Tensions escalated into a war which lasted from April 1992 to 1995, involving Serb forces backed by Slobodan Milosevic's government in Serbia, Croat forces, and the army of the Republic of Bosnia and Herzegovina. The country was de facto partitioned, with Serbs proclaiming the Republika Srpska and Croats proclaiming the Republic of Herzeg-Bosnia. Widespread atrocities were committed, forcing around two million people to leave their homes.

In March 1994, the Washington peace agreement stopped the fighting between Bosniaks and Croats, who established the Federation of Bosnia and Herzegovina. In November 1995, all parties agreed to the Dayton Peace Agreement, which was formally signed in Paris on 14 December 1995. The agreement re-established Bosnia and Herzegovina in its previous borders, and provided the country with a Constitution.

The Constitution establishes a complex structure providing for governments at state, entity and district levels. The country consists of two entities: the Federation of Bosnia and Herzegovina (predominantly inhabited by Bosniaks and Bosnian Croats) and the Republika Srpska (with a majority of Bosnian Serbs). Besides, the Brcko District was established as a local administrative unit of self-government, which is part of both entities.

State-level institutions comprise a tri-partite rotating Presidency (representatives of the three "constituent" peoples), a Council of Ministers and a bicameral parliamentary system (House of Representatives and House of Peoples). Each of the entities and the district has political, legislative and judicial authority. While the Republika Srpska has a centralised structure, the

http://en.wikipedia.org/wiki/Federation_of_Bosnia_and_Herzegovina

http://en.wikipedia.org/wiki/Federation_of_Bosnia_and_Herzegovina


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The Dayton Agreement established the Office of the High Representative to oversee the agreement's implementation. General elections were held in October 2010, with the next scheduled for 2014.

Federation is divided into 10 cantons with a far-reaching level of self-governance.

The Dayton agreement also provided for the establishment of the Office of the High Representative (OHR), an ad hoc international institution tasked to oversee the agreement's implementation. In 1997, following political and economic stalemate, the High Representative was granted far-reaching executive and legislative powers, the so-called "Bonn Powers".

From 2002 to 2011, the successive High Representatives also held the position of EU Special Representative for Bosnia and Herzegovina. The Bonn powers were used extensively between 2000 and 2006 in order to accelerate the reform process. Since 2006, the Peace Implementation Council (PIC) has been seeking to close the OHR. However, concerns over the domestic political situation, including failure of the political elite, dysfunctional institutions and lack of sufficient reform progress, have led to the postponement of the OHR's closure (see section 5.1).

The latest general elections were held on 3 October 2010, including presidential elections at state level to designate the Presidency's three members (see section 3.2); parliamentary elections at state level (see section 3.3) and in both districts (3.5 and 3.6); and a presidential election in the Republika Srpska where, contrarily to the Federation, the president is directly elected (3.6). According to the OSCE/ODIHR Election Observation Mission, the elections "were generally conducted in line with OSCE and Council of Europe commitments".

More recently, municipal elections were held in October 2012 (see section 3.7). The next general elections are scheduled to take place in 2014.

3.2 State Presidency

Elected in October 2010, the country's Presidency includes three members — currently Zeljko Komsic (Croat), Bakir Izetbegovic (Bosniak) and Nebosja Radmanovic (Serb).

The Presidency of Bosnia and Herzegovina consists of three members: one Bosniak and one Croat elected in the Federation, and one Serb elected in the Republika Srpska. The Presidency's chairmanship rotates among the three every eight month. The Presidency is responsible for the country's foreign policy and external representation; it also nominates the Chairman of the Council of Ministers and proposes the annual state budget to Parliament.

The current Presidency , elected on 3 October 2010, is composed of:

Croat: Zeljko Komsic (then member of the Social Democratic Party, SDP)

Bosniak: Bakir Izetbegovic (Party of Democratic Action, SDA)

Serb: Nebojsa Radmanovic (Alliance of Independent Social Democrats, SNSD)

Croat parties contested the legitimacy of Zeljko Komsic, on the argument that he had mostly been elected with Bosniak votes. The SDP (from which he


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resigned in 2012), is a multi-ethnic party which is mostly supported by Bosniaks. This added to the grievances of a substantial part of the Croat population, who also feels underrepresented in the government of the Federation (see section 3.5).

3.3 State Parliamentary Assembly

Zlatko Lagumdzija's Social Democratic party (SDP) and Milorad Dodik's Alliance of Independent Social Democrats (SNSD) emerged as leading forces in the 2010 general elections.

The Parliamentary Assembly of Bosnia and Herzegovina is composed of the House of Representatives (lower chamber) and the House of Peoples (upper chamber). The latter is composed of five Members of each 'constituent people', elected by the parliaments of the Federation and of the Republika Srpska.

The House of Representatives is composed of 42 Members directly elected every four years in two constituencies through a party list system: 28 Members are elected in the Federation and 14 in the Republika Srpska The latest elections were held on 3 October 2010, simultaneously with the state presidential election and elections in the entities (see sections 3.5 and 3.6).

Figure 1: Composition of the BiH House of Representatives after the 3 October 2010 elections

BiH House of Representatives - 42 seats

PDP: 1

DNS: 1

*SDS: 4

*SNSD: 8

*HDZ 1990 - HSP BiH: 2

*HDZ BiH: 3*SDP BiH: 8

*SBB BiH: 4

SDA: 7

SBiH: 2

NSRzB: 1DNZ: 1

* parties of the governing coalition

28 MPs from the Federation Social Democratic Party of BiH (SDP BiH) * - multi-ethnic,

predominantly Bosniak Party of Democratic Action (SDA) - Bosniak Union for a Better Future of BiH (SBB BiH)* - Bosniak Croatian Democratic Union of BiH (HDZ BiH)* - Croat Croatian Democratic Union 1990* - Croatian Party of Rights of

BiH (HDZ 1990-HSP BiH) - Croat Party for BiH (SBiH) - Bosniak People's Party for Work and Betterment (NSRzB) - multiethnic Democratic People's Union (DNZ) - multiethnic

14 MPs from Rep. Srpska Alliance of

Independent Social Democrats (SNSD)*

Serbian Democratic Party (SDS)*

Party of Democratic Progress (PDP)

Democratic People's Alliance (DNS)

Previously the third biggest force of the Federation in the state House of Representatives, the Social Democratic Party of Zlatko Lagumdzija emerged victorious in the Federation, ahead of the Party of Democratic Action. In the


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The Assembly passed some important legislation at the beginning and end of 2012, but has been paralysed during the rest of its term.

Republika Srpska, Milorad Dodik's Alliance of Independent Social Democrats maintained its lead. Simultaneously, both the SDP and the SNSD imposed themselves as the leading forces in the lower houses of the Federation and of the Republika Srpska, respectively.

The BiH Parliamentary Assembly was able to adopt important legislation in the first half of 2012, after a government was formed and before the outbreak of a new government crisis (see next section). These included laws on the population census and on state aid, which were two of the three conditions for the Stabilisation and Association Agreement (SAA) to enter into force (see section 5.2 on the EU integration process). Further progress resumed at the end of 2012, when the government crisis was resolved.

During most of the legislature, however, constant political wrangling considerably hampered the work of the BiH parliament. In June 2013, thousands of citizens demonstrated in front of the parliament in Sarajevo, protesting against the failure to find a solution to the issue of newborns' ID registration. Triggered by news of the death of a baby unable to travel to Serbia to get proper medical treatment, these protests expressed above all the population's exasperation against the perceived inaction of the country's political class. After protesters blocked parliamentarians for leaving the building, the Parliamentary Assembly suspended its work.

3.4 State Government

PM Vjekoslav Bevanda chairs the Council of Ministers, composed of a coalition of six parties. The Party of Democratic Action (SDA), the country's main Bosniak party, was expelled from government in October 2012.

Led by Prime Minister Vjekoslav Bevanda (HDZ BiH), the current state-level coalition government is composed of the (predominantly Bosniak) SDP party, the Bosniak SBB party, the Serb SDS and SNSD parties and the Croat HDZ BiH and HDZ 1990 parties. The SBB joined the coalition in November 2012, in replacement of the SDA, the country's main Bosniak party, in the framework of a toughly negotiated shift of alliances.

It had taken 16 months after the 2010 elections for parties to establish a government, in February 2012, including most major political forces in the country. However, the new government entered a crisis just three months later, when the SDA refused to approve the state budget. In response, the SDP sought the support of its other coalition partners to expel the SDA from the Council of Ministers. The SDA blocked the decision by invoking the constitutional “vital interest” mechanism, arguing that Bosniaks would be under-represented in government.

The country's Constitutional Court dismissed that argument in August, therefore allowing the ruling parties to proceed with the dismissal. On 22 October 2012, the Council of Ministers finally voted in favour of the exclusion of two SDA Ministers and a deputy minister.

This process was closely intertwined with political dynamics in the Federation. The SDP did not only seek to exclude the SDA from the state-level government, but also from the Federation's. At the same time, the Croat HDZ BiH party, which is not part of the Federation's SDP-led government (see


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next section), saw this as an opportunity to negotiate its integration in it, and therefore supported the SDA's exclusion.

3.5 Political situation in the Federation

The two Croatian Democratic Union (HDZ) parties, which represent the majority of the Croat population, are currently excluded from the Federation's coalition government. A government reshuffle is blocked. Judges must be appointed to the Federation's Constitutional Court to resolve the current stalemate.

The government of the Federation of Bosnia and Herzegovina is led by Nermin Niksic (SDP). However, the entity is in the unusual situation of having a government in place whose composition is not in line with the majority coalition in the Federation's House of Representative. Indeed, a reshuffle aiming to exclude the SDA and to include both the Croat HDZ BiH and HDZ 1990 parties has been blocked for months for complex institutional reasons.

The reasons for the absence of the HDZ parties are worth reminding. Indeed, the HDZs represent a majority of the Croat population and had previously been part of all Federation governments. In early 2011 the SDP, after winning the 2010 elections, decided to form a government without them after months of unsuccessful negotiations. The SDA and two minor Croat parties, however, were integrated in the governing coalition. The Federation's House of Peoples (upper house) had to elect a President, responsible in turn for nominating a Prime Minister. On 17 March 2011, the SDP convened the House of Peoples despite the absence of a number of delegates, whose election had purposely been blocked by the HDZs. The coalition elected Zivko Budimir (member of HSP BiH at the time), and Budimir immediately nominated Nermin Niksic as Prime Minister.

On 24 March 2011, the Central Election Commission (CEC) declared both the convening of the House of Peoples and the election of the President unlawful. However, in a controversial move, High Representative Valentin Inzko took an order suspending the CEC decisions, therefore confirming the new government. This further antagonised the Croats, already angered by the way in which Zeljko Komsic was elected at the Croat seat of the state-level Presidency thanks to Bosniak votes (see section 3.2).

It is against this background, and after the government reshuffle at state level, that the SDP sought to recompose the Federation government. Besides replacing the SDA by its rival Bosniak party, the SBB, the intention was to include the Croat HDZ BiH and HDZ 1990 parties in the coalition, a move which should have contributed to appeasing tensions.

Instead, the Federation institutions entered a new deadlock. The SDA blocked the dismissal of its ministers from the Federation government by using its majority in the Bosniak caucus of the Federation's House of Peoples to invoke the vital national interest clause. The SDA was supported by the Federation president, Zivko Budimir, who considerably delayed the appointment of judges to the Constitutional Court. These appointments were necessary for the Court to enable the functioning of its panel on vital national interests, which must decide on the use of the clause by the SDA.


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Federation President Zivko Budimir was arrested in April 2013 on corruption charges and released in May pending investigation.

The situation was on hold at the time of writing this briefing. On 28 April 2013, Budimir and four of his collaborators were arrested on organised crime charges, related to the alleged selling of pardons and clemency and abuse of office. The media quickly speculated on the possible political motives behind the arrest, and its implication on the pending government reshuffle.

Budimir was eventually released on 24 May, after a decision of the Constitutional Court. While the Federation's House of Representatives adopted conclusions on 4 June stating that President Budimir was unfit for office, the following steps remained uncertain. The Federation was left in a situation of legal and political limbo, with no functional government.

3.6 Political situation in the Republika Srpska

Led by President Milorad Dodik, the authorities of Republika Srpska are challenging the legitimacy of national institutions. In May 2011, Dodik contested the authority of the national war crime court. In October 2012, he advocated dissolving the country's armed forces.

In the Republika Srpska (RS), a direct presidential election was held in parallel with the parliamentary elections of 3 October 2010. Milorad Dodik - who was previously RS Prime Minister - was elected President on the first round, while his party, the SNSD, emerged as the first force in the RS National Assembly. A coalition government was formed in December 2010, including the SNSD, the DNS and the SP and led by Aleksandar Dzombic. Under Dodik's leadership, the authorities of Republika Srpska have developed an increasingly nationalistic rhetoric, taking systematic aim at the state institutions of Bosnia and Herzegovina.

The political crisis in the neighbouring Federation provided an opportunity for RS authorities to challenge the institutions established by the Dayton agreement. In April 2011, shortly after High Representative Inzko imposed his decision enabling the constitution of a Federation government, the RS National Assembly adopted resolutions denouncing the High Representative's "violation of the law" and declaring the Federation government illegitimate. Growing Croat aspirations for political autonomy in the Federation (see section 3.5) have provided President Dodik with a extra argument to advocate the further division of the country along ethnic lines (see section 3.8 on the constitutional reform debate).

In May 2011, Dodik announced a referendum on the rejection of the state-level war crime court and the special prosecutor's office, which he sees as biased against Serbs. High Representative Inzko qualified the situation as "the most serious crisis since the signing of the Dayton agreement" and threatened to use his powers to prevent the referendum, while EU sanctions were evoked. Dodik eventually backed down. In September 2012, the Socialist International excluded Dodik's SNSD party from its ranks, denouncing its "nationalistic and extremist" line.

In October 2012, President Dodik submitted to the RS National Assembly an initiative for the dissolution of the armed forces of Bosnia and Herzegovina. He argued that the armed forces had no constitutional grounds and were both costly and unnecessary. This initiative is to be seen in connection with


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Many ministers of Republika Srpska were replaced in March 2013, although the coalition remained in place.

the debate on Bosnia and Herzegovina's application for NATO membership, which most Serbs oppose. In February 2013, Dodik stated that joining NATO would require a referendum in Republika Srpska (see section 3.11 on the country's foreign policy).

Dodik proceeded to a government reshuffle in March 2013. Led by Prime Minister Zeljka Cvijanovic, the new government includes six new ministers, while ten were part of the previous one. PM Cvijanovic herself was previously Minister of Economic relations and regional cooperation. The coalition remains composed of the same parties (SNSD, DNS and SP). In accordance with the RS Constitution, the government counts 8 Serb members, 5 Bosniaks and 3 Croats.

3.7 Municipalities

The ruling parties of both country's constitutional entities suffered major losses in the October 2012 municipal elections. Elections could not be held in Mostar, and the results in Srebrenica were contested.

Municipal elections were held across the country on 7 October 2012. In both entities, the ruling parties suffered major losses. Milorad Dodik's SNSD party won only 19 mayor positions (out of 58), down from 41. The SDS, however, emerged as winner in 26 cities. The Bosniak SDA won in 37 municipalities (out of 78), while the SDP won in only 10. HDZ BiH won 13 mayor positions, and HDZ 1990 three. The voter turnout was 56%.

The elections were held in an overall satisfactory manner, according to international observers. The results were however contested in Srebrenica, where new electoral rules annulled the possibility for the Muslim population who fled the city in 1995 to cast their vote. Despite this change, the Bosniak candidate, Camil Durakovic, won against the Serb candidate. The coalition of Serb parties denounced frauds, claiming that a high number of Bosniaks had been illegally registered,

Elections could not be held in Mostar, after the BiH Constitutional Court ruled in September 2010 that its statute, imposed by the OHR in 2004, was unconstitutional. Mostar has continuously been the subject of political strife between the Bosniak SDA and the Croat HDZ, against the background of dire ethnic tensions.

As a result, the city council's mandate expired, leaving the city without a budget for 2013. Faced with a worsening economic situation, the mayor (HDZ) decided in April to impose a budget. In reaction, the SDA caucus filed criminal charges against him. The mayor froze all payments - including public salaries - until a decision was taken by the cantonal prosecutor. This led to strikes and further instability. The cantonal prosecutor eventually rejected the charges in June and payments could be made, but tensions remained at a very high level.

The underlying problem remains that of the statute of Mostar, another knot in the complex constitutional reform debate. The special statute imposed in 2004 by the OHR merged six municipalities into one, composed of six


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districts, with specific rules to ensure a balance between both main communities. The SDA would now like to come back to the prior system, while the HDZs want one united city. The OHR has sought to facilitate discussions among parties on this issue, with no conclusive result at this stage.

3.8 The constitutional reform debate

In the Sejdic/Finci case, the European Court of Human Rights (ECHR) condemned Bosnia and Herzegovina for discriminating against ethnic minorities. Implementing the ECHR judgement has been held up by broader, divisive constitutional issues.

In 2009, the European Court of Human Rights judged in the Sejdic/Finci case that the Constitution of Bosnia and Herzegovina discriminated against citizens who do not declare themselves as one of the three constituent peoples (Bosniak, Serb and Croat). Indeed, these citizens cannot be elected to the BiH House of People or the Presidency. While the EU made the implementation of this judgement a condition for Bosnia and Herzegovina to advance on its EU path, no progress was made to date due to the many political and institutional blockages the country is currently stuck into.

The issue of ethnic representation remains very sensitive. While the Croat HDZ parties claim to be in favour of the implementation of the Sejdic/Finci judgement, they are asking for guarantees of their community's rights, and for broader constitutional reforms. The election of Željko Komšić on the Croat seat of the BiH Presidency thanks to Bosniak votes, together with the failure of both HDZ parties to join the Federation's government, have fuelled the grievances of Croat political leaders. They insist that Croats must be fairly represented both at Federation and state level, including by making sure that one constituent people cannot elect the representative of another. In the Federation, the idea that Croat majority areas should form one united space, and that a separate Croat constituency should be established, is gaining ground. In 2011, the HDZs and smaller Croat parties established the Croat National Assembly (HNS) as a platform to effectively challenge the Federation's authorities. The HNS held its fifth session on 6 April 2013 in Mostar.

Bosniak parties, who are dominant in the Federation, object to Croat claims that they are treated unequally, but agree with the general objective of improving the Federation's constitution. In June 2013, the Federation's House of Representatives started discussions on the recommendations of a group of experts constituted at the initiative of the US (and supported by the EU), which presented its work after large-scale stakeholder consultations.

A debate has thus been engaged on the nature and scope of the necessary changes. Beyond the issue of the Federation's central institutions, the question of the abolition of cantons is another matter of intense debate. Differences of approach also exist with regard to whether the state's constitution should also be changed - besides the Federation's. The issue was also discussed at state-level, among the parties of the governing coalition, with no agreement at this stage. The position of Republika Srpska's SNSD


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leaders completes the quandary: pointing out that the main problem remained in the Federation, they openly support a division of the Bosniak-Croat entity along ethnic lines as a way to further weaken the state institutions.

In April 2013, Commissioner Fule decided to cancel the Third meeting of the High-Level Dialogue on the Accession Process due to the lack of progress in the the implementation of the ECtHR judgement. He regretted that "some of the party leaders have focused exclusively on party and ethnic interests (...) rather than implementing the Sejdic-Finci judgement itself".

3.9 Judicial reform and fight against corruption

The EU launched a Structured Dialogue on Justice with Bosnia and Herzegovina in 2011. Corruption remains widespread.

The EU has launched a Structured Dialogue on Justice in 2011, of which the fourth session was held on 8-9 April 2013 in the District of Brcko. The European Commission has reported the 'constructive attitude' of the authorities involved and the positive effect the Structured Dialogue has had on the implementation of the country's judicial reform strategy. Beyond the technical dialogue, however, stronger political consensus was still needed for thorough legislative reforms to go ahead.

In its 2012 Progress Report, the Commission regretted that draft laws had been submitted to the BiH Parliament without proper consultation and cooperation, including a draft Law on Courts. In April 2013 the BiH Ministry of Justice requested the Venice Commission's opinion on this draft, following recommendations reiterated by the Commission during the fourth session of the Structured Dialogue a few days earlier.

The Justice Sector Reform Strategy 2009-2012 was extended until the end of 2013. In February 2013, the state and entity-level Ministers of Justice held their ninth Conference on the matter and adopted a revised action plan. A new strategy must now be drafted for the next period, for adoption by the end of the year. The EU-BiH Structured Dialogue should contribute to this process and help shape the country's future reform objectives, in line with EU standards and acquis.

Corruption remains a problem in Bosnia and Herzegovina, where complex institutional and legal frameworks and poor enforcement create a lack of accountability. The anti-corruption strategy for 2009-2014 hasn't been entirely implemented and the Anti-Corruption Agency is not yet fully operational. The arrest of Federation President Zivko Budimir on corruption charges in April 2013 was a significant development (see section 3.5). Time will tell whether this case marks a real landmark in the fight against corruption, or whether it turns out being a mere settling of political scores.

On 23 May 2013, the BiH House of Representatives adopted amendments to the Law on Conflicts of Interest in the BiH institutions through the urgent procedure, concluding a process that allowed little consultation. The


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A new strategy against organised crime must be drafted.

amendments establish a new Conflicts of Interests Commission. The new body's decision-making rules and composition - six out of nine members would be MPs - have raised concerns with regard to its independence and impartiality.

The country's strategy against organised crime expired at the end of 2012. The state Council of Ministers decided in May 2013 to establish a Working Group tasked to carry out an Organised Crime Threat Assessment, as a first step towards a new strategy.

3.10 Human Rights

The country must take concrete steps to improve the protection of ethnic minorities, in particular the Roma. Authorities insufficiently condemn attacks against LGBT people. Threats against journalists and human rights defenders have been reported.

The ECHR's Sejdić/Finci judgement has highlighted the political discrimination of non 'constituent' ethnic groups (see section 3.8). More generally, concerns remain with regard to the protection of ethnic minorities, in particular with the living conditions of Roma. Bosnia and Herzegovina ratified the Council of Europe's Framework Convention for the Protection of National Minorities in 2000. On 22 May 2012, the country submitted its third report on the implementation of the Framework Convention, highlighting the legislative, institutional and practical measures undertaken. The Advisory Committee on the Framework Convention adopted an Opinion on the report in March 2013, which hasn't yet been publicly released. According to the European Commission's 2012 Progress Report, the legal framework for the protection of minorities is 'largely in place, but implementation remains uneven'. The country participates in the Roma Decade of Inclusion, but it has yet to improve Roma access to health, employment and education.

Other minority rights issues include violations of the rights of lesbian, gay, bisexual and transgender (LGBT) people. According to Amnesty International, despite the anti-discrimination law prohibiting discrimination on the grounds of sexual orientation and gender identity, the authorities have not developed a system to register discrimination cases, and the State has failed to publicly condemn violent attacks against LGBT people. Amnesty International underlined in its 2013 report that no 'individuals responsible for the attacks on the organisers and the participants of the 2008 Sarajevo Queer Festival were investigated or prosecuted'.

Bosnia and Herzegovina ranks 68th out of 179 countries in Reporters Without Borders' Press Freedom Index. Threats and political pressure against journalists continue to occur, and 'the polarisation of the media along political and ethnic lines remain of concern' (EC 2012 Progress Report). Intimidations against human rights defenders have also been reported.

3.11 Foreign policy and regional cooperation

Besides EU integration, Bosnia and Herzegovina aspires to become a member of NATO. After joining the NATO Partnership for Peace in 2006, the country


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Bosnia and Herzegovina aspires to join NATO, despite the opposition of many Serbs. Since Croatia has joined the EU, Bosnia and Herzegovina is now a direct EU neighbour. In April 2013, Serbian President Tomislav Nikolic asked that Serbia be pardoned for crimes committed in Srebrenica.

was conditionally invited in May 2010 to join the Membership Action Plan, subject to the registration of defence military property as property of the state. This commitment was reaffirmed by NATO Secretary-General Anders Fogh Rasmussen during an official visit in February 2013. The authorities of Republika Srpska, however, have a wholly different view on NATO accession. RS President Milorad Dodik has called for a referendum on NATO accession in the entity, and contests the country's competence in defence matters (see section 3.6).

Bosnia and Herzegovina maintains good relations with its neighbours. Croatia's accession to the EU on 1 July 2013 profoundly changed the regional environment, and will have direct consequences for Bosnia and Herzegovina, which now shares a border with the EU. The three members of the BiH Presidency attended the ceremony held in Zagreb on 30 June to mark Croatia's accession. Both countries signed three bilateral border agreements on 19 June 2013 in Brussels, during a trilateral meeting chaired by Commissioner Füle. Regulating the crossing of persons and goods between Croatia and Bosnia and Herzegovina in accordance with EU rules, these agreements were qualified as "historical milestones" by Commissioner Füle.

Relations with Serbia continue to be good, despite recurring controversies. A number of bilateral agreements have been adopted and ratified in recent years in various sectors. Border and refugees issues remain open, but both countries have committed to step up their cooperation to solve them.

The BiH Presidency met Serbian President Nikolic in Belgrade on 23 April 2013, in the absence of Presidency Member Komsic. Komsic cancelled his participation, protesting against a series of recent statements made by President Nikolic (criticising the ICTY and qualifying Republika Srpska of 'Serb state'). The meeting went well, however, and Bosniak Presidency Member Bakir Izetbegovic acknowledged that President Nikolic adopted a conciliatory tone. Shortly after the meeting, Nikolic gave an interview to BiH TV channel BHT, in which he asked for pardon on behalf of Serbia for the crimes committed in Srebrenica.

On 8 May 2013, a trilateral meeting of foreign ministers of Bosnia and Herzegovina, Serbia and Turkey was held in Sarajevo, followed by a meeting of the countries' Presidents (including all three BiH Presidency Members) in Turkey on 15 May. Serbian President Nikolic acknowledged the important mediation role played by Turkey between Serbia and BiH leaders.

Bosnia and Herzegovina also has cooperation agreements in force in various sectors with Albania, Montenegro and the former Yugoslav Republic of Macedonia. However, the country hasn't recognised the independence of Kosovo.

The conclusion and implementation of bilateral agreements in the field of judicial cooperation is making progress. Protocols on cooperation between prosecutors on war crime cases have been signed with Serbia and Croatia.


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Judicial cooperation with countries of the region has been strengthened.

Extradition agreements - which do not include war crime cases, however - have been initialled with Montenegro, the former Yugoslav Republic of Macedonia, Croatia and Serbia. Further bilateral agreements provide for cooperation on legal aid in civil and criminal matters and on mutual enforcement of court decisions in criminal matters.

Finally, Bosnia and Herzegovina participates in numerous regional initiatives, including the Sarajevo Process (to find a sustainable solution for refugees), the South East European Cooperation Process, the Regional Cooperation Council, the Central European Free Trade Agreement, the Energy Community and the Common Aviation Area.

4 Economy, social indicators and trade

The unemployment rate has reached 28 % of the active population.

The country's economy was severely hit by the global financial crisis. It recovered in 2010 and 2011 but growth plunged again in 2012 (at -0.7% of GDP, according to the IMF). Meanwhile, the unemployment rate increased to 28%.

Figure 2: Gross Domestic Product % change

-4-3-2-101234567

2007 2008 2009 2010 2011* 2012*

Source: International Monetary Fund. *Years 2011 and 2012: estimates

Export-led growth initially helped the country recover from the 2009 recession. However, external demand started to weaken in 2011.

The European Commission 2012 Progress Report noted that the political deadlock in Bosnia and Herzegovina had led to important delays in the adoption of the 2011 and 2012 budgets. These delays, in turn, affected the country's capacity to adopt coherent economic and fiscal policies.

The 2013 budget was, however, adopted more quickly. By endorsing it on 6 December 2012, the BiH Parliament met a deadline set by the IMF in the framework of the implementation of the new two-year Stand-By Arrangement (SBA) approved in September 2012.

The SBA (totalling EUR 405 million) aims to help the country face the negative impact of the crisis, while consolidating its public finances and stimulating growth. In 2011, the consolidated budget deficit was reduced to 1.3% of GDP (European Commission figures), mainly as a result of the economic recovery. The 2012 recession, however, was expected to impact public finances negatively.


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Croatia's accession to the EU is expected to divert trade.

The 2010 economic recovery was in good part driven by export growth. The country's trade deficit decreased in 2009 and 2010, but it has since been on the rise as external demand weakened and import growth accelerated.

The EU accounted for 65.8% of Bosnia and Herzegovina's total trade in 2011 (according to the European Commission's DG Trade), while Croatia came second at almost 20%. Trade diversion was however expected after Croatia joined the EU on 1 July 2013, and left the Central European Free Trade Agreement.

5 The EU and Bosnia and Herzegovina

5.1 International supervision and EU policy

The EU aims to assist the country in its transition from international supervision to full sovereignty, while offering it a European future. The EU reinforced its presence in 2011 with the appointment of a Special Representative / Head of EU Delegation.

The EU is at the forefront of the country's international supervision of the Dayton Peace Agreement. Between 2002 and 2011, the Office of the High Representative (OHR), which oversees the civilian implementation of the agreement, was coupled with the EU Special Representative (EUSR) in Bosnia and Herzegovina: both positions were held by the same person. Since 2006, the Peace Implementation Council (PIC) has sought to close the OHR. However, the PIC assessed the country's preparedness as insufficient and delayed the closure.

In 2008, the PIC laid out specific benchmarks for the closure of the OHR (including, among others, the distribution of state and defence property, ensuring the state's fiscal sustainability, entrenching the rule of law, and signing a Stabilisation and Association Agreement with the EU). The objective is to operate a transition from OHR to EU presence in the country. Closure of the OHR is considered a pre-condition for Bosnia and Herzegovina to obtain EU candidate status.

In 2011, the positions of High Representative and EUSR were decoupled, and the positions of EUSR and Head of EU Delegation where combined in a single, reinforced EU representation. Austrian diplomat Valentin Inzko remained in post as High Representative, while Peter Sorensen (Denmark) was appointed EU Special Representative and Head of EU Delegation in July 2011.

On 31 August 2012, the High Representative closed the Brcko Office, and the mandate of the Brcko Supervisor was suspended. An EU office was opened in Brcko.

The EUFOR Althea military mission, deployed in 2004 in replacement of NATO's SFOR, remains in place, but under a new configuration since September 2012. The number of in-country troops was reduced, while reserve troops outside the country stand ready to deploy in case of need. However the EU Police Mission, launched in 2003, closed down on 30 June 2012.


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5.2 EU integration process

The entry into force of the EU-Bosnia and Herzegovina Stabilisation and Association Agreement (SAA) remains frozen due to the country's insufficient reforms. The Commission launched a High Level Dialogue in 2012 to help the country prepare a credible EU membership application. Bosnia and Herzegovina clearly lags behind other countries of the region on its EU integration path.

Bosnia and Herzegovina is a potential candidate country, but has yet to submit its application for EU membership. A Stabilisation and Association Agreement (SAA) was signed in June 2008. Ratified by all EU Member States, its entry into force was frozen in 2011; only the interim agreement on trade and trade-related matters is currently in force. A readmission agreement is also in force since January 2008, and since December 2010, citizens of Bosnia and Herzegovina benefit from visa-free travel to the Schengen area.

In its 2012 Progress Report, the Commission noted that the country had 'made limited progress towards meeting the political criteria and achieving more functional, coordinated and sustainable institutional structures. A shared vision by the political representatives on the overall direction and future of the country and its institutional set up remains absent'. The Commission expressed its disappointment that little results were delivered when it comes to meeting the conditions for the entry into force of the SAA. These conditions include, in particular, the implementation of the ECtHR's Sejdic-Finci judgement (see section 3.8).

In the absence of a proper SAA framework, the Commission has launched initiatives to engage the country's authorities in a dialogue on priority reforms. A Structured Dialogue on Justice was established in 2011, under which four session have been held so far (see section 3.9). In June 2012, a High-Level Dialogue on the Accession Process (HLDAP) was launched to help the country prepare the submission of a credible EU application.

The third meeting of the HLDAP was scheduled to be held on 11 April 2013, but was eventually cancelled by Commissioner Füle due to the continued failure to implement the Sejdic-Finci judgement. The EU dissatisfaction with this state of affairs was reiterated by EU High Representative Catherine Ashton during her visit to Bosnia and Herzegovina on 18 April.

5.3 EU assistance

Bosnia and Herzegovina benefits from EU funds channelled through the Instrument for Pre-Accession Assistance (IPA). The IPA Multiannual Indicative Planning Document sets three priorities: improving the capacity and efficiency of public administration, strengthening the rule of law, and supporting social and economic development.

The implementation of IPA funds has however repeatedly suffered from political divisions, which resulted in recurrent delays in the adoption of the necessary programming document. This was the case with the IPA 2012


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national programme, whose financing agreement was eventually signed by Bosnia and Herzegovina on 24 June 2013.

Component 2007 2008 2009 2010 2011 2012 2013

I. Transition Assistance & Institution Building

58.1 69.9 83.9 100.7 102.7 102.7 103.5

II. Cross Border Coop.

4 4.9 5.2 4.7 4.7 5.2 5.3

Table 1: IPA revised multi-annual indicative financial framework for 2013 (in million EUR)

TOTAL 62.1 74.8 89.1 105.4 107.4 107.9 108.8

Source: European Commission, COM(2012) 581 final, October 2012

5.4 Outlook for the European Parliament

The European Parliament adopted a critical, yet constructive, resolution on the country's progress on 23 May 2013. The 15th inter-parliamentary meeting provides an opportunity to encourage the country's MPs to work together and carry out genuine reforms.

In its resolution of 23 May 2012 on Bosnia and Herzegovina's 2012 Progress Report, the European Parliament 'urges political leaders and elected officials to work together and focus on the implementation of the Roadmap as part of the High Level Dialogue with the Commission, thus making it possible to meet the requirements enabling the SAA to come into force at last and permitting the submission of a credible membership application'.

The resolution also 'urges the authorities to execute the Sejdic-Finci judgement, as a first step in the comprehensive constitutional reform that is needed in order to move towards a modern and functional democracy in which all forms of discrimination are eliminated'. The text notes 'the urgent need for substantial constitutional reforms, at both state and entity levels', and 'reiterates the need for simplification of the structure of the Federation of BiH'.

The European Parliament further underlines 'the importance of functioning institutions at all levels for the country's progress in the European integration process'. The 15th EU-BiH Inter-Parliamentary Meeting (IMP) to be held in Brussels on 8-9 July 2013 will provide a timely occasion to reiterate this message.

Indeed, the continued suspension of the work of the BiH Parliamentary Assembly following the 6-7 June 'baby protests' (see Section 3.3) had initially caused some doubts about whether BiH MPs would participate in the Brussels IPM meeting. That the BiH Assembly was able to decide to participate – despite the fact the Assembly is suspended – is a positive development.

MEPs may therefore take this opportunity to support their BiH counterparts in finding ways to address the population's demands and to press for genuine reforms.


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6 Table

People and geography

Population 3 833 916 2012 Source: World Bank

Capital city Sarajevo 391 870 Source: World Bank

Total land area 51 000 km2 Source: World Bank

Bosniaks 46.07 %

48 % Sources: UNHCR 1996

CIA 2000

Serbs 37.88 %

37.1 % Sources: UNHCR 1996

CIA 2000

Croats 14.58 %

14.3 % Sources: UNHCR 1996

CIA 2000

Ethnicity Note: no official census was conducted after 1995. Figures should be taken with caution. UNHCR 1996: census conducted by the UNHCR in 1996 CIA 2000: latest estimate of the CIA World Factbook, in 2000 Others

1.47 % 0.6 %

Sources: UNHCR 1996CIA 2000

Languages Bosnian, Croatian, Serbian

Official languages

Life expectancy at birth 78 women 72.9 men

2010 Source: World Bank

Literacy rate 97.9 % 2010 Source: World Bank

Rankings

Name of index: Ranking: Explanation and source:

Human development index

'Medium' 81st / 187 countries

United Nations Development Programme, 2012.

Press freedom 68th / 179 countries Reporters Without Borders, The worldwide press freedom index, 2013

Freedom in the World 'Partly free': political score: 4/7 civil score: 3/7

Freedom House, Freedom in the world, 2012. (1 represents the most free and 7 the least.)

Corruption Perceptions Index

72nd /176 countries Transparency International - 2012 Index


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7 Map

Source: United Nations

Documents

Bosnia: Political Stalemate Hampers Reforms