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Balkan Report: December 20, 2002

20 December 2002, Volume 6, Number 47

"RFE/RL Balkan Report" will next appear on 10 January 2003.

A BOSNIAN MILESTONE: JACQUES KLEIN TAKES STOCK. In one signal of just how far Bosnia-Herzegovina has progressed, a seven-year UN mission wraps up its work there in December amid congratulations for strengthening peace and security.

The UN envoy in charge of the mission, Jacques Klein, has spent much time in recent weeks recounting its achievements. The mission helped put in place a full-fledged state border service. It transformed the police force from 40,000 wartime personnel to 16,000 newly trained officers. Its new standards have contributed to the return of hundreds of thousands of displaced people and refugees.

Klein also noted the emerging symbols of statehood -- flag, passport, license plate -- and what he calls the hardest currency in the region, the konvertibilna marka, which was tied to the German mark and is now pegged to the euro.

In a recent interview with RFE/RL at UN headquarters, Klein credited Bosnian citizens with many of these achievements: "The fact that you have freedom of movement today and a police force that's relatively professional, the fact that the currency works -- all those things are to the credit of the citizens. The citizens want to get on with their lives."

But Klein, a veteran U.S. diplomat and military officer, also said there is unfinished business in many places. Bosnia's weak rule of law, he said, is discouraging crucial foreign direct investment. Indicted war criminals like former Bosnian Serb leader Radovan Karadzic and his military commander, General Ratko Mladic, remain at large, poisoning efforts at reconciliation.

Klein noted with particular concern the failure to integrate Bosnia's armies and universities among its dominant Muslim, Serbian, and Croatian ethnic groups: "You have three armies structured ethnically [and] university structures functioning ethnically. Now those are impediments to really building a state."

The United Nations is handing over the responsibility for ongoing police training to the European Union, effective 1 January (see "RFE/RL Newsline," 13 December 2002). The international community's high representative continues to oversee the country's general reform efforts, holding the power to impose laws and dismiss Bosnian officials under agreements that ended Bosnia's war.

Klein praised the emphasis that the new high representative, Paddy Ashdown, has placed on strengthening the rule of law. But Klein said the country's legal structures should have been a focus of international reform efforts soon after the signing of the Dayton accords in 1995.

Bosnia's civil war, in which more than 200,000 people were killed, was especially harsh on civilians. Civilians and prisoners of war alike were killed. Women and girls were systematically raped. Property theft was rampant.

There have been proposals to hold a truth-and-reconciliation commission patterned after the model used in post-apartheid South Africa. But Klein said there are practical problems to mounting such an effort in Bosnia. "In South Africa, you had a construct where when you admit your crime, you'd receive amnesty, and the victim would receive some kind of compensation. No one knows how to do that in Bosnia, so we're long a way from any kind of truth and reconciliation," Klein said.

But Klein has promoted special efforts at reconciliation and revival in Srebrenica, where Bosnian Serb forces killed more than 7,000 Muslim men and boys in 1995. They include promoting a Srebrenica Regional Recovery Plan aimed at spending $12.5 million in development projects during the next three years to try to revitalize the traumatized region.

The high representative for Bosnia has established the Srebrenica/Potocari Memorial and Cemetery, and there are plans to begin the final burial of victims' remains early next year. (Potocari is the nearby community where many Muslims had sought the protection of Dutch peacekeepers -- in vain.)

But Klein said many of the wives and female relatives of the Srebrenica victims do not want to return. Klein has appealed for continued UN support for the Potocari Memorial. "What these women will need is long-term counseling, long-term care. [They are] heavily traumatized and [lost in] a world that's moving around them -- Bosnia-Herzegovina into Europe, Bosnia-Herzegovina into the Council of Europe. What's for them out there as mothers of Srebrenica who suffered this terrible loss?" Klein said.

Klein said the political elites who benefited most from Bosnia's civil war have proven skillful at converting a war economy into one dominated by corruption and organized crime. And he said the internationally approved system of three presidents rotating according to ethnicity has so far translated into "no focus, no continuity, and no responsibility."

As Klein put it: "During the war, all three sides created purchasing logistics infrastructures to avoid sanctions. After the war, they converted those into mafia infrastructures. So our crime is not [to be found among the population at large]. Community[-level] crime, rape, murder, mayhem, [and] robbery [are] very low, [the] lowest in the whole region. Our crime is [on a higher level]: national elites privatizing state enterprises, massive smuggling, [and the] illegal sale of weapons."

Bosnia's two ministates, the Muslim Croat federation and the Republika Srpska, each has its own government and parliament. They are linked by a few joint institutions.

In October's general elections, nationalist parties strengthened their power (see "RFE/RL Newsline," 21 October 2002). But both Klein and Ashdown say it was ineffective leadership, not hard-line nationalism, that led to the defeat of moderate candidates. (Robert McMahon)

MACEDONIA'S FINANCIAL PROBLEMS. Labor and Social Affairs Minister Jovan Manasievski told RFE/RL's Macedonian broadcasters on 28 November that about 82,000 families are receiving state benefits of some kind, while almost one-fourth of the country's 2 million citizens live in poverty.

The government is currently spending 22.5 percent of the state budget on income support and unemployment benefits. Overemployment in the public sector and an uncontrolled spending policy have contributed to the fact that the state is short of money. The 2001 interethnic conflict has caused additional financial problems for the state.

In an attempt to save money, the government has not paid some wages, which in turn has triggered strikes (see "RFE/RL Balkan Report," 6 December 2002). The Finance Ministry has introduced a war tax, a 1 percent levy on all financial transactions made by domestic companies. This money has helped finance the army's purchase of helicopter gunships and fighter jets from Ukraine and other war-related expenditures. However, experts doubt that the war tax will help the state truly deal with its financial and economic problems ( see "RFE/RL Balkan Report," 6 November 2001).

Petar Gosev, the new finance minister, is now faced with the task of resolving these financial problems. In an interview with "Utrinski vesnik" of 14 December, Gosev said that the budgetary deficit is worse than he had expected when he took office. The deficit has been estimated at approximately $140 million, or about 40-50 percent of the GDP. The financial situation is further complicated by the fact that the war tax, which so far has contributed some $108 million to the revenues, will expire at the end of this year.

The previous government's free-spending policy has added to the country's deficit. For example, the Defense and Interior ministries jointly exceeded their budgets by more than $17 million. Without providing the necessary funds, steep increases were made in expenditures for child care and agriculture. Gosev accused his predecessor of having spent a large amount of money on social projects before the elections as an attempt to win over voters.

Macedonia now relies on foreign aid in order to overcome its budgetary problems. As Gosev pointed out, the government expects some $115 million in credits and grants from various donors such as the United States or the European Union and from international financial institutions like the World Bank. EU Commissioner for Foreign Relations Chris Patten announced on 6 December that the EU will support Macedonia with some $46 million (see "RFE/RL Newsline," 9 December 2002). These funds, however, will only be released if the government makes a new standby arrangement with the International Monetary Fund. The IMF has recommended that the government cut state expenditures before reaching an agreement.

"Our first aim is to curtail expenditures," Gosev said. "Some people believe that we will not succeed in saving all of the [$140 million] by cost reduction. Even the IMF doubts that we will be able to do so without [raising] taxes. We have taken [various possibilities] into consideration to compensate for the $108 million previously collected from the war tax. [A VAT increase on some goods] should bring in about $33 million, which is obviously not enough.... But our first aim is to avoid major tax increases."

Gosev was optimistic that the government will not only succeed in reducing expenditures but will also be able to increase revenues by putting an end to graft and mismanagement. He stressed that the government has named new directors in the most important, but also most corrupt, revenue-raising agencies: the Customs Agency and the Administration for Public Revenues.

It remains to be seen whether Gosev's plans and measures will be enough to convince IMF officials to agree to a new standby agreement. It seems that the government itself has some doubts. That is possibly why Foreign Minister Ilinka Mitreva asked the U.S. government during her official visit to Washington for support in the talks with the IMF and for a "more flexible approach" to Macedonia's economic problems (see "RFE/RL Newsline, 9 December 2002). (Ulrich Buechsenschuetz,

SLOVENIA'S NEW CABINET. With the dust settling from Slovenia's recent elections, various political figures are trading seats. Former Prime Minister Janez Drnovsek has ceded his duties to former Finance Minister Anton Rop, while President Milan Kucan will serve his last day in office on 22 December before turning the job over to Drnovsek. To mark the transition, Ljubljana's Museum of Modern History has opened an exhibition titled "From Birch Broom to Silver Platter," chronicling over 600 gifts that Kucan received as president. Meanwhile, others politicians are jockeying for positions in the new government.

As expected, Rop easily secured the necessary 46 votes in the National Assembly to become prime minister (see "RFE/RL Balkan Report," 6 December 2002). He was expected to obtain 60 votes in the 90-member body: 58 from the coalition of Liberal Democracy of Slovenia (LDS, 34 seats), the United List of Social Democrats (ZLSD, 11), the Slovenian People's Party (SLS, 9), and the Democratic Party of Retired Persons of Slovenia (DeSUS, 4), as well as one each from the Italian and Hungarian minority representatives.

In fact, "Delo" reported on 15 December, Rop managed to obtain an additional three votes from opposition representatives in the secret ballot held on 11 December (see "RFE/RL Newsline," 12 December 2002). This exceeds the support secured by any of Rop's predecessors as prime minister: Alojz Peterle, Drnovsek, or Andrej Bajuk.

Before the voting, Rop presented his ideas for the new government to the parliament. Four hours of discussion ensued. Rop's sharpest criticism came from the conservative opposition Social Democratic Party (SDS) and New Slovenia (NSi), faulting him for his work as finance minister (see "RFE/RL Balkan Report," 6 December 2002).

Parliamentary deputies made the final decision on Rop's proposal for new government on Thursday, 19 December. Although the coalition parties settled the ministerial positions soon after the elections, negotiations continued for other positions such as ministerial councilors and state secretaries.

As anticipated, Rop selected Dusan Mramor, a professor at the University of Ljubljana's Faculty of Economics, as his successor as finance minister. Mramor holds a Ph.D. in economics from the University of Ljubljana, where he has taught since 1996. He has also spent significant time abroad, including two years of research and teaching in the United States at Indiana University's School of Business.

Working bodies in the National Assembly held hearings early this week with the new ministerial candidates. Mramor outlined his plans on 16 December. As finance minister, he foresees a partial relaxing of indexation of public-sector wages, further reform of the pension system, and the elimination of ineffective programs from the budget. Mramor also spoke of a need to increase financial discipline, stating that Slovenia "has payment times that are longer than usual, and this represents a hardship for small businesses," "Delo" reported on 17 December.

The Committee for Finance and Monetary Policy approved Mramor's nomination, but not without debate. Nine of the 13 members voted for Mramor, but votes were cast against him by the SDS and Slovenian National Party (SNS), with one abstention from the NSi.

Slavko Gaber is slated to replace Lucija Cok as minister of education, science, and sports. Gaber previously served in the position from 1993 to 2000. When Cok replaced Gaber in Drnovsek's government in 2000, pundits joked that when you cut down a "gaber" (hornbeam tree), a "cok" (stump) remains. A "Dnevnik" article on 11 December speculated that one reason underlying Cok's replacement was the stump-like lack of energy in the Education Ministry under her tenure.

A number of scandals marked Gaber's previous terms as education minister. However, "Dnevnik" continued, Cok did little to reorient the ministry. Furthermore, she was unable to keep her staff in hand, and her decentralization policy for higher education proved unpopular. Finally, she was unsuccessful in bringing educational facilities in Nova Gorica and Portoroz under the umbrella of the University of Primorska project for Slovenia's third university.

The most visible change involves the creation of the new Ministry of Regional Development. Zdenka Kovac, currently the director of the Small-Business Development Center, will head the new ministry. Her candidacy for the position was backed by DeSUS, although she herself is not formally affiliated with any party. The creation of the new ministry brings the number of ministers in the Rop government to 16, including two ministers without portfolio: Kovac herself, as well as Janez Potocnik, the minister for European affairs.

The new ministry should prove a welcome one, as it is often felt in Slovenia that development has one-sidedly favored the capital, Ljubljana. Some, however, have suggested that the move merely serves to appease coalition parties' demands for positions in the new government. In addition to matters of regional development, the new ministry will also coordinate structural policies. (Donald F. Reindl,

QUOTATIONS OF THE WEEK: "We must get some normalcy to this place." -- Norwegian Ambassador to the United Nations Ole Peter Kolby, quoted by Reuters in Belgrade on 17 December. He was referring to Kosova.

"Moscow is conducting a constructive dialogue and is in close contact with the countries of the Balkan region." -- Russian Foreign Minister Igor Ivanov after meeting with his Albanian counterpart Ilir Meta in Moscow on 11 December. Quoted by ITAR-TASS (see "RFE/RL Newsline," 11 and 12 December 2002).

"Here is the problem: As long as the region fears, and Belgrade hopes, that Serbia will one day resume its role as the dominant Balkan power, lasting peace and stability in the region is unattainable. Which means that the U.S. and Europe will have to continue deploying resources -- in terms of both money and attention -- not only to keep Serbia in check, but also to calm regional fears. The resources currently deployed in the region as a result will be unavailable for the war against terrorism.

"It is time Belgrade made a choice: Is it a Western capital, with genuine Western interests, including democracy as its driving force, or is it a great pretender, only looking for ways to resurrect its claim over the territory that never was its to claim in the first place? The rest of the region has already decided on Europe and NATO." -- Borut Grgic in "The Wall Street Journal in Europe" on 13 December.