DAYTON'S FUTURE
By Clifford Bond
Former US Ambassador to Bosnia and Herzegovina

I was asked to say a few words about the future of Dayton, but I would like to begin by recounting a little recent history. And let me start by making it clear that these are my personal views. They are not presented by someone who has a brief to defend Dayton, but by a diplomatic practitioner who has worked within its framework for three years.

The Dayton Accords brought peace to Bosnia and separated the warring parties, as well as provided a road map for everything from post-war property restitution, the return of refugees and the preservation of cultural monuments, and more. Annex IV in the Accords also gave the State of Bosnia its basic constitution with the division of powers and authorities between the state and its two entities.

Implementation of the various Dayton annexes has been uneven. The UNHCR trumpeted this year the return of more than a million out of a total of 2.2 million refugees and displaced persons to their homes. About half of this number is minority returns, i.e., people returning to areas, which were ethnically cleansed. Some people take issue with the demographics of these returns, but the number is remarkable. I think it’s fair to say the principal obstacle to returns today is economics, i.e., a lack of jobs, not security concerns. The improved security situation in Bosnia is permitting the NATO-led SFOR to transition to an EU Force later this year. This is a significant achievement. Refugees are returning to all parts of the country, though the numbers of returns are declining, in part because of a sharp fall in international assistance.

You frequently hear in Bosnia that dissatisfaction with Dayton Accords appeared before the ink on the document was dry. It is always easier to criticize with 20-20 hindsight, but one thing is clear: the constitution Dayton gave Bosnia created a very weak central government and confirmed an overly costly, multi-layered government structures. These factors severely limit Bosnia’s future, in particular its ability to meet the conditions of membership in European institutions, but also its economic future.

Entering Europe was not on the mind of Dayton’s framers. If they thought of it at all, it was a remote prospect. Peace was paramount. Times have changed, though, and the war has receded from peoples’ minds in Bosnia. Increasingly Bosnia’s citizens are focused on the future, particularly a future in Europe, and they see more clearly than ever before the limitations of Dayton.

How could Bosnia think of qualifying for PfP, or eventually NATO, with multiple armies on its territory?

How could Bosnia enter the WTO with multiple customs regimes?

How could Bosnia ever be a credible candidate for EU membership without a single economic space, without a tax system that provided a secure source of revenue to the central government and that conformed to EU standards, particularly for a unified VAT and indirect tax system.

For a long period after the war these sorts of questions were very theoretical for most Bosnians. In fact, the “Alliance” coalition government, which campaigned in 2002 as the best political alternative to bring BiH into Europe, was voted out of power in fall of that year. There were many reasons for the outcome of these elections, but the prospect of Bosnia’s entry into Europe seemed unrealistic to most voters in that campaign. People were focused on more existential questions.

At some point, however, over the past two years, a significant shift in the public mindset occurred. I don’t want to get into an analysis of all the factors for this change. I’ll mention just a few.

A new High Representative, Paddy Ashdown, made entry into Europe a central feature of his “Jobs and Justice Program” and this program was strongly endorsed by the Peace Implementation Council, the nations supporting Dayton implementation.

NATO Sec Gen Lord Robertson set out in a public letter in December of 2002 clear and specific conditions that Bosnia needed to meet to qualify for PfP, implying strong NATO support for Bosnia’s potential membership.

The USG moved from a bilateral military training program (Train and Equip) directed narrowly at the Federation (i.e., Bosnian-Croat entity) to a broader program engaging both entities and the State in an effort to develop central defense institutions and meet PfP qualifications.

The European Commission in Brussels became much more positive in its message on Bosnia’s prospects for negotiation of an SAA.

Perhaps most importantly, the political leaderships in Zagreb and Belgrade increasingly took a much more constructive approach to Bosnia and were focused themselves on their own and regional integration into Europe. There was a prospect of Croatia, Albania, Macedonia and even Serbia joining Europe without Bosnia.

There was also a growing acceptance by all the people of Bosnia that the international community, which along with the Alliance government had in 2001 faced down a Bosnian-Croatian nationalist “Third Entity Movement,” was committed to BiH, and this state was going to last. This was reflected in several public opinion surveys in 2003, which showed that, while some might prefer another political arrangement, the expectation of a majority of all ethnic groups was that Bosnia and Herzegovina would remain.

This recognition, coupled with a desire not to be left out of Europe, particularly a Europe in which Croatia and Serbia might be members, prepared the population for some of the dramatic reforms of the past 2 years. In other words, Bosnians wanted to be in Europe, particularly if Croatia and Serbia were in, and they understood that the only way of getting there was by making Bosnia work.

Here are some the significant changes that have been adopted in the wake of that recognition, and while still being implemented, have significantly changed the Dayton landscape:

A State Ministry of Defense has been setup with a joint command and all military units in the country are now under state-level command and control.

Tax reform has been enacted to create a state-administered VAT and unify entity customs services. The State now as a secure source of revenue to provide essential services and fund the new state-level institutions required to meet both PfP/NATO conditions and negotiation of the SAA with the EU.

New criminal code and criminal procedure codes have been enacted at the State-level, new State courts and prosecutors are operating and a state-level domestic chamber is being established to try war criminals

New law enforcement structures at the state level have been created, including a State Border Service and a State Information and Protection Agency, an FBI-like organization to coordinate the fight against organized crime and terrorism. Most recently, a Police Reform Commission has been set to recommend restructuring the police at all levels of government.

All of these initiatives have a few things in common. They were carried out on the basis of international and local (state and entity) cooperation; they were aimed at overcoming limitations that Dayton placed on the country’s ability to meet EU and international standards; and they required a redistribution of authority from the entities to the State. In the case of defense and tax reform, these initiatives required amendment of the constitution by state and entity parliaments. These reforms were also carried out on the basis of an unspoken understanding that they were not designed as steps toward elimination of the entities, specifically the Republika Srpska.

It may well be possible through what I call this “functional” approach of reform to qualify Bosnia for membership in PfP and possibly the EU, though the RS’ failure to fully cooperate in the apprehension and prosecution of senior war criminals remains a political obstacle to Bosnia’s entry into both institutions. This functional approach leaves the Dayton structures of government intact, though substantially modified.

In my view this functional approach to reforming Dayton has probably exhausted itself and is not helping provide Bosnia with a more rational and efficient government. By World Bank measures Bosnia’s governmental structures: state, entity, cantonal and municipal, as well as the separate Brcko District, consume something in the order of 60 percent of GDP. That is clearly an unsustainable burden for an economy in transition. The addition of new state institutions, without a commensurate downsizing at other levels of government, will only add to the burden.

Several of Bosnia’s more courageous and visionary politicians are already calling for a public discussion to rationalize the structures of government. The terms of that debate are also becoming clearer. Most Bosnians accept that the state needs to be strengthened to meet the country’s international obligations and to qualify for institutions that will guarantee its long-term security, prosperity and integration into Europe. Most also agree that municipal governments, which provide basic services and just conducted their first direct election of mayors, need to strengthened and provided with a securer source of funding.

The problem with governmental structures is what some refer to as the “muddle in the middle,” that is what to do with the cantons and the entities. These have overlapping responsibilities with the state and other levels of government, consume the vast majority of resources and provide little in return, and need to be downsized.

I would suggest a few additional guidelines for this debate, which is long overdue. First, these are decisions that Bosnians should take for themselves. The international community is not going to reopen Dayton. It should be supportive and facilitate a dialogue, but in the end changes to Dayton must be agreed and implemented locally.

The tone and substance of this discussion must be pragmatic. Discussion of the future of the entities, particularly the RS, and the cantons is the third rail of Bosnian politics. These structures are in place because people view them as the ultimate protection of ethnic community interests. Until a higher level of confidence is established among all communities in Bosnia, it will not be possible to completely eliminate these structures. Bosnia’s integration into Euro-Atlantic institutions, particularly entry into PfP and the onset of SAA negotiations, will be important in this regard. It can help create a climate of trust and confidence in which this discussion can take place more rationally and less passionately. This is why the functional approach is valuable, but insufficient.

Parallel to this domestic debate, the international community must begin to decide what we will do with the exceptional and intrusive foreign presence in Bosnia. As I said, SFOR is transitioning into an EU force. I expect EUFOR to rapidly morph into something resembling a policing operation. The heavy military presence is no longer necessary. As the EU carries out this mission, it must also consider how it applies the special military authorities provided in Annex IA. Bosnia is far along on the path of normalization since 1996. These authorities must be applied in a way that acknowledges BiH’s sovereignty, respects local institutions and their capacity to provide for security. A NATO office is also being stood up to support the apprehension of war criminals.

Neither the international community nor local politicians have been able to think beyond the current civilian Dayton arrangements, specifically the winding down of the Office of the High Representative. No one disputes the importance and even the necessity of the High Representative and his exceptional pro-consular powers in the post war period and in pushing through the most recent reforms.

The existence of OHR is becoming increasingly counter-productive, however. It does not allow for local ownership of the reform process. In fact, OHR and the international community are filling the political space that should be occupied by local, non-nationalist reformers. As long as OHR exists, locals can confidently vote for nationalist politicians to protect their narrow ethnic interests, knowing full well that OHR and the IC will move Bosnia forward on the path toward Europe.

With completion of the current round of reforms, hopefully in 2005, and Bosnia’s entrt into PfP and the start of the SAA process, we will need a strategy to shut OHR down. This decision needs to be taken well before the 2006 elections, even if not completed by then. Before tho0se elections Bosnian voters should understand that they are electing officials that will be fully responsible for carrying through on the reforms that will take Bosnia into the EU and NATO. Moreover a failure to agree of OHR’s future before this target date may well lead to it and the exceptional IC presence in Bosnia becoming an issue in the elections. My advice is that OHR leave before being asked to do so by the locals. As part of this OHR transition, the IC should continue to turn over the authorities of Dayton’s Annexes to the local government, as it already has done with Annex VII on refugee returns.

Bosnia and Herzegovina is a special place. It is not your average European state. In today’s Europe the nation state is an anachronism. Europe is moving toward deeper integration and unity – with the entry of ten new members from eastern Europe earlier this year. Bosnia does not need a centralized nation state to qualify for Europe. What matters is a state with the ability to provide justice and essential services to its citizens and to meet the conditions that will qualify a government for admission to those key institutions, PfP, NATO and the EU. Membership in these bodies will provide for Bosnia’s long-term security and prosperity. Bosnians are moving, perhaps not as fast as some foreign observers might like, to create such a state. We need to show our support and patience for their efforts, but I am confident they will get there.