Bosnia: Ashdown Faces Huge Challenge

When Paddy Ashdown, former leader of Britain's opposition Liberal Democrats, takes over in June as High Representative in Bosnia, he faces a morass of corruption and social ills that have blighted the country's post-war transition towards democracy.

Armed with sweeping powers by the international community, Ashdown has only a limited time to achieve reforms. The general belief is that within three years, the West's interest in Bosnia will have waned to the point where financial and military assistance will dry up. He is, therefore, under pressure to set goals that can be achieved in that time.

A major task will be to weed out the lawlessness and corruption linking key echelons of government to organised crime. A first step on this path should be a thorough audit of public sector institutions to examine how public funds are channelled into illegal hands.

The Office of the High Representative, OHR, was set up under the Dayton agreement, which ended the Bosnian war in 1995. Its mandate was to supervise implementation of the accord's civilian aspects, a task severely hindered by the rampant corruption infecting public services.

Examples of graft abound. In Mostar, public money has long been diverted to local authorities controlled by the HDZ, a Croat nationalist party that opposes everything Dayton stands for.

In western Herzegovina, cars, mobile phones and other equipment in the hands of police have been quietly transferred to HVIDRA, the main Bosnian Croat association of war veterans, renowned for its anti-Dayton stance.

Certain government departments have been particularly prone to misusing funds. In 2000, a flat owned by the interior ministry of the Muslim-Croat Federation mysteriously found its way into the hands of a former local minister in Herzegovina-Neretva canton.

In the same year, western Herzegovina authorities paid an enormous bill of 500,000 konvertible marks - the official Bosnian currency - for the maintenance of their 24 cars. This amounts to 20,000 marks per car. The total sum was enough to buy more than 20 new cars.

Other examples include the scandal of the Hercegovacka Bank and the battle over Aluminium Mostar, the bank and company used by HDZ hardliners to launder money and finance their parallel institutions.

At the root of the problem is dishonesty in the judiciary. Without its reform, the system cannot be put right. Over the past five years, all efforts by the United Nations and OHR to achieve this have been thwarted.

One reason is that public sector reform has largely been left to technical missions while the OHR concentrated on fraud in banking, energy and forestry.

If financial abuse is bad in the Federation, things are even worse in the other half of Bosnia, Republika Srpska, RS. Officials estimate the latter is two years behind the former in investigating and prosecuting corruption. So far, the RS authorities have filed only 31 charges against former officials for abuse of office and corruption, involving sums of only a few hundred thousand marks. Cases in which hundreds of millions of marks are thought to have been siphoned out of the exchequer still await attention.

Priority must be given to stamping out public sector fraud if Bosnia is to become a functioning democracy. The first step is to investigate all ministries with an OHR-appointed team of auditors. Everything from pay rolls to fuel receipts must be examined to establish where the money is going.

Local authorities must be impressed with the absolute need to adhere to the findings of the investigation. If they do not, international funding should be suspended. If that does not work, the West must enforce the changes while it still has the power to do so.

Politicians found guilty of financial and other misdeeds should face prosecution on such a scale that public servants will be deterred from graft in future.

Money for prosecution could come from the European Commission. The actual work should be carried out by the OSCE, or by a beefed-up anti-fraud unit.

This is not just a question of preparing Bosnia's public sector for integration into Europe but of ensuring that the goals set at Dayton are achieved in full. Three years should be enough time to see the job through.

Daniel Korski works for the International Crisis Group in Sarajevo.