Donors’ conference dispute threatens Bosnian recovery

Date: 03/07/1997

NO SOONER had one Bosnia donors' conference been cancelled than the arguments began over when the next one should be held.

While the Dutch, whose term at the EU helm ended this week, have called for a meeting of potential donors to the country to be held in mid-July, other countries, such as France, are wary of holding it too soon.

But European Commission sources are warning that unless they come to an agreement quickly, Bosnian reconstruction could grind to a halt at a time when the country is in dire need of help.

“The conference must be held in July,” said one official. “If not, then we have holidays, and in September there are elections in Bosnia. That would mean, practically, that the conference could not take place until October.”

Given that donors would be providing funds for 1997, he added, pledging aid at the end of the year would look very bizarre.

The disagreements are just the latest in a series of setbacks for the former Yugoslavian state. One and a half years after the world celebrated the infamous Dayton agreement, which ended the war in Bosnia, the Balkan republic is still as divided as ever.

The donors' conference scheduled for mid-June was cancelled because Bosnian Serbs had failed to adopt a package of 'quick start' laws designed to bring the two parts of the federal state into a coherent whole.

This hurdle was overcome last week when, under growing pressure from Belgrade and the international community, the Serb entity's parliament accepted the laws.

If Bosnia can now reach agreement with the International Monetary Fund, it will have complied in principle with all the preconditions laid down by world governments at Sintra in Portugal a month ago and open the way for a new conference.

But that is more easily said than done. Before an agreement can be reached between the IMF and Bosnia, the country's federal government will need to make firm pledges to create a central bank, adopt a single currency and design a stringent budget to launch economic recovery.

Over the next two weeks, fund officials and special envoys will be rushing backwards and forwards to elicit suitable guarantees that this will be done.

Although they are reasonably hopeful of getting commitments to reform by the middle of the month, critics of the process say that while words are one thing, action is another. “It would be a big mistake to cut corners in the rush to hold a conference this month,” said one diplomat.