Priorities differ prior to start of donors’ conference

Date: 11/04/1996

AFTER much threatening and cajoling, the European Commission is set to host an international donors' conference this week in a fund-raising drive for the reconstruction of Bosnia-Herzegovina.

That tomorrow's (12 April) meeting in Brussels is happening at all is regarded as good news, after Foreign Affairs Commissioner Hans van den Broek threatened to cancel the event if aid pledges were deemed insufficient.

But he and World Bank President James Wolfensohn, co-hosts of the meeting, may still face difficulties in securing a reconstruction programme.

Several different development plans are already emerging.

International High Representative Carl Bildt has made infrastructure his number one priority, saying that restoring roads, transport and lighting is the best way to restore normality.

The Commission, on the other hand, says housing is the most urgent need and only an adequate supply of shelter will bring displaced Bosnians home in time to vote in this summer's elections.

While Bildt says Bosnia needs 1 billion ecu this year, Commission officials have reduced their sights because of doubts that the Bosnians can actually put that much money to use. “We say 800 million ecu is enough, given the absorption capacity,” said one official.

Another feature of the reconstruction efforts which is sure to disappoint donors is that about 5&percent; of programme money is already being diverted

to operating costs. But Commission officials say this is unavoidable, pointing out: “There is nothing there. You can't just give them trucks. You have to give them the fuel, the drivers and the drivers' salaries.”

And that, according to those same officials, is just one of the problems facing the reconstruction partners. Any attempt to restore the country's agriculture production will be obstructed by landmines and the tangle of property questions raised by squatters inhabiting the farms of owners who have left. Property disputes will also complicate efforts to rebuild houses all over Bosnia.

Construction materials are reaching Sarajevo and elsewhere, but private construction firms are reluctant to deploy workers there with the departure of NATO's peacekeeping force likely at the end of this year. It may be difficult to persuade anyone to go there until a replacement for the IFOR force is assured.

Some believe that political and military strength may count more than economic gain for Bosnians. Although Bildt repeatedly insists that the former warring parties need to see the material rewards of peace, it is not clear that the parties themselves feel the same way.

“The ink on the agreement allowing Croatia into the Phare programme was not even dry when they launched the Krajina offensive and when the agreement was revoked, they didn't seem to care,” said a Phare official.

But the Bosnian government has asked for funds, and the World Bank estimates Bosnia's reconstruction needs up to 4.5 billion ecu. Although the cost was to be split three ways, with the EU, the US, and a bloc containing Japan, Russia and Islamic nations each paying a third, Commission officials say the EU will almost certainly pay more.

The Commission has already drafted proposals for 1996-99 spending through its Phare programme for Central and Eastern Europe countries (CEECs), with some 400 million ecu for reconstruction and 200 million ecu for restructuring programmes more typical of Phare - helping economic and democratic reforms, and cross-border cooperation.

Other pledges expected include 475 million ecu from the US and 80 million ecu from the Arab states in the Islamic Conference. Japan has indicated it is preparing a package of 40 million ecu in grants and 150 million ecu in loans.

Most of the money will be administered by the World Bank, which itself has pledged 110 million ecu and has also agreed to reschedule some 450-million-ecu worth of debt over 30 years. Bosnia owes some 500 million ecu to the bank as its share of the former Yugoslavia's debt.