Building a new State

Bosnia-Herzegovina is a new State, with new institutions, new laws, new borders, a new electoral system. The European Commission is laying the groundwork to give the new state a solid basis to build on.

Drafting new laws

Specialist European lawyers are assisting their Bosnian counterparts to draft laws inspired by those in force in the EU. For example, laws on foreign trade, crucial for the country's economic revival. European and Bosnian lawyers are working together in a long term perspective to put in place the principles of a free economy. EC experts are currently working on laws governing the banking, legal and commercial systems.

Supporting the electoral process

Given the very complex political context, the organisation and supervision of the elections in Bosnia-Herzegovina was assigned to the OSCE which has wide experience in the field. The EU gave substantial support to the OSCE to allow observers and supervisors to scrupulously monitor the process. The most recent municipal elections in September 1997 took place under a high level of surveillance. In 1996 and 1997, the EU supported the elections in Bosnia-Herzegovina with a contribution of 3 and 4.39 million ECUS respectively. During these two years, the elections were closely monitored: the means and materials made available by the EU enabled the presence of supervisors in nearly all voting stations. Regarding the elections in 1998, the EU has renewed its support for the OSCE with a contribution of 5 million ECUs, which will finance the EU supervisors as well as the OSCE/EU media centre. This centre will ensure the distribution of information relative to the elections at a national and international level.

Customs: the new State's essential source of finance

For them to work, Bosnian State institutions must have financial resources. The ruined economy can not fill the country's coffers. Today the customs services represent the single biggest source of revenue for the Bosnian state. Officials from the European Commission Customs Administration and Fiscal Assistance Office (EC CAFAO) have done sterling work here. Having restored confidence between the Federation's two ethnic communities (Croats and Bosniaks), the EC CAFAO has managed to put in place an efficient and reliable customs service common to the two entities (the Croat-Bosniak Federation and Republika Srpska). The European customs officials assist and train their Bosnian counterparts. They build up systems which help detect and avoid fraud, of primary importance in a country undergoing transition. The objective is to apply customs procedures throughout Bosnia-Herzegovina which are modern, efficient and largely compatible with those of the European Union.

Making the new institutions work

The Dayton/Paris accords give a precise description of the Bosnian State's new institutions. To make them work, the EC is giving equipment, financial support as well as technical training to most of them.

The Central Bank is up and running

Since June, Bosnia-Herzegovina has a new currency: the Convertible Mark, which, as its name indicates, has an exchange parity of 1/1 with the Deutsche Mark.

Up to now, 4 different currencies circulated in Bosnia-Herzegovina: the Croatian Kuna, the Yugoslav dinar, the Bosnian dinar and the Deutsche Mark. This new currency is issued by Bosnia-Herzegovina's brand new Central Bank which was set up on 11 August 1997. In accordance with the Dayton Accords, the Central Bank is an independent body that is common to the two Entities, and is sole responsible for monetary policy. The European Commission helped to set up this institution which is essential to the existence of Bosnia-Herzegovina as a State. The Commission entrusted the Belgian Bankers' Association (ABB) with the task of providing technical support and training the Central Bank's personnel. The ABB also organised the information campaign for the launching of the new currency by way of TV spots, leaflets, billboards and seminars. Apart from launching the new currency which is already a challenge in itself, the Central Bank has a major role to play in reconciling Bosnians with banks in general, as the latter are the key players in the transition to a market economy.