Former political and administrative institutions were virtually shattered as a consequence of the war. With the signing of the Dayton/Paris Peace Agreement the state of Bosnia and Herzegovina was formed comprising two Entities, Republika Srpska and the Federation of Bosnia Herzegovina. Though minimal inter-Entity institutional links exist, Dayton also stipulated the need to create the foundations of a modern democratic state through the strengthening of Bosnia and Herzegovina’s state institutions.

The EC institutional strengthening programme, working in close coordination with the OHR, aims to assist in the rebuilding and establishment of the state institutions. The programme helps to formulate the policies needed for their effective governance and operation, and to modify legal and economic frameworks in order to assist reforms. The common institutions at the state level that will be supported through the programme are: the Parliamentary Assembly of Bosnia and Herzegovina; the collective Presidency; the Council of Ministers, the three line ministries, namely the Ministry for Foreign Affairs (MFA), the Ministry for Civil Affairs and Communications (MCAC), and the Ministry for Foreign Trade and Economic Relations (MFT); and, through two separate projects, the Constitutional Court and the Central Bank.

Since 1996 the EC has allocated approximately 29 MEURO to support the functioning and consolidation of Bosnia and Herzegovina as a state.

In 1996, over 10 MEURO was allocated through the Essential Aid Programme (EAP) and the Country Operational Programme (COP96) to support the authorities in establishing the mechanisms necessary for economic reform in accordance with Dayton. Assistance includes support for the emerging private sector, rehabilitation of the banking sector, and technical support to the authorities for management of the priority reconstruction programme.

Over 1.1 MEURO was also allocated for the Quick Start Package (QSP) which provided urgent legal assistance for the first drafts of essential legislation for the Government. EC expert advice focused particularly on the drafting of foreign trade and investment laws. Approximately 0.4 MEURO of the QSP was provided for the strengthening of the existing Entity statistical offices and to create a state level Bureau of Co-ordination for Statistics (BCS) which will provide up-to-date, accessible statistical information for the government, private businesses, and potential investors. The remaining 0.7 MEURO went toward the development of a legal and regulatory framework which included the preparation of three sub-laws on the Law on the Policy of Foreign Direct Investment, the development of the commercial code of Bosnia and Herzegovina, and the preparation of rules for accounting and auditing. In 1998 the EC allocated a further 2.5 MEURO toward the statistical sector.

The Constitutional Court received 0.5 MEURO from the EC in 1996. Funding provided material assistance, such as books, electronic equipment, and e-mail access, in addition to basic training on economic reform, and the development of a long-term legal support programme.

The EC programme allocated over 3 MEURO to support the Parliamentary Assembly, the Presidency, the Council of Ministers, and the three line ministries. The programme has two main objectives: creating and developing at state level a professional civil service, and securing the international and external functions of the state in accordance with the Dayton peace agreement and the BiH constitution. Support includes EC expert advice and training, monitoring of legislation, and computerisation of the institutions.

Additional 0.5 MEURO has been allocated to create in the local partners the capacity to assume the responsibility for managing the reconstruction process in BiH (priority identification, project design, implementation, monitoring and coordination). Support was provided both in the form of technical assistance and supply of IT equipment and vehicles. The programme was co-financed with Italy, UK, and France and the International Management Group was the implementing partner.

In 1998, the EC institution strengthening programme also assisted the Brcko judiciary. Brcko has been a particularly sensitive area under the arbitration of the international community until it was awarded the status of a district in March 1999. The EC committed 0.2 MEURO for the procurement of necessary equipment. 0.112 MEURO has been utilised to provide additional support to the State Institution, focusing mainly, following the rehabilitation of the Parliament building, in assisting in the distribution of office spaces, the establishing of a security system for the building, the installation of a Network Operation Centre, the establishing of a training centre and the reconstruction of the Parliament Hall.

A further 8 MEURO has been allocated to the institution strengthening programme in 1999. 6 MEURO has been allocated to assist in the creation of Police Academies in support of the IPTF. The EC will finance the refurbishment of the Police Academy in Sarajevo and the construction of a new Police Academy in Banja Luka. A further allocation of 0.6 MEURO to support the Constitutional Court and 1.2 MEURO for assistance to judicial reform complete the programme. The first component provide both material assistance and legal advice and sustainable training to the Constitutional Court, while the second component aims at supporting the establishment of a state judiciary through the creation of judicial and ancillary institutions and at strengthening the Prosecutors Offices at Entity level.

5 MEURO has been allocated (2.3 MEURO PHARE 1999 and 2.7 MEURO PHARE 2000) aiming at the modernisation and development of the customs services, through the introduction of a system of computerisation of customs data (ASYCUDA++). The system will provide the automation of the declaration processing function, and thus will enable the production of similar accounting statistic data, which will facilitate the production of statistics at the national level.

Further 5.6 MEURO complete the 2000 Institutional strengthening programme, aiming at strengthening the institutional, human resources and technical capacity of the State Institutions, to facilitate cross-border and inter-regional co-operation by increasing municipal administrative capacity and to reinforce the institutional and technical capacity of the State Border Service.