Where is the Donors' Money

A Part to the Federation, a Part to RS, a Part to Foreigners

AIM Sarajevo, 3 April, 1998

The promise of the international community of 5.1 billion dollars for reconstruction of Bosnia & Herzegovina was the constituent part of the Dayton peace package which ended the four-year war in this space. Out of the total sum, 3.7 billion were intended for the B&H Federation, and the remaining 1.4 billion dollars for Republica Srpska.

According to the evaluation of the experts of international financial institutions at the time, in the course of four years this money should have enabled the economy of B&H to stand up on its own feet, and to the citizens of B&H to begin living off their on labour. Two and a half years after Dayton, promises concerning economic reconstruction have partially been met. At the three so far held donors' conferences the intrenational community has promised about three billion dollars for reconstruction of B&H which is about 60 per cent of the total expected sum.

However, when speaking about meeting promises and concrete expenditures, the situation is slightly different. Nobody can tell precisely how much money the world has spent on reconstruction of B&H. Each donor is keeping records about his money, and the obligation to register all projects and expenditures in a single place, either in the country or abroad, simply does not exist.

According to the data of the World Bank since January 1998, the total value of the projects in B&H the implementation of which is pending amounts to 1.459 billion dollars. This figure includes both the money belonging to the World Bank itself, and the money of other donors who have entrusted this international financial institution to control it for them.

Diversity in the manner of calculation and record keeping used by different donors for their projects and money creates additional confusion. For instance, in reports of the World Bank, the figure of 1.459 billion dollars "in implementation" is mentioned. However, more detailed analysis of this fact shows that world bankers included in this figure 286 million which nobody knows who will give them, in other words the "hunt on donors" has not been completed yet.

The so far spent money mainly referred to projects for reconstruction in B&H Federation for known reasons. The money for reconstruction is one of the most powerful trump cards in the hands of the international community, so that its inflow and distribution in B&H entities directly depends on the readiness of the leaders to meet the Dayton obligations.

Thanks to the stubbornness of the leadership of RS and obstruction in establishing joint institution of B&H, to prevention of return of the banished and refusal to extradite the indicted for war crimes to the Hague tribunal during 1996 and 1997, RS has remained without a significant sum of donors' money intended for reconstruction.

At the last donors' conference in July 1997, out of 1.08 billion dollars intended for reconstruction of B&H, 30 per cent, meaning more than 300 million dollars was planned for RS, and the rest for the Federation of B&H. Of course, using of this money was unequivocally conditioned by meeting obligations assumed in Dayton, and since while the Serb Democratic Party (SDS) was in power this did not happen, the money remained in the pockets of the donors.

Since the SDS is in the opposition and the new government has been established in RS, the donors seem to be ready to begin actual realization of the projects of reconstruction in this B&H entity as well. If after the September elections the SDS remain in the opposition, and Dodik's government by then shows that it seriously intends to meet obligations from Dayton, citizens of RS can expect to feel effects of the project of reconmstruction. It is expected that only the World Bank will in the course of this year invest more than 70 million dollars on the territory of RS, and its example will be followed by a majority of other donors.

According to the data of the federal government, for the projects of reconstruction on the territory of this entity, 1.38 billion dollars were provided until the end of 1997, out of which 1.02 billion have been used and 354 million dollars are in implementation. The actual figure is certainly larger, but the Government of the Federation of B&H has the exact data and complete insight only when projects of the World Bank are concerned. Most of the other donors carry out their projects often in direct contacts with municipalities and cantons, and the federal government is skirted. That is why the figures about the total allocated and spent money of the international donors in B&H significantly differ depending on whether records are kept by domestic or foreign authorities. Indeed, everything that has, but also often does not have, anything to do with projects which should contribute to economic reconstruction of B&H, donors register as their donnations. From expenses for various advisors, overhead expenses of numerous non-governmental organizations, equipment and maintining costs of the Office of the High Representative, all kinds of observers, missions and similar, everything is neatly booked under the item "reconstruction of B&H" and the final sum is slowly but surely approaching the promised amount of 5.1 billion dollars.

On the other hand, whenever there are no daily topical events, a story appears on the pages of leading world newspapers about hundreds million dollars which have "disappeared" from funds for reconstruction of B&H, all that garnished with a comment on corruption of domestic officials. This story has already become hackneyed and objectively serves as a "smoke curtain" or to divert attention of the domestic public and to entertain international financisl experts.

Regardless of the already several times proved skill of domestic "experts" in financial "acrobatics" and manipulations, with the existing procedure, even they cannot accomplish to have hundred odd million dollars "misplaced" on private accounts. That is why every new pompous statement about hundreds of "disappeared" millions which is then without any problem denied with solid arguments, however paradoxical it may sound, is grist to the mill of criminals on all levels.

Corruption belongs in the group of incurable social diseases which nobody is immune to, but which again does not mean that the struggle for keeping it down should be abandoned. It is certain that various "commissions" are regularly charged and paid in B&H, but that donmestic "players" objectively get only "crumbs" of them.

Probably for the future of the citizens of B&H it is more important how money which will have to be returned some day is spent and how it is allocated, especially the part the distribution of which is decided by the state. It will not be very comforting that nobody individually had any use from the money if they end up as "abortive investments", that is, if they are directed in compliance with party directives.

It is certain that realization of the projects of reconstruction of B&H will last longer than the planned four years, that is that, if the donors do not fail us, money promised in Dayton will continue to be spent in the first years of the next century. Who will and when pay it back when time comes for returning debts, remains to be seen.

Drazen Simic

(AIM, Sarajevo)