Kevin Sullivan, OHR Spokesperson: Good morning everyone. As you can see, I am not Alexandra Stiglmayer, she will be joining us shortly. The High Representative will give a presentation on his last two years in office and on his priorities for the coming twelve months. We will distribute a text of the presentation afterwards, and with that I will turn the floor over to the High Representative.

Wolfgang Petritsch, High Representative: Thank you, Kevin. I am sorry to be late, but as you can see, Alex is even later than I am, but that is our job here, it is keeping us from being on time.

Today, ladies and gentlemen, it is exactly two years since I started my job as the High Representative in Bosnia and Herzegovina. I wanted to take this opportunity to look back at the past two years and see what I can and should achieve over the next, my final year.

The situation in and around Bosnia and Herzegovina has changed dramatically when you compare today with August the 16^th, 1999.

• Back then, Bosnia and Herzegovina was largely governed by the same political parties that had held power during the war.

• Return to many areas, such as for example the eastern Republika Srpska, was virtually impossible.

• Franjo Tudjman and Slobodan Milosevic, the two main actors of the Yugoslav tragedy, were still in power, continuing to exert their negative influence on Bosnia and Herzegovina.

• Now, back then, and I am sure some of you will remember this, I proposed three strategic and structural priorities for my work – to accelerate return, to accelerate the state and institution building process and to carry out thorough and fundamental economic reform – and of course I also proposed at the time the so-called ownership concept for Bosnia and Herzegovina: koncept odgovornosti domacih vlasti i bh. gradjana za Bosnu i Hercegovinu.

Today, the situation is very, very different. Just sticking with the examples that I have mentioned above:

• Bosnia and Herzegovina now has a reform-oriented government embracing the idea of a state of Bosnia and Herzegovina, and this government loudly demands ownership. Ownership of the issues that are so important for the future of this country. We are developing a new relationship on the basis of partnership and responsibility.

• Bosnia and Herzegovina has to be seen in the wider regional context, and there Croatia and the FRY are now supporting Dayton and are respecting the sovereignty of Bosnia and Herzegovina. These two countries have actually become Bosnia and Herzegovina’s competitors for international funds, and they are also in the race to move ever closer to the EU. Thanks to the changes in the FRY, the ex-Yugoslav countries have, under the auspices of my Office and under my mandate and guidance, recently concluded a succession agreement. Bosnia and Herzegovina’s authorities are currently discussing how to use the roughly 250 million Marks that Bosnia and Herzegovina is receiving as a result of this agreement which was signed in Vienna. I can say that I have finished one of my jobs here, and I can now hand back the mandate to the international community.

• We have achieved many other goals, such as returns to the eastern RS or the right of the Srebrenica victims to a cemetery and a monument in Srebrenica. Srebrenica has been of special concern to me personally because I followed the events during the war there with utmost horror. That is why I issued a Decision deciding that the monument and cemetery will be located where the families wish them to be. I also established a Foundation for the Potocari Memorial and Cemetery, which is locally registered, and will make sure that the Memorial will be a permanent structure. And my Office, together with the other international agencies here, has drafted a "Srebrenica Action Plan" which will promote returns to the town and its economic revival.

• We have also managed to solve many territorial disputes, those disputes that could not be resolved in Dayton such as Brcko, Dobrinja, Zepce. Bosnia and Herzegovina is now taking the first steps along the road of economic reform; its membership of the Council of Europe is a real option; and it is discussing how to secure the equality of Bosnia and Herzegovina’s three constituent peoples and the principle of non-discrimination across the country. One remark in that context too: I consider the Constitutional Court’s Decision to be of paramount importance for the country, and I am anxious to see it implemented. This is the reason why I decided, on January 11, to create the Constitutional Commissions in both Entity Parliaments, which comprise four Bosniaks, four Serbs, four Croats and four from the group of the so called Others, each. They have drafted proposals for the implementation of the Court’s Decision. Hopefully after the holiday season, the two Commissions will meet and then hopefully submit their proposals to the Parliaments. Now the citizens of this country are constituent throughout the state of Bosnia and Herzegovina. Croats and Bosniaks in the Republika Srpska as well as Serbs in the Federation, they are now equal in the whole state of Bosnia and Herzegovina and I believe this is a very important and very promising basis for the further development of a normal state of Bosnia and Herzegovina.

This all shows you how much Bosnia and Herzegovina has changed in the last two years. These are, both locally and regionally, radically different circumstances and require also - and this is important to be stressed here - they require a repositioning of the international community in Bosnia and Herzegovina.

Now before I turn to the future, let me take stock of what we have achieved over the last two years with regard to what I declared my strategic priorities, and I would also like to mention where we have failed.

Let me first turn to returns: I must tell you that I am personally quite satisfied that the property legislation, which I imposed in October 1999, and the property law implementation plan, the so called PLIP, have proven to be a framework that has ensured the repossession of homes by their original owners and tenants, thereby creating a real basis for return.

Now, 73,000 out of 254,000 claims for property repossession have been resolved, roughly 1/3. This leaves the horrific number of 182,000 claims still to be resolved, but the process is ongoing, unstoppable and irreversible.

People are actively taking advantage of the results of this process. According to UNHCR statistics, the number of registered so-called minority returnees is increasing very steeply, is really surging now. From 1999 to 2000, we saw an increase by 60%, and the first half of this year, it went up by 55%.

Human Rights Watch wrote in their annual country report for the year 2000 that. and I quote, "a breakthrough" had been achieved in the field of refugee returns in Bosnia and Herzegovina.

Now we need to see the property repossession process through to its conclusion. The focus is now being placed on the sustainability of return; on jobs for returnees, on their security, on the right education for their children.

Now this brings me to the next issue, and that is economic reform. This is the driving engine, so to speak, of my priority concept here.

The old governments did not do much in this area, so that I had to impose altogether 35 Decisions in the economic field alone, out of a total of 93 Decisions I have issued, and I am not counting the 66 removals and suspensions of public officials.

Now most of my Decisions, the legislation in the economic sphere, imposed or amended laws. They represent major, groundbreaking legislation, which has created the foundation for economic reform in Bosnia and Herzegovina.

These Decisions, for example, supported the dismantling of the payment bureaux at the beginning of this year, which is one of the real success stories in Bosnia and Herzegovina. Nowhere else have these Communist relics been abolished faster, even Croatia and Slovenia still have them. Talking about finances, I would also like once again, to mention the successful monetary policy of the Central Bank because this cannot be mentioned often enough.

Another set of Decisions, which I issued last November, introduced European standards for products in Bosnia and Herzegovina, as well as an Institute for Standards to which Bosnia and Herzegovinian businesspeople can turn to have their products certified for export to the EU. In this way, Bosnia and Herzegovina can benefit from the lifting of EU import tariffs and quotas on most goods from your country. This enables Bosnian and Herzegovinian businesspeople to export to the EU, which is a great advantage and great progress for this country.

Obstacles for a single economic space have been removed, privatisation is picking up, the tender-sale of the 52 strategic enterprises in the Republika Srpska and 86 in the Federation has started, so they will hopefully find strategic investors who will bring in not just money capital, but also new and modern management know-how, and restructure the companies over the next year.

I also issued controversial Decisions, such as the ones that have re-organised the pension funds in this country. Initially, pensioners covered by the Sarajevo fund protested in front of my office against the changes, but I believe that today, they have accepted them. They now receive their pensions on time, and the Federation government has promised to pay them two outstanding monthly pensions by the end of this year. So pensioners will get more money this year than before my Decisions. I hope that the protestors at the time, in the cold December wind, will realise this that sometimes tough decisions are necessary in order to bring this country on the right track and that what we are doing here, what the international community is doing here is for the benefit of its citizens.

Now I very much hope that the new governments will build on these Decisions and continue with economic reform. Economic reform - and this cannot be said often enough -, is of paramount importance for the future of this country, and, since I just spoke about return, for the sustainability of return because returnees need jobs, jobs and jobs. Without reforms, there will be no business activity, no investment and no restructuring of the companies and factories, and without that restructuring, there will be no jobs.

This is also something the International Crisis Group has pointed out in their latest Bosnia report, and I quote: "Since Dayton, many impressive gains have been registered." (…) However, without "thoroughgoing economic reforms", "the business environment will remain unattractive to foreign and domestic investors alike, and Bosnia’s European future will remain in jeopardy."

Economic reform also means the elimination of corruption. As you know, the special auditors for the Entities and Cantons, an institution that I helped create in order to fight structural corruption, recently submitted their reports, which show a hair-raising degree of corruption in this country. They have identified 31single cases of major corruption in the Republika Srpska, and 74 in the Federation and its Cantons. These cases now need to be prosecuted, and this is what we are now discussing with the local authorities.

Now let me lastly turn to the state and institution building efforts. I believe there too, we have made progress. Just a few points:

• The Council of Ministers comprises six ministries now and can work much more efficiently.

• It is made up of members of a reform-oriented alliance that has committed itself to the implementation of the Brussels Peace Implementation Council Declaration of last year.

• As of January 2000, the State Border Service, which was created by one of my Decisions, is operational. Today it comprises 1,450 officials who already control 75% of Bosnia and Herzegovina’s border and 35 of Bosnia and Herzegovina’s 50 major international crossings. The State Border Service has proven to be very efficient, in particular in battling illegal immigration and this is what is being expected by the European countries.

• The Communications Regulatory Agency, which I established in March of this year, is regulating Bosnia and Herzegovina’s frequency spectrum. Right now it has a staff of 83 – of whom only four are foreign nationals. Soon it will be entirely domestic.

• I have established a State Court, which is not operational yet, but which we hope will be operational soon, after the Constitutional Court rules on its constitutionality.

Now these examples illustrate how Bosnia and Herzegovina is slowly attaining all the attributes and assets that a state needs.

I also want the citizens of this country to have good-quality, state-of-the-art driving licenses, good-quality ID cards and passports.

Of course, institutions by themselves do not get things done, they have to be properly staffed, and they have to be properly run, that is why police reform, judicial reform and the civil service law, which will soon be on the agenda of the parliament, are so important.

Now, after talking about successes, let’s talk about failures. Among the things that I regard as the biggest failures over the last two years are:

• The outbreaks of violence in Banja Luka and Trebinje in May during ceremonies marking the beginning of the reconstruction of mosques, and the initial reaction of the authorities. This has shown me the degree to which the Republika Srpska society this people they still suffer from dangerous misconceptions and beliefs. It has demonstrated that the Republika Srpska still has a long way to go before we can talk about the rule of law and respect for human rights there. This is certainly something I will follow very closely during my last and final year in Bosnia and Herzegovina.

• The boycott, this is another point that I would like to make, the boycott of the legal institutions by the HDZ since the elections last year is another thing that I do not take lightly. The HDZ still enjoys the support of many Croat people, but I am convinced that more and more of these people realising that HDZ leadership has taken the wrong road. The Croats need representatives that fight for their interests within the legally establish institutions. I very much hope that the implementation of the Constitutional Court’s Decision and the election law will take Croat concerns into account, and I wish to see the moderate forces in the HDZ prevail and start engaging in the legal and institution process of Bosnia and Herzegovina because this is the homeland of Croats – as it is of Serbs and Bosniaks as well.

• In that context, I also consider the initial reaction to the introduction of a Provisional Administration at the Hercegovacka Banka utterly counter-productive. If the take-over had gone peacefully, Ms. Robinson would have finished her audit a long time ago, and people, in particular the small deposit holders who are the most vulnerable, would have regained access to their money.

• But I believe that all these events represent the last desperate attempts of negative, hard line forces to hold onto to power. As normalcy and the rule of law take hold, the failed forces of the past protest more and more loudly and less and less effectively.

Now, what do I intend to do during my last year here? I want to give you a first sketchy idea what I have been thinking about. I will have to discuss my plans and ideas with the Steering Board in Brussels in September, and then I will of course readily share it with you as well. Let me mention a few of my ideas:

Firstly, I believe that you are familiar with the new kind of relationship that the Council of Ministers and I wish to develop - a relationship that is based on partnership and responsibility. This is going to be the basis for the relationship between the international community and the local authorities, and I welcome the Prime Ministers readiness to accept this kind of relationship as it conforms to what I demanded when I arrived here two years ago: the acceptance of local ownership and responsibility.

This is a learning process for the authorities and for the international community, we are learning by the day but I am confident that we will manage. The Consultative Partnership Forum, but also the Civic Forum, will be the manifestation of this new relationship, and I intend to take full advantage of them.

The new relations are not only a challenge to us, I also believe that the media need to follow this in a very responsible way, and with that I am addressing you now directly. The media should critically examine the actions of the government, point out the good things and the bad things, and not simply shrug their shoulders, declare governments incompetent and ask for the Office of the High Representative’s intervention, as the media has tended to do in the past. This is now a new era, and this needs to be taken into account.

At the same time, I wish that the media would also scrutinise my Office more seriously than they have been doing lately. We are not perfect. I regularly read your newspapers and watch television as much as I can, and I take serious criticism seriously. But I cannot accept malicious and factually wrong campaigns, which simply shower us with baseless and libellous accusations, such as that the international community is corrupt or a Mafia-like gang.

I can state here once and for good, I have no relatives at Siemens Austria, Siemens Germany or any other Siemens branch. I also have no single relative working at Mobilkom Austria, Hrvatski Telekom, Italian Telecomm or any other telecommunications outlet anywhere in the world, including Western Wireless. And I can tell you I have nothing to do with Western Wireless’ buying a GSM operator in Austria for 1 Austrian Schilling recently.

On the actual peace implementation side, I will continue to press ahead with my strategic priorities: refugee return, economy, and state and institution building. Regarding the latter, Bosnia and Herzegovina needs, above all, a functioning judiciary, efficient police, and responsible public broadcasters.

You are probably aware that the foreign ministers have asked me to develop proposals on how to streamline the international community in Bosnia and Herzegovina – increase its co-operation and improve efficiency. For me, this represents an acknowledgement of my work here, and I must tell you I feel very honoured. But it is of course also a big job.

I will also review some of the things that we have been doing here. For example, I want to discuss with the Steering Board Foreign Ministers: What are peace implementation issues and what are transition issues?

Bosnia and Herzegovina is no longer just a post-war country, but has also become an ordinary country in transition to a market economy, albeit late and slow. This is a process that every post-Communist country has gone through. So, what are classic peace implementation issues and what are transition issues, and who should take care of what?

Now during the last two years, we have started looking beyond Dayton. Many of the issues that we are pushing are not only Dayton requirements, but requirements resulting from other arrangements.

For example, Bosnia and Herzegovina is obliged to co-operate with the Tribunal in The Hague under Dayton, but also because it is a member of the United Nations. Bosnia and Herzegovina is obliged to respect human rights, such as the right to return, under Dayton but also because it is aspiring to become a member of the Council of Europe. There shouldn’t be any trade barriers between the Entities, under Dayton, but also because this is a requirement of the EU Road Map.

Speaking about the EU Road Map, I would like to mention that the EU Summit, when it met in Zagreb last year, expressed the expectation that the Road Map would be fulfilled by the middle of this year. The EU Road Map hasn’t been met. As a matter of fact, only a few of the 18 conditions have been met. But nobody seemed to have noticed that this deadline came and went, and this is very worrisome. I can only tell you one thing, only once the EU Road Map is done and the EU conducts a feasibility study for the Stabilisation and Association Agreement, the relations between Bosnia and Herzegovina and the EU will have reached a new and so necessary quality.

As you can see, the peace implementation process has already begun to overlap with the Europeanisation process. As time passes, there will be a gradual shift from the former to the latter, so to speak: from Dayton to Europe.

Many of the things that we do, reflect the decreasing engagement of the international community. Every year, to give you one example, my Office has a lower budget. We are, in fact, contrary to what is out there in some of the media, the smallest and the cheapest international agency in Bosnia and Herzegovina, although we have by far the largest mandate. Examples like the Communications Regulatory Agency, an independent agency, or the International Commission for Missing Persons, which is now establishing the National Missing Persons Institute, show how responsibilities are being handed over to the domestic authorities.

There are other examples, such as the Independent Judicial Commission, which has a very limited, but also a very robust two-year mandate, which show how the international community has started to streamline. Prior to the establishment of the IJC at the end of last year, the UN, the OSCE and my office had been dealing with judicial reform, now IJC is the only and the lead agency in regard to judicial reform.

The engagement of the international community is not indefinite. When I arrived here two years ago, I said I am not here to stay. As peace and normalcy take root, as we deliver less and less aid, and aid is decreasing dramatically as you all know, the domestic authorities and citizens have to take over. I hope that this transition - and this is yet another transition that Bosnia and Herzegovina is going through -, will be successful.

Now what matters for me and this may sound touching, but it is true, is the citizens of this country. When I take a walk through the Bascarsija or some place else or visit returnees, people talk to me. They address their concerns to me, their very personal, but very broad ideas and concerns. Of course, they all expect that I will be able to help them. Now these people, be they in Sarajevo, Banja Luka or Mostar or anywhere else in the country, they indeed do deserve a better life. This is what keeps me going and makes my work really and truly rewarding.

Let me just at the very end now take this opportunity to thank my own staff at Office of the High Representative, my Office. The many international as well as local employees at the Office of the High Representative they are equally dedicated and working around the clock so that this beautiful country in the end be a normal ordinary country, a European country in the European family of nations.

Kevin Sullivan: Thank you High Representative. We will open the floor for questions now, and it would be good if you could state your name and affiliation before asking the question.

Alexandra Stiglmayer, OHR Spokesperson: Hello from me, sorry about this shift here but the High Representative and I got lost in the traffic. This was an unusually long statement, but three years is a long period to cover and we will distribute the draft notes after the press conference, so you will have something in hand. And now your questions please.

Sead Numanovic – Dnevni Avaz – The events in Banja Luka and Trebinje, which you particularly mentioned, took place on 5 and 7 May, and nothing has happened afterwards. I mean no one was prosecuted. What are you going to do about it? And the second question is: some officials of the Alliance are demanding the departure of Messrs. Torngren and Shearer, how will you respond to those demands?

High Representative: It is not true, there have been prosecutions, and the prosecutions are still under way as well. There are many more consequences that will have to be taken over time in terms of a thorough reform of the society in Republika Srpska, but prosecutions have been taken, as you know, both in Trebinje and in Banja Luka. Some are still under investigation. So, things are moving ahead in this respect, and, of course, as I indicated, I am watching this very carefully. This is of exemplary importance and relevance to our peace implementation efforts here.

Second question, well I myself have not been told anything about demanding the departure of the Head of the Regulatory Agency and Mr. Shearer. We will, if necessary, discuss this. This is an independent regulatory agency, Mr. Torngren is employed there, so we can talk in a normal way about this. It is definitely not the usual way to go via the media to discuss such important issues. When it comes to the reform of the public broadcast system here, you also need to keep in mind that I have to answer to many of the donors who are supporting, financially, this reform. It is not just the European Union, there is German, Dutch, American, Italian, Japanese, Canadian, UK, Norwegian, Finnish, Swiss money and so on. They are supporting this financially, this transformation process, and they of course are watching very carefully. They also control very closely the work that is being done by the Office of the High Representative and by its people there. So, rest assured they have very, very intimate knowledge of what is being achieved and what the problems are.

One of the main problems is: in the television you have 1,200 people working there and barely 100 are producing the programme. This is unique world-wide, you don’t have such a situation anywhere else, and I understand of course that the 1,200 people are extremely concerned about their jobs, and it is absolutely justified. But this is more a social problem that we need to tackle, something the government is also asked to do something about. The unions are of course asked to act as responsible partners in this. This is a much broader issue than whether somebody, an experienced journalist and manager from the BBC like Mr. Shearer, is going to stay or is leaving. This has broader, much broader ramifications, and these need to be kept in mind when we discuss these issues.

I can tell you I have had some very good meetings with representatives from the Alliance. They should be concerned about the status of television and broadcasting in general in this country. But I believe that when you take a look at the situation of public radio, you will see this is the way forward. We are following a very clearly scripted plan and strategy. We are trying to take in as much criticism and support from the local authorities as necessary. I encourage everybody to work on this in a very responsible way, that is the only way forward. It is your television, it is your broadcast system, you need it, and you should get the best out of it.

Yasin Rawasdeh, Kuna: Following the events of this country, I observe you have done a good job, but it is not a very good job yet!

High Representative: Thank you.

Yasin Rawasdeh, Kuna: I observed from your failures here, you did not mention the returnee question. Do you think that there are substantial returnees for example in the Republika Srpska, and what about their human rights, do you think that they enjoy their human rights, for example in the Republika Srpska?

High Representative: I agree with you. We are far away from human rights and from a satisfactory result in returns all over Bosnia and Herzegovina, but in particular in the Republika Srpska. But I still remember when two years ago I travelled to Bijelina and saw a deserted Janja there. I returned several weeks ago, and there 6,000 out of the 10,000 people, Bosniaks from Janja, were back in Bijeljina, which is where in ’92, as you will remember, where the ethnic cleansing started. For me this is great success. Of course it is not enough, but things have moved quite enormously. They are fighting there for their human rights, and I am fully supporting them. I took the mayor from Bijeljina to Janja, and we went into a private home, sat down and had coffee. And I must tell you, the way the mayor and the Bosniak family discussed issues was very impressive to me. Sometimes we should really go and talk to the people directly on both ends, so to speak, of the former conflict, and there you will realise there is much more realism, pragmatism and appreciative tendency than this is sometimes registered here in the political circles of Sarajevo.

These are the real heroes of Bosnia and Herzegovina, those returnees who return to areas where, almost 10 years ago, they were driven out under bloody circumstances. They are returning there, reclaiming their right to property and to their homeland. These are now developments that are more and more also recognised by the Serb side. I must tell you that many Serb citizens, ordinary Serb citizens of Bosnia and Herzegovina, are much more, much readier to accept this than many of their own politicians are. The problem again lies more with the political class than with the ordinary citizens of this country. So if we get these things going and if we succeed with all the other agencies on the ground, not the least with SFOR, which is providing such invaluable support for the returnees giving them the feeling that we are here to watch out for you and see that you feel secure, then I am very confident that in the coming year we will see enormous further progress, even in the Republika Srpska including Banja Luka.

Amra Kebo, Oslobodjenje: It seems as if the Bosnian authorities do not have any confidence in Messrs. Torngren and Shearer’s work. On the other side you support them, how do you intend to solve this problem? That is my first question, my second one is: talking about the Constitutional Court decision, you said that all citizens in Bosnia and Herzegovina are equal, did you think about Mostar when you said it?

High Representative: What do you mean by Mostar concretely?

Amra Kebo, Oslobodjenje: Because it is a divided city. People from the Bosniak eastern side cannot return to the western side. There are a lot of evictions in the eastern side of the city, but people cannot return to their own flats in the western side.

High Representative: It is not just Mostar, it is many other places. I was recently in Trebinje, I have seen other places where not enough progress has been made. But again, what I can do is to establish ground rules so that the basis is there for an improvement of the overall human rights situation. Then we need to push - this is something that will not end so quickly. This will not come overnight. Six years have gone by, and many of the burning issues are still around, and Mostar, of course, is such an issue. But again, when talking about Mostar, I see progress there. When I think of the Croat mayor there, when I think of many of the contacts that I have there, where people are in fact ready to move on - to move back to a normal life when they realise that this fractured city actually is suffocating in the dirt that is not being collected because it is divided in six parts. All these day-to-day issues, they have a great, in my opinion, positive impact on the people. They will return slowly, but steadily to a normal life. On top of this, we need a different HDZ policy there. This is the main problem. The HDZ is still supported by so many Croats, and of course HDZ is not a monolithic party; there are many moderate forces there, but so far they have not yet had the guts to call it quits and say, okay, we are not going to support these extremists in our party any longer. This needs to come from inside the Croat community in Mostar, then I believe things will change much faster. But I believe, with the Decisions that I have issued also in regard to Mostar that the pre-conditions are in place now and things can move on. When you think of Mr. Koschnick, how he was attacked, and then of when I had to take over the Hercegovacka Banka. A couple of weeks ago I was there, and I must say I was quite glad to realise that people are much more realistic now. They see the past failures of HDZ policies, and they are recognising that some things need to be corrected. So, again progress - much too slow, but it is there.

Amra Kebo, Oslobodjenje: My first question?

High Representative: The first question; well, first of all we are discussing these issues and I think we should move away a little bit from this kind of ad hominem attacks and character assassinations and just take the things as issues. The issue is the telecom reform. The issue here is to get cheaper telephone lines into this country. This country has some of the most expensive telephone operators in Europe and probably world-wide. It is one of the poorest countries around - this does not fit together. So, let us talk about the real issues. Let us talk how to get competition in the telecom sector in there, let us talk about how to get the privatisation and the restructuring of Telekom Srpska and PTT Bosnia and Herzegovina moving. These are the issues. Otherwise you are going to stay behind. These are going to be dinosaurs that will die away by themselves, nobody is going to invest in such dinosaurs on the one hand, and on the other hand, people are not getting cheaper telephone lines. So this is the real issue, and these are also the issues that I am discussing with the government and the respective Ministers, and things are slowly sinking in.

The reality principles are taking root now, and people are realising we need reform, however difficult this is. When we talk about the PTT system, there are hundreds and hundreds of employees, of course state employees. I still remember in Austria when this happened, I do not know - 10 or 15 years ago, there where protests, of course. People do not like to lose their jobs, people do not like to move on to other jobs. But we need to provide new jobs, the two PTTs have licenses now for the whole country, GSM licenses. Have you heard anything about investments? For many months now they have had licenses for all of Bosnia and Herzegovina. Where are the results? These are the real questions, and this is not a name, it is not Torngren or anybody else. This is the name of the game, it is reform, restructuring, coming up with new ideas to attract more customers.

Why is there such a low GSM penetration here? Just look to neighbouring Croatia, in Croatia the state PTT was of course also against competition coming into the country. Do you know what has happened in the meantime? They have tripled the turnover of the state PTT because of the competition. Because competition creates new opportunities, new challenges, and competition also gives more opportunities to those firms who already exist. This rule of modern market economy needs to penetrate the brains of the local politicians. This is the important issue where I believe you, the media, can contribute enormously. Broaden your view, read the international media, what they write about telecom and what is happening out there. This has a direct impact on the situation on Bosnia and Herzegovina.

You are now entering the competitive field. You are not going to be dependent on aid any longer. You are going to be dependent on investment, and investment plays according to different rules. These rules need to be learned, these rules need to be familiarised with, and then things will happen. That is the very important issue in all of these discussions that we are having right now. And I must tell you, it is sinking in. I can realise this now, both with journalists and politicians and many, many other people who approach me on this, and who understand: it is difficult, but it is necessary.

Alexandra Stiglmayer: Let us take two more questions and then close.

Aida Cerkez-Robinson, AP: When you speak about foreign investment, okay foreign investment will probably come once this is, as you said, the goal was to make this an ordinary European country. Now the problem with that, I have, is, I cannot see this ever becoming an ordinary European country if it is going to still have 2 armies, 2 police forces, 3 governments, and as long as it is divided as it is. Now either these two Entities and everybody is going to be happy working together and love each other with the Dayton structure, which, even when that happens is going to actually turn this into a very unique "ordinary European country", or these divisions will have to disappear in order for this to become an ordinary European country. How do you see this actually ever being achieved with the current structure?

High Representative: I must tell you that every European country is unique because most of the European countries have extremely difficult structures. Think of Belgium, think of Germany, of Austria, of many other countries. Of course, they have not had such a recent terrible war experience like Bosnia and Herzegovina, but what I mean is about preserving the uniqueness of this country, the multi-ethnicity. Sometimes you have to pay with a certain complicated structure in order to meet the interests and concerns of the citizens, like the insistence of the Croats on being a constituent people and having a certain level of rights. For practical reasons that would not make a lot of sense: to give 6, 7, 8% of the population basically 1/3 - or in the Federation even 50% - seats within the institutional structures - given to a people of only 8%. But it makes sense. This of course costs, this has costs, and these costs have to be earned. You can only drive this process, you can only afford this luxury, if you take into account individual human rights and ethnic concerns that need to be brought into harmonisation in this country, and then it is going to work.

But the driving force behind this is of course economic reform. It is not that we are talking about a Bosniak, Croat or Serb telecom provider, we should talk about a Bosnian telecom provider at the least. This is the reason why we are pushing the state-level reforms, this is why we are pushing the State Border Service, this is why we are pushing state-level independent regulatory agencies, and this is the reason why we are pushing for a state level public broadcast system. This will tie the country together and slowly, but steadily, move it closer to European normalcy, which is always a number of rather unique features that you have.

What is the European Union all about? It is about diversity, it is about many languages. For practical purposes we should have one language in Europe, but because of the traditions of the history, different cultures and so on, different languages is the luxury that the Europeans are ready to pay for. In a way there is a parallel in Bosnia and Herzegovina. The only problem is that this is one of the poorest countries - but in many ways it is similar. We do not have one single army in Europe. The Bosnian and Herzegovinians do not have it either. They should move much faster in order to be able to join the Partnership for Peace. They have probably far too many layers of government, they will have to figure out what they want. Do I need this, or should I eliminate this in order to save costs? This is now slowly, slowly becoming a Bosnian problem. The citizens need to decide what they want. Do I want to keep Srpska Telekom and the high prices, or do I want to let in foreign telecoms and get lower prices and more jobs? This is the decision to make now, these are all decisions that the citizens and the political class in Bosnia and Herzegovina will have to tackle, and then things will move on.

But I do hope that this country will remain unique in its positive features. It should not remain unique in its dividedness, but it should remain unique - and hopefully it will remain unique - in the many languages, cultural roots and traditions, history, the beautiful landscape and all these other things it has, that this country is rich in. This is how I see the future of Bosnia and Herzegovina. In this way it fits perfectly into the European history and also into the European future.

Aida Cerkez-Robinson, AP: So, it all comes down to the strengthening central institutions of all kinds?

High Representative: Well, it is not so easy to sort of say there is one and it is going to work. I think the vision that we strengthen the state, the idea of a state of Bosnia and Herzegovina and consequently the institutions that we come up with a more efficient government and institutional structures, it is very important. You have the problems throughout the region. Weak governance is one of the main problems in all of south-eastern Europe in ex-Yugoslavia and so on. There are many, many problems that you can see in Croatia or in Yugoslavia now, in Albania, in Macedonia and so on. So in this way this country is again part of this regional transition process which Bosnia and Herzegovina should pay more attention to and also learn, co-operate more with the neighbours on these features. The advantage of this country is a relative one in as much as it has this kind of delayed transition. The 10 years past eastern Europe, so have a look how did the Hungarians do this, learn from the experience in the Czech Republic and then you will realise those where the most successful transition countries that took the hard choice and for 2 or 3 years it was very tough but now they are candidates for the European Union and I am sure the people of this country and the political class can achieve the same here in Bosnia and Herzegovina, they only have to set the right priorities and then they will be successful.

Nedim Dervisbegovic, Reuters: You just mentioned the issue of war crimes and that Bosnia and Herzegovina is obliged under Dayton and as a member of United Nations to co-operate with The Hague Tribunal, it does not seem to be enough for the Republika Srpska and we are still waiting for them to start co-operating, even Yugoslavia has started extraditing war crime suspects. They say they will adopt this law, even when they do they will start saying again we cannot extradite this guy or that guy because of this or because of that. People are complaining, just as they are in Croatia, how much longer will we wait. It has been almost 6 years since Dayton and Karadzic and Mladic are still at large, I mean how long do we have to wait for them to be arrested?

High Representative: Well it is … I say almost on a daily basis as long as these two suspected real war criminals are out there, at large, it is going to be extremely difficult to have a normal country, a normal state of Bosnia and Herzegovina as we just discussed with your colleague here. But on the other hand there are changes now, just the mere fact that surrounding this law, there are discussions now in the Republika Srpska. The Republika Srpska is realising they are the only region left in all of ex-Yugoslavia who do not co-operate with The Hague in an appropriate way. Now yesterday, or the day before, when Lt. Jokic turned himself in, this marks progress. People are slowly realising that those who are accused need to face justice and this process is too late, too slow, but it will accelerate, and very soon I will have another meeting with Carla del Ponte and I am sure we are going to discuss the next steps that need to be taken. But again I fully agree with you: the local authorities are not doing enough and therefore I believe we need to go on pushing as the international community, and our job is not done until we have succeeded in getting Karadzic and Mladic behind bars in The Hague.

Nedim Dervisbegovic, Reuters: What measures do you have at your disposal, unlike Yugoslavia you cannot condition aid with the extradition of war criminals or co-operation in general, so what can you do basically?

High Representative: The latest statistics indicate that the gap in economic development between the Federation and the Republika Srpska is widening. People are realising that this kind of attitude of their government or their governments in the past do not pay the bills. This is the conditionality so to speak, no foreign investment of major significance is going to come into the Republika Srpska unless they have the rule of law and human rights guaranteed. Unless the minorities, unless the other constituent peoples are treated as equals. Slowly, slowly they are starting to realise that there is an intimate nexus between economic well-being and political decisions that the governments take.

Nedim Dervisbegovic, Reuters: This includes war crimes as well, co-operation on war crimes? This includes conditionality, unless they co-operate you will withhold the aid, is that what you are saying?

High Representative: Well first of all, already in the past not so much as was originally intended came into the Republika Srpska. That explains the fact that the Federation is further advanced. This will continue of course but more importantly it is simply that foreign investors will not go into a situation where basic human rights are not guaranteed. It is as simple as that, these are the new rules of the world. This is what globalisation is all about, what you write here, what you as a local politician do here is recognised in capitals, not just through diplomatic channels. Businesses, international businesses are watching very carefully what is happening in your country, in the Republika Srpska, in the Federation, in all of Bosnia and Herzegovina. I know this, I have to travel a lot and there are many questions where I am quite surprised how quickly information travels and the questions are being asked, what is happening in the Balkans. This is something that every politician in this country, including Mr. Sarovic and Mr. Ivanic need to keep in mind, if they want to be successful as politicians, major fundamental changes in their minds, in their heads, have to go on in order to be successful. I guess they want to be successful as politicians but so far of course because of the overall situation because of Milosevic and Tudjman, they sort of felt safe. This now, as I expressed in my statement, fundamentally changes and you will see dramatic changes, just count the number of PIFWC’s (People Indicted for War Crimes) that were taken in, in the month of August alone, that is enormous. This will have consequences.