1. Bosnia and Herzegovina passed a significant milestone during the reporting

period. As has been the case for several years, the overarching goal of the

international community has been to assist the country in equipping itself to take

part in Euro-Atlantic integration and, in particular, to establish contractual

relationships with the European Union (EU) and the North Atlantic Treaty

Organization (NATO). Bosnia and Herzegovina not only fulfilled the conditions for

opening negotiations with the European Union on a stabilization and association

agreement in time for the tenth anniversary of the Dayton Accords in November

2005, but it also started the technical talks in January 2006.

2. The process by which Bosnia and Herzegovina finally met the requirements set

by the November 2003 European Commission (EC) feasibility study for initiating

stabilization and association agreement negotiations demonstrated that there is still a

need for a strong but modified international engagement in the country. Yet the clear

message from the international community that final responsibility for fulfilling the

EC terms lay exclusively with the domestic authorities encouraged the assumption

of real ownership. This approach to reform, combined with continuing downsizing

by the Office of the High Representative and the gradual prominence of the role of

the EU Special Representative should characterize the next stage in Bosnia and

Herzegovina.s progress towards self-sustaining statehood and active integration in

Europe.

3. Bosnia and Herzegovina was thus ultimately successful in joining its

neighbours, Croatia and Serbia and Montenegro, in the regional endeavour to

participate in European integration. Their common aspiration renders unresolved

border questions a minor irritant. Uncertainty over both the future of the state union

of Serbia and Montenegro and the final status of Kosovo have thus far had little

impact on the political debate in Bosnia and Herzegovina.

precluded Bosnia and Herzegovina.s admission to the NATO Partnership for Peace.

But ongoing political and financial pressure on the Serb Democratic Party (SDS),

security sector reforms and greater coordination among State and entity institutions

helped sustain the improved level of cooperation between Republika Srpska and the

International Tribunal for the Former Yugoslavia noted in my previous report.

5. The approach of the tenth anniversary of the signing of the General

Framework Agreement for Peace stimulated an intensification of the discussions on

constitutional reform that had been taking place intermittently throughout the year.

A commemorative event in Washington, D.C. resulted in the signature of a

commitment to support the process and to agree on constitutional changes by March

2006 by the strongest eight political parties in Bosnia and Herzegovina. Their

negotiations have thus far resulted in agreements in principle on human rights

provisions, the competency and size of the Council of Ministers and the two houses

of the Parliamentary Assembly as well as on certain reductions in the authority of

the Presidency. But it has not yet produced the package deal that was promised or

draft legislation for submission to parliament.

6. The European Union Military Mission (EUFOR) built a strong reputation in its

first year on the job, becoming a key partner in support of the EU political

objectives and the mission implementation plan of the Office of the High

Representative. For its part, the European Union Police Mission completed its initial

mandate. A follow-on mission, which will extend until 31 December 2007 and focus

on both supervising police restructuring and fighting organized crime, came into

being on 1 January 2006.

7. After intensive lobbying, much public campaigning and several rounds of toplevel

political negotiations, an agreement on how to proceed with police

restructuring was finally reached in early October. This involved explicit acceptance

by the state and entity governments of the three principles that the European

Community had insisted should undergird the reform, and which had become a

precondition for stabilization and association agreement talks. A Directorate for

Police Restructuring Implementation has been formed to manage the process.

8. Defence reform proceeded to its climax with few hitches. The general

consensus encompassing the elimination of entity competencies, the transfer of all

defence responsibilities and personnel to the state, the abolition of conscription and

the establishment of a restructured and small reserve force to back up the downsized

professional army held sway throughout. In their last sessions in 2005, both the

Federation and Republika Srpska parliaments adopted the legislation still required to

complete the implementation of the defence reforms. According to schedule, the

defence ministries of both entities ceased to exist on 31 December.

9. The mandate of the Intelligence Reform Supervisor, Kálmán Kocsis, expired

on 31 December. Intelligence reform has now reached the stage where intensive

international supervision is no longer required. The Office of the High

Representative and the Organization for Security and Cooperation in Europe

(OSCE) will maintain a watching brief on the further consolidation and operations

of the Intelligence and Security Agency.

10. In September 2004 the Bosnia and Herzegovina Council of Ministers pledged

to create a body to deal with state property and accommodation problems. The

promised commission finally commenced its work in November 2005. Its first task

is to draft a law on state property.

11. In December 2005, the Office of the High Representative provided the

Parliamentary Assembly and the Council of Ministers of Bosnia and Herzegovina

with draft legislation proposing a domestic vetting procedure for state-level

ministers and deputy ministers. In addition, I announced that all persons removed

from public office by my predecessors or myself, with the exception of those banned

for obstructing cooperation with the International Tribunal for the Former

Yugoslavia or for supporting Hague indictees, would in future be eligible to apply

for non-managerial positions in public institutions.

12. The effective unification of the city of Mostar administration continued during

2005. The Mostar Implementation Unit completed its mandate after two years and

handed over responsibility for supporting and monitoring the finalization of several

outstanding unification tasks to the Office of the High Representative South.

13. Efforts to guarantee that Brcko District.s multi-ethnic and democratic

institutions can function effectively under the sovereignty of the state continued as

the Office of the High Representative encouraged an agreement, signed in

November, between the Council of Ministers and the Brcko government to open a

District office within the Council of Ministers. This will help ensure that the District

has appropriate representation at state level.

14. This is my seventh and final report to the Secretary-General since assuming

the Office of High Representative in Bosnia and Herzegovina on 27 May 2002. As

has been the norm, the report assesses progress made towards attaining the goals

outlined in previous reports as well as reviewing developments during the reporting

period.

15. The past six months have been dominated by the drive to satisfy outstanding

feasibility study requirements and to obtain a green light to open negotiations on the

EU stabilization and association agreement. This was accomplished with the formal

launching of the talks on 25 November.

16. Reforms of the country.s policing, defence and public broadcasting systems

were the touchstone issues on which the international community concentrated its

efforts. No sanctions or impositions were, or could be, deployed to produce results.

The domestic authorities had to take the responsibility for moving forward.

17. The tenth anniversary of the signing of the Dayton Accords saw the conclusion

in Washington, D.C. of an agreement by the leaders of the eight largest political

parties in Bosnia and Herzegovina to work towards state-level constitutional

changes to be put in place by the end of March 2006. The parties had made

substantial if incomplete progress by mid-January. It is uncertain at this writing,

however, whether negotiations will recommence to achieve an all-embracing set of

amendments within the short time available or whether efforts will be confined to

turning the agreements reached thus far into constitutional or state-level law. A

drafting team of legal experts from the Council of Ministers and parliament of

Bosnia and Herzegovina stands prepared to draft both a package of amendments and

other legislation.

18. Despite prolonged naysaying and foot-dragging by the Republika Srpska

government, on 5 October the Republika Srpska National Assembly adopted a lastminute

acceptance of police restructuring proposed by the entity.s president, which

met EC standards. The Council of Ministers, the state parliament and the Federation

parliament subsequently adopted this same text. The agreement called for the

establishment of the Directorate for Police Restructuring Implementation by

31 December; the preparation of an implementation plan by 30 September 2006;

entity and state government approval of the plan by 31 December 2006; and entity

and state parliamentary adoption of the scheme by the end of February 2007. The

first step, establishment of the Directorate, took place within the deadline.

19. The fact that negotiations on police reform commanded centre stage over the

past six months meant that other outstanding reforms received less attention than

usual by the Office of the High Representative. In fact, the appearance of a pattern

of systematic obstructionism on a range of mostly economic and fiscal issues by the

Republika Srpska government led the Office of the High Representative to issue a

demarche, on 10 November, and to summon a press conference, on 2 December,

designed to exert public pressure on the authorities in Banja Luka. Some

improvement seems to have taken place, but the long holiday season and current

moves to unseat the SDS-led government have brought normal business to a halt.

20. The Federation government, for its part, finally gave up its resistance to

complying with the provisions of the Washington, D.C. and Dayton Accords

regarding the move of five ministries to Mostar. It adopted the requisite decisions

during the autumn and the designated ministries have moved or are moving their

central offices. Federation constitutional amendments on local self-government and

consequent laws on local self-government and the allocation of public revenues are

now set to be discussed in the Federation parliament. Their passage would establish

the basis for a long-overdue reform of municipal government in the entity.

21. The Federation government has latterly functioned with fewer threats to

disrupt its work or cabinet meetings by the one or another of the three coalition

partners. Parliament adopted key legislation in July concerning budgets and internal

debt. In the same month the ruling coalition saw off a no-confidence vote initiated

by the Social Democrats. It was brought to the brink of crisis in August and

September, however, by disagreements over the appointment of ministers to replace

two who had resigned.

22. Although two major parties in Bosnia and Herzegovina, SDS and the Croat

Democratic Union of Bosnia and Herzegovina (HDZ BiH), have experienced

internal turbulence during the period, the political scene is stable, albeit with many

indications that the parties are already manoeuvring to enhance their positions in the

run-up to the October 2006 general elections. The SDS congress in November saw

party he obviously aims to distance from its wartime past. At the end of 2005, the

Party of Democratic Progress (PDP) announced that it would no longer support the

SDS-led government in the Republika Srpska National Assembly, thereby depriving

the government of its majority and creating the opportunity for the largest Republika

Srpska opposition party, the Alliance of Independent Social Democrats (SNSD), to

initiate a vote of no confidence. Two PDP ministers continue to fulfil technical

mandates in the Council of Ministers, notwithstanding the prime minister.s effort

last June to sack one of them and the subsequent resignation of the other. The leader

the legitimacy of his election as party president in June 2005. The grouping of

European People.s Parties has, as a consequence, suspended HDZ BiH.s associate

membership.

23. The review of removal decisions that I initiated early in 2005 continued, and

by the end of the year 30 persons had their right to participate in public service fully

restored. In November, I extended the process by announcing that all those who had

been removed by my decisions or by those of my predecessors would henceforward

be eligible to apply for non-managerial positions in public bodies or companies that

are filled through open competition, provided that they had not been removed from

office for supporting International Tribunal for the Former Yugoslavia indictees or

impeding cooperation with the Tribunal.

24. The authorities of Bosnia and Herzegovina made sufficient progress in

completing the legislative and other requirements of the EC feasibility study during

the period to permit EC to recommend and the EU Council to endorse the opening

of stabilization and association agreement talks. As noted above, their formal launch

took place on 25 November in Sarajevo. The Bosnia and Herzegovina governments

agreed and enacted reforms in a wide variety of fields, including the rule of law,

human rights, taxation, competition, transport, narcotics control, the information

society and media.

25. In the rule of law sphere the major achievement was the agreement to push

through police restructuring according to the following principles decreed by EC: all

legislative and budgetary competencies for all police matters must be vested at the

State level; there should be no political interference with operational policing;

functional local police areas must be determined by technical policing criteria,

where operational command is exercised at the local level. The Directorate for

Police Restructuring Implementation was established on 8 December and its steering

and executive boards were appointed on 29 December.

26. Bosnia and Herzegovina has also met most of its Council of Europe postaccession

commitments over the past six months. The state ombudsman law,

merging the offices of the entity and state ombudsmen, has been adopted by the

Council of Ministers and now awaits parliamentary passage.

27. Adoption of the Law on Value Added Tax in the summer was followed by the

enactment of a package of legislation on customs and taxation: the Law on the

Indirect Taxation Authority, the Law on Indirect Taxation Procedures, the Law on

Forced Payment Procedures, and the Customs Violations Law. These should ensure

both the functionality of the Indirect Taxation Authority and the smooth

implementation and enforcement of value added tax, which began to be collected on

1 January.

28. Important legislation on commercial competition, drug licensing, narcotics

abuse, railways and public broadcasting were also adopted during the period.

Several laws demanded by EC still await adoption, including the establishment of a

data protection commission, an information society agency and entity-level laws on

public broadcasting. As has been noted before, the passage of legislation is one

thing and its application and enforcement is another. Bosnia and Herzegovina needs

to improve significantly in moving from the one to the other.

29. As a result of considerable effort by the Office of the High Representative and

other agencies, Bosnia and Herzegovina now has the laws and legal institutions

necessary to inculcate and maintain the rule of law. This is a signal achievement. As

a consequence, the Office.s Rule of Law Department was able to close down at the

end of 2005.

30. The simultaneous closure of the Anti-Crime and Corruption Unit signalled the

end of the Office.s role in identifying and developing individual cases for

prosecution at all levels. The Unit transferred its files to the domestic authorities

after a series of meetings designed to ensure an effective transition of responsibility.

31. The Office of the High Representative also successfully completed its efforts

to strengthen links between and among the law enforcement agencies of Bosnia and

Herzegovina and their regional counterparts tasked with fighting organized crime,

corruption and terrorism. The working group chaired by the Office of the High

Representative, comprising the ministries of justice and defence of Bosnia and

Herzegovina, the Intelligence and Security Agency, the State Investigative and

Protection Agency, the Indirect Taxation Authority, EUPM and the EC.s Customs

and Fiscal Assistance Office, had analysed the intelligence and legal framework and

identified innovations to strengthen coordination and efficacy on the part of those

possessing criminal intelligence responsibilities.

32. A task force set up by the Office of the High Representative in the autumn

provided technical assistance to support the work of the security and civil affairs

ministries of Bosnia and Herzegovina in establishing a commission during the

autumn to review the award of citizenship to hundreds of foreign nationals since

1992. Many such nationalizations are suspected to have been highly irregular and to

pose continuing security risks.

33. At the request of the Commander of EUFOR, the Rule of Law Department

prepared an in-depth analysis of organized crime and corruption in Bosnia and

Herzegovina and proposed possible goals, benchmarks and tasks for the

international community.s use in supporting domestic efforts to fight organized

crime and corruption.

34. During the reporting period there was further cooperation between the

authorities of Bosnia and Herzegovina and the International Tribunal for the Former

Yugoslavia. Out of 18 fugitives linked with Bosnia and Herzegovina and wanted by

the Tribunal at the beginning of 2005, four remain at large. The state-level

Monitoring Group of the Tribunal helped remove most of the personal and structural

flaws that had obstructed cooperation with the Tribunal and hindered compliance

with EU directives. Additional reform of the defence and intelligence sectors

improved the capacity of Bosnia and Herzegovina to cooperate with the Tribunal.

Police restructuring will complete this institutional transformation. Constant

political pressure produced a change of mind among the leadership of SDS, forcing

the Republika Srpska government both to acknowledge at least some of its wartime

sins and to acknowledge the urgent need to cooperate fully with the Tribunal.

Bosnia and Herzegovina will not, however, be invited to join the NATO Partnership

reference in the stabilization and association agreement platform now being

negotiated with EC (specifically on articles 2 and 4 in the General Principles of the

stabilization and association agreement) regarding the necessity of full cooperation

with the Tribunal also means that the country will have to maintain progress on this

front. Full cooperation with the Tribunal will continue to be one standard by which

the readiness of Bosnia and Herzegovina to take part in Euro-Atlantic integration

will be measured.

35. Bosnia and Herzegovina was still in the early stages of a difficult economic

transition in 2005. Reflecting, however, the increasing degree of domestic

ownership and the successes local stakeholders have registered in dealing with

economic challenges, the Economic Department of the Office of the High

Representative closed down at the end of the year. The year 2006 started with the

implementation of perhaps the most dauntingly complex fiscal reform to date: the

introduction of the value added tax. In order to assure that the advent of the tax went

as smoothly as possible, it was introduced at a single rate of 17 per cent. The results

thus far have been promising, although the impact of this major reform will likely

not be evident for several months. Fortunately, the technical aspects of putting the

tax in place proceeded with hardly any hitches. The introduction of the tax was both

a necessary milestone in the country.s effort to make itself fit for European

integration and a major step towards stimulating the economy, enlarging the tax

base, attracting investment and creating new jobs.

36. The overall macroeconomic situation remained positive thanks to strong

domestic demand during 2005. Economic growth last year is estimated at 5.7 per

cent of gross domestic product (GDP), which is among the highest in the region.

After hitting rock bottom in 2001, the rate of growth in industrial production has

rebounded steadily. Inflation remains negligible and the Central Bank now holds

substantial foreign currency reserves, which currently provide around six months of

import cover.

37. In order to maintain this momentum, my office has focused on several fiscal

measures with the objective of enhancing fiscal coordination and reducing fiscal

risks. Among these measures was the establishment of the Bosnia and Herzegovina

National Fiscal Council, which is responsible for the development of consolidated

annual revenue projections and expenditure targets, as well as for deciding on

budget allocations among the state, entities and Brcko District. The Council has

established an advisory group to find ways to reduce the costs and increase the

efficiency of government at all levels. One of its projects is to draft a law on state

salaries. Once drafted, the Office of the High Representative will seek to facilitate

its passage.

38. The adoption of new business registration laws in 2005 represented a

significant step forward in establishing a business environment in Bosnia and

Herzegovina conducive to foreign and domestic investment. It is obvious, however,

that the business climate must improve a great deal more if the country is to

capitalize on its currently promising rate of annual growth. The creation of a single

economic space remains key to achieving this objective, as well as to stimulating

business development, foreign investment and new employment. My office has

therefore sought to help in preparing and promoting state-wide legislation on

obligations, pharmaceuticals and consumer protection.

39. Only the full implementation of the above and other laws already on the statute

books will bring real benefits to new businesses and ensure private-sector

development. Both also require continuing corporate restructuring. Bankruptcy

legislation is on the statute book, but is only rarely applied. Effective privatization

slowed down in the second half of 2005, particularly in the Federation.

40. Agricultural reform has lagged. Despite efforts to facilitate progress in the

sector, the Republika Srpska government has thus far rejected the EC

recommendation on establishing a country-wide legal and institutional framework.

Since cooperation between the state and entity administrations is vital in agriculture,

the Office of the High Representative has urged the entities to forswear unilateral

approaches.

41. It will be essential in future to keep highlighting the fact that Bosnia and

Herzegovina has the potential to be an economic success, not just a subsistence

economy. Real and rapid economic growth is possible if sensible policies are

implemented sooner rather than later and if corporate restructuring once more

becomes a top government priority.

42. The Joint Action Plan for Staffing and Premises, presented to the Peace

the political agenda during the reporting period, with the focus now on the

Commission for Public Assets. As a result of lobbying by the Office of the High

Representative, the intergovernmental Commission commenced work in November

2005. It is tasked with looking into issues of ownership at all levels of government,

as well as the state.s rights to acquire/expropriate property pursuant to its needs, not

least those stemming from the European integration process. The Commission,

comprised of state, entity and Brcko District officials, is also charged with drafting

state property laws for Bosnia and Herzegovina, the entities and Brcko District.

After extensive discussions on the principles of state property distribution, the

Commission.s legal subcommittee is now drafting the requisite laws. The Office of

the High Representative acts as observer and legal adviser.

43. During the reporting period the focus was on the establishment of the

coordinator.s office for national public administration reform within Prime Minister

support and technical assistance.

44. I described the impressive progress that has been made in defence reform in

some detail in my previous report. Since then the two state defence laws have

entered into force and, as of 1 January 2006, Bosnia and Herzegovina has a single

will oversee what is expected to be a two-year period of implementation and

integration. A team of defence ministry experts will plan, organize, coordinate and

monitor the process of transferring all defence functions and personnel to state

level. NATO will continue to assist. For its part, the Office of the High

Representative will also continue to provide political support to the authorities of

Bosnia and Herzegovina as they proceed with implementation.

45. As the new defence structure takes shape, Bosnia and Herzegovina will

enhance its capacity to maintain a safe and secure environment at home and in the

region, thus moving the country closer to achieving its aspiration to join in the

Euro-Atlantic partnership. EU repealed its long-standing arms embargo on Bosnia

and Herzegovina on 23 January.

46. The mandate of the intelligence reform supervisor, Kálmán Kocsis, expired on

31 December. Striking achievements have been registered since I appointed him to

coordinate the overhaul of the country.s intelligence agencies in June 2004. This

progress means that the time has come to scale down international oversight. The

Office of the High Representative will, however, monitor developments in the

intelligence sector in order to ensure, in particular, that the rule of law prevails in

Bosnia and Herzegovina.

47. The Intelligence and Security Agency continued to build up its operational and

analytical capabilities during the reporting period. Basic training programmes were

developed and the first courses took place in July. In January 2006, the Agency

signed an agreement on cooperation with the Ministry of Defence whereby it will

provide the armed forces with access to the information they require for force

protection.

48. The Bosnia and Herzegovina Parliamentary Assembly has improved its ability

to oversee the agency.s operations and to ensure democratic accountability. Passage

of the Law on the Protection of Secret Data in July represented an important step,

enabling the exchange and safekeeping of classified information. The Intelligence

and Security Agency is obliged by law to provide security assessments on

individuals and institutions handling classified information.

49. In November 2005 the EU Council of Ministers approved the second mission

review of EUFOR and extended its mandate, leaving the force structure unchanged

for 2006. EUFOR continues to be perceived as a peacekeeping force with a more

than credible deterrent. Its presence remains essential for the time being.

50. EUFOR comprises some 6,200 troops from 22 EU member States and 11 other

States. The force is still deployed throughout the country, with three regionally

based multinational task forces and a headquarters in Sarajevo. It has continued to

conduct operations in line with its mandate to ensure compliance with its

responsibilities under annexes 1 (a) and 2 to the General Framework Agreement for

Peace and to contribute to the maintenance of a safe and secure environment. The

multinational task forces conduct a variety of operations, including presence

patrolling, local observation team activities, weapons. collections and specific

operations to ensure compliance with the Framework Agreement and to prevent

anti-Dayton activities.

51. Over the coming year, in accordance with the second mission review, EUFOR

will play a less prominent and proactive role in conducting operations targeted at

organized crime. Instead, EUFOR will align its operations more closely with those

of the EU Police Mission and the priorities set by the domestic law enforcement

agencies, but will still be ready to assist these agencies in carrying out operations

against organized crime. EUFOR is also participating actively in the Crime Strategy

Group chaired by the EU Special Representative. The group is tasked with

overseeing the coordination and coherence of the EU Security and Defence Policy

efforts in support of the fight of the Bosnia and Herzegovina authorities against

organized crime.

52. Two years ago my office closed its department dealing with refugee return and

handed responsibility over to the domestic authorities. The international lead in this

sphere lies with the Office of the United Nations High Commissioner for Refugees

(UNHCR). Domestic institutions have successfully taken up the challenge. The state

level commission that makes return policy operates effectively. It has managed to

obtain substantial loans (not grants) and is working through the Bosnia and

Herzegovina Ministry of Human Rights and Refugees to implement housing

reconstruction projects directly. The level of return achieved, with over 1 million

people reclaiming possession of their pre-war homes and spending at least some

time in them, has been sustained. But truly sustainable return requires much more

than housing. There is thus still a considerable risk not only that potential returnees

will opt not to do so, but that those who have returned will give up the struggle to

remake their lives in the face of long-term unemployment, inadequate schools and

roads and no water mains or electricity. To highlight the continuing problem of

making return sustainable, in December, Minister Mirsad Kebo and I launched a

State Intervention Fund to finance small-scale projects to help returnees, in

particular, those to rural areas.

53. The unification of the city of Mostar administration has continued at a brisk

pace over the past several months. Progress has been such as to permit the closure of

the ad hoc Mostar Implementation Unit at the end of November. The Office of the

High Representative South has assumed responsibility for the Unit.s remaining

tasks. During the reporting period, the city made its first civil service appointments

in accordance with EU standards, a first in Bosnia and Herzegovina. The city

administration is fully unified, as are most other municipal institutions.

54. A number of tests remain in 2006. In the immediate future the city must adopt

a balanced budget. The status of the city-owned television station and that of some

of its cultural institutions remains unresolved, while administration faces the

daunting task of finalizing the downsizing of its overlarge workforce and making it

more streamlined and efficient.

55. Efforts to guarantee that Brcko District.s multi-ethnic and democratic

institutions can function effectively under the sovereignty of the state continued as

the Office of the High Representative encouraged an agreement, signed in

November, between the Council of Ministers and the Brcko government to open a

District office within the Council of Ministers. This will help ensure that the District

has appropriate representation at state level.

56. The October agreement on police restructuring saved Bosnia and Herzegovina

from being left behind as its neighbours advanced their negotiations on association

with or membership in EU. The formal launch of stabilization and association

agreement talks in time for the tenth anniversary of the Dayton/Paris Accords and

their actual commencement in late January meant that Bosnia and Herzegovina was

no longer threatened with being left behind by its neighbours. On the other hand, the

continuing liberty of four individuals from Bosnia and Herzegovina indicted by the

International Tribunal for the Former Yugoslavia and the mounting uncertainty over

the future of the state union of Serbia and Montenegro (Montenegrin independence

and Kosovo.s final status) will have to be watched closely.

57. Finally, it should be noted that Bosnia and Herzegovina continues to have

minor but unresolved border issues with both of its neighbours. More notable

difficulties stem from the fact that many citizens of Bosnia and Herzegovina are

also citizens of Croatia or Serbia and Montenegro and the constitutional provisions

of those countries on the extradition of their citizens mean that the regional battle

against organized crime and the pursuit of putative war criminals not indicted by the

International Tribunal for the Former Yugoslavia are both impeded.

58. As the initial mandate of the EU Police Mission came to a close in late 2005, it

conducted an evaluation process to review the progress it had made in realizing its

four strategic priorities: (a) institution and capacity-building; (b) the fight against

organized crime and corruption; (c) the financial viability and sustainability of

Bosnia and Herzegovina policing; and (d) developing police independence and

accountability.

59. In July, the Council of Ministers of Bosnia and Herzegovina decided to

establish a Ministerial Council for Cooperation on Police Matters. Building on a

body originally formed during the mandate of the United Nations International

Police Task Force, the Ministerial Consultative Meeting on Police Matters, the new

Council has started to work on establishing adequate coordination and cooperation

among police forces in Bosnia and Herzegovina and in passing decisions and

instructions that will be binding for the Police Steering Board.

60. The Bosnia and Herzegovina Immigration Law came into effect on 17 August.

As a consequence, the Security Ministry of Bosnia and Herzegovina has had to

establish and fund a temporary detention centre for illegal immigrants. EC and the

International Organization for Migration (IOM) will support the construction of a

permanent centre.

61. The EU Police Mission maintained its support of the State Investigative and

Protection Agency, which, since August, has stepped up its recruitment and

enhanced its operational capacity to a significant degree. The EU Police Mission

advised an internal Agency working group reviewing the organizational rulebooks

setting out the structures and responsibilities of the Agency.s various departments

and has since monitored the implementation of the revised rules. The Agency.s

Financial Intelligence Department was invited, only seven months after its

formation, to join the Egmont Group, a worldwide network of law enforcement

agencies that share intelligence on money-laundering.

62. After the October breakthrough on police reform, the Mission.s police

restructuring working group and the Office of the High Representative developed a

framework for the establishment of the Directorate that will bring police

restructuring to fruition over the next three to five years.

63. The European Council decided on 24 November to extend the Mission.s

deployment until the end of 2007, but with fewer officers and a refocused mandate.

With guidance and coordination provided by the EU Special Representative, the

Mission will concentrate on supporting the establishment of a sustainable,

professional and multi-ethnic police service in Bosnia and Herzegovina that

operates in accordance with the highest European and international standards. The

reformed police must also fulfil the commitments that Bosnia and Herzegovina

made during the stabilization and association process, including the fight against

organized crime. The Mission.s mandate has been strengthened in this regard, and

the follow-on mission is expected to be proactive in assisting domestic agencies to

plan and carry out major investigations of and operations against organized crime.

The Mission will also take part in the Crime Strategy Group and will continue to

operate in line with the general objectives of annex 11 of the Dayton/Paris Accords.

Brigadier-General Vincenzo Coppola from Italy has been appointed Head of

Mission/Police Commissioner.

64. On 24 October 2005 the European Commission for Democracy through Law

(the .Venice Commission.) issued its opinion on a possible solution to the vexed

issue of Bosnia and Herzegovina police officers dismissed from service after failing

to win certification by the International Police Task Force. The Venice Commission

concluded that International Police Task Force certification procedures failed to

provide police officers being vetted with a public, adversarial, impartial and

independent examination of their rights. The review mechanism that was provided

by the Force appeared to be largely notional. As a result, the Venice Commission

recommended that the United Nations establish a special body authorized to review

decertification cases that have been challenged before domestic courts. Given the

numerous occasions on which I have put the same view forward in these reports, it

will come as no surprise that both the Commissioner of the Police Mission and I

should commend it to you.

65. Considerable progress was made during the past six months in reforming the

public broadcasting system in Bosnia and Herzegovina. The Parliamentary

Assembly passed the state framework legislation, the Law on the Radio and

Television System of Bosnia and Herzegovina, on 5 October. This law regulates a

system composed of three public broadcasters: one covering the whole of Bosnia

and Herzegovina and the others their respective entities. On 21 December, the state

parliament completed its obligations stemming from the feasibility study by

endorsing the second of the two state-level laws required in this sphere, the Law on

the Public Broadcasting Service.

66. State-level legislation must, however, be mirrored at entity level. Both entities

made progress in enacting public broadcasting legislation. The Federation and

Republika Srpska governments adopted draft legislation in mid-December and have

forwarded it to their respective parliaments for passage. The Office of the High

Representative is endeavouring to make sure that these assemblies adopt fully

harmonized legislation.

67. Since July 2005, there has been substantial movement towards completion of

the 2005 mission implementation plan of the Office of the High Representative.

Although the Republika Srpska continues to oppose planned reform measures,

particularly when a transfer of competency to the state is required, the police

restructuring agreement removed the blockage of a number of items and allowed the

Office of the High Representative to concentrate on other important reform

priorities. The action planning process, initiated in mid-2005 to improve tracking of

mission implementation plan item progress, identify obstructions and improve

completion rates, has proved effective in helping clear the mission implementation

plan backlog that accumulated early in 2005.

68. As a result, by the end of my mandate as High Representative about 40 items,

spread among three of the four core tasks, will remain incomplete: entrenching the

rule of law (11); reforming the economy (12); and institution-building (17). In mid-

January the Defence Reform Core Task was fully completed when the Minister of

Defence signed the order establishing the Transition Implementation Expert Team.

All but six of the remaining items had been scheduled for completion in 2005. A

good many of these, however, related to either police restructuring or public

broadcasting, issues on which political breakthroughs were not achieved until the

autumn.

69. Of the still-outstanding rule of law items of the mission implementation plan,

all but one are tied to the police restructuring process, which will likely stretch into

early 2008. The remaining items of the mission implementation plan relating to

economic reform include a broad range of reform priorities, as is the case with the

institution-building agenda as well.

70. A mission implementation plan for 2006 should be presented to the Peace

Implementation Council in the next few months. It will contain revised timelines for

police restructuring items based on the now-extended process.

71. In keeping with my proposal to submit regular reports for onward transmission

to the Security Council, as required by Council resolution 1031 (1995), I herewith

present my last regular report. Should the Secretary-General or any member of the

Security Council require information at any other time, I would be pleased to

provide an additional written update.