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One year has passed since we met, here in Brussels. Substantial progress has been achieved since then, although internal political problems and external crisis have had a dampening effect. Major reforms necessary to bring the country to a modern, democratic and market-oriented society have been initiated. In media, the judiciary, economy, and electoral law, concrete steps have been made. The economy of the country is now performing better. Bosnia and Herzegovina is under a single customs policy; taxes and excises have been harmonized between the two entities and illegal fiscal practices have been reduced. Privatization has started, the Konvertible Mark has gained high confidence among BiH citizens and I am happy to report that it can now be traded in other parts of Europe. Further reforms in payment bureaus and public services will add to this tangible progress. Common Institutions and Entities have better budgetary practices, Bosnia and Herzegovina media have adopted a more moderate tone. Bosnia and Herzegovina is therefore in a better situation than twelve months ago, but more significant improvements could have been achieved if all political authorities behaved in a more responsible manner. After the 1998 September elections, it took four months to have a fully operational Federation government in place. The Common Institutions worked irregularly. In the Republika Srpska, Mr. Poplasen's sad attempts to provoke a political crisis have undercut government formation. This has hampered the process of reform, necessary to improve the quality of life for all citizens. The Kosovo crisis has put considerable strain on the politics and the economy of the Republika Srpska but the behavior of the RS population has been exemplary. The terrorist act against Minister Leutar shows that some extremists are even ready to use the most dangerous ways to achieve their goals. His death has been a loss for all of us and we must not leave it unpunished. Colleagues and representatives of Bosnia and Herzegovina, let us hear the message of ordinary people. They want peace and progress. Let us not allow obstructionists or extremists from any faction to prevent that. Let us keep the process of reform and return on track. The way ahead is clear. Bosnia and Herzegovina must keep moving towards a more modern and democratic society. Its politicians must learn to behave more responsibly and democratically. Its economy must be reformed to reward the initiative and energy of ordinary people to create growth. All citizens, majority or minority, powerful or powerless - must have equal access to the law and human rights. They must live in an open and informed society. And Displaced Persons and Refugees must be able to come back home. Let me outline some key areas. Many economic reforms have been initiated since the last donors' conference, they must now bring fruits on the ground and lead to concrete changes in the daily lives of entrepreneurs and consumers. Privatization must finally enter its active phase to reach completion by the end of 2000. The Privatization Monitoring Commission that I established will ensure that the privatization process is carried out in a fair and transparent manner. By the end of next year, the payment bureaus should not exist any more. Their functions will have been taken over by privatized banks, modernized treasuries, and statistics institutes. By that date, pensions funds should be modernized and more integrated. Significant progress has been achieved to create a single economic space in Bosnia and Herzegovina. This task must now be completed by further harmonization of taxation system, labor and capital markets. The financial difficulties that both Entities go through now clearly show that a sound legal framework and harmonization is the only way to boost fiscal revenues while promoting a market-oriented economy. The normalization of fiscal practices should not suffer from corruption and fraud. My Office will continue to work with local authorities to fight smugglers and fiscal evasion and improve the relevant legislation. We will also keep on working to extricate economic activities from political parties and circles. In that respect public services need to be reformed urgently. Economic reforms have no meaning if they are not accompanied by similar changes in a civil society. For all of them, I need your support. Bosnia and Herzegovina needs a Border Service empowered with policing powers. This initiative suffered the same setback as many other issues that have been placed before the Common Institutions. It is now to time to press ahead with this issue and bring it on top of the list of priorities of the Council of Ministers. It is a worthwhile enterprise that deserves your special attention. On media, we only need to look at the situation in the FRY to realize how vital media reform is for building stable democracies in the region. As can be easily seen, Bosnia and Herzegovina is a beacon of light in the darkness of the region in terms of emerging media freedom. This must be consolidated, or the progress we have made risks being reversed. In particular, the new public broadcasting service we have been demanding, and which the PIC agreed was politically essential, still needs fresh pledges and firm commitments. Without your support, the chance to create a media model for the entire region could be lost. Judicial reform is fundamental. None of the reforms will be sustainable without reform of the judicial system. A comprehensive judicial reform strategy is nearing completion and will be presented to the Steering Board at its next meeting. Significant progress has been made on the Madrid judicial reform priorities as well. Let me turn to the issue of return, a crucial priority. The early part of 1999 has seen an increase in the number of minority returns. I know you will discuss this separately tomorrow, but I would like to emphasize again the importance I attach to this process. The creation of conditions conducive to large-scale minority return was one of the pillars of the Madrid PIC. Yes there are difficulties. But we always knew that this would be the case. Now is not the time to falter. The donor community which you represent has been generous in its funding for return. That generosity is justified. And I hope it will remain an important part of your programs. As you all know, the Brcko arbitration decision was announced on March 5. The decision provides for a balanced solution. It presents a major challenge and Brcko will require significant resources to build the legal and neutral governmental structure called for in the award. Ambassador Farrand will share an implementation plan with you tomorrow. I hope you will do everything you can to help implement the Brcko decision. Let me address the dramatic financial situation of the Republika Srpska. On top of a very weak economy inherited from the past Pale Government, the obstruction to normal governance organized by Mr. Poplasen, and the events in the Federal Republic of Yugoslavia have severely disrupted international trade with FRY, affected the economic situation and placed fiscal revenues at risk. This perilous fiscal position may weaken the position of the government and increase the risk of a resurgence of the hard-liners. I believe it is critical that we prevent this resurgence. It is also critical to the region that we demonstrate that a moderate and progressive option is a realistic alternative to the policies of the predecessors and of governments elsewhere in the region. I consider that the residents of the RS should not suffer from the mistakes of a few extremists. This is why I contacted you last week and urged you to help the current authorities of the Republika Srpska with direct budgetary support. I hope you can respond. Moderate leaders like Prime Minister Dodik, who have shown their commitment to Dayton Accords, should be given the chance to carry out their policies in favor of the people. As you can see, our agenda for the coming year is quite tight. No time can be lost. Reforms must proceed speedily. But I need your help. On 2nd of February, I contacted many of you to present and explain the cost of our commitments decided in Madrid. I urged you then to come with financial support to make the reform agenda a reality. Unfortunately, to date, only the process of return for Displaced Persons and Refugees has been provided with significant funds. But all reforms lack money. And without your support, I just cannot carry out on your behalf the reforms that you have tasked me with to change the reality of Bosnia and Herzegovina. Madrid commitments and their costs have been summarized in a document that you will find on your tables very soon. I urge you to read it and to participate in the pledge of about 135 million EURO we need to bring Bosnia and Herzegovina forward to join the European family. The pace of reforms is in your hands, you control it. And you will agree with me that the pace cannot and should not slow down, otherwise the cost we will have to bear would be even higher. When it comes to financial help for reconstruction and for the authorities of Bosnia and Herzegovina, you expect your effort to be supported by significant commitments from the authorities of Bosnia and Herzegovina. And you are right. Conditionality should and will apply to any direct support to the country. Your pledges today, that I expect in the range of that gathered last year, should not be a blind gift. I encourage you to apply a strict conditionality on all disbursements and I will continue to guide and co-ordinate this process. Let us not forget that this conference today is the last of the initial reconstruction program, which started after the signature of the peace agreement. And we have to answer the question of what should come next. We will see in the near future if a regional initiative for reconstruction is necessary and planned. It could be that Bosnia and Herzegovina will be included in a more general program. What I want to stress today is that in any case, under any scenario, we would be making a mistake in thinking that the case of Bosnia and Herzegovina is solved and that our efforts can focus only on other parts of the region. Bosnia and Herzegovina will still need financial help for a few years. Similarly, the presence of the International Community will remain strong in the country for several years. And the extremists from all parties and sides should know that they have no chance in the coming years to overrule the International Community. If they think that it is enough for them to wait until we withdraw, they are wrong, because we will not leave before the country is stabilized and democracy has taken root. Our task is to create a better and stable future for the people of Bosnia and Herzegovina. A future made of peace and prosperity where leaders do not base all their policies on ethnicity or on personal profit. Based on this assumption, I invite all authorities in Bosnia and Herzegovina and the International Community to keep working together and pursue the implementation of the Dayton Peace Accords. I remain confident that we will achieve this goal. I thank you for your attention.
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