Identifier
Created
Classification
Origin
06SARAJEVO1129
2006-05-19 15:18:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Sarajevo
Cable title:  

BOSNIA: DODIK UPS THE ANTE IN ITA GOVERNING BOARD

Tags:  ECON EFIN PREL BK 
pdf how-to read a cable
VZCZCXYZ0001
PP RUEHWEB

DE RUEHVJ #1129 1391518
ZNR UUUUU ZZH
P 191518Z MAY 06
FM AMEMBASSY SARAJEVO
TO RUEHC/SECSTATE WASHDC PRIORITY 3539
INFO RUEATRS/TREASURY WASHDC PRIORITY
UNCLAS SARAJEVO 001129 

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EUR/SCE (FOOKS/RIEHL),EUR/ACE (VISOCAN),
EB/IFD/OMA (VOLK/YOUTH),D (SMITH),P (BAME)
TREASURY FOR GAERTNER
STATE PLEASE PASS TO USAID

E.O. 12958: N/A
TAGS: ECON EFIN PREL BK
SUBJECT: BOSNIA: DODIK UPS THE ANTE IN ITA GOVERNING BOARD
DISPUTE

REF: A. SARAJEVO 946

B. SARAJEVO 756

C. 05 SARAJEVO 2953

UNCLAS SARAJEVO 001129

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EUR/SCE (FOOKS/RIEHL),EUR/ACE (VISOCAN),
EB/IFD/OMA (VOLK/YOUTH),D (SMITH),P (BAME)
TREASURY FOR GAERTNER
STATE PLEASE PASS TO USAID

E.O. 12958: N/A
TAGS: ECON EFIN PREL BK
SUBJECT: BOSNIA: DODIK UPS THE ANTE IN ITA GOVERNING BOARD
DISPUTE

REF: A. SARAJEVO 946

B. SARAJEVO 756

C. 05 SARAJEVO 2953


1. (U) Summary. The ongoing controversy over distributions
from the BiH Single Account has resulted in the filing of
criminal charges by Republika Srpska (RS) Prime Minister
Milorad Dodik against Indirect Taxation Authority (ITA)
Governing Board Chairman Joly Dixon (who is seconded by the
European Commission),and ITA Director Kemal Causevic. Dodik
continues to push for the removal of Dixon and the
appointment of a Bosnian as ITA Governing Board Chairman,
Dodik's actions are unlikely to result in actual criminal
prosecution, and are more aimed at political effect. He is
also pushing for an "audit" that will resolve RS criticisms
of 2005 distributions. Hopefully his proposal will allow the
entities to finish the debate over 2005, and move on to the
even more challenging question of a final formula for 2006.
End Summary.


2. (U) On April 28, RS PM Milorad Dodik filed criminal
charges with the BiH Prosecutor's Office against Joly Dixon
and Kemal Causevic. The charges state that Dixon issued an
illegal Governing Board decision on March 28 regarding the
temporary allocation of indirect tax revenues for 2006
(discussed Ref B). Causevic is included in the charges for
acting on that Decision, despite knowing that it had not been
approved by a required vote of the Governing Board. The
charges also state that both individuals did not perform
their official duties by failing to revise allocation
coefficients from the Single Account during 2005 (discussed
Ref C). Dodik claims that these actions resulted in damages
to the Republika Srpska government.


3. (SBU) These charges are part of Dodik's push to eliminate
Dixon from the Governing Board, and reach an agreement by
which a Bosnian will serve as Chairman in the future. (As a
result, it is unlikely that Dixon is in real danger of being
arrested or prosecuted.) There is no agreement yet on who
might assume that position in the near future, although Prime
Minister Terzic's office has suggested the possibility of
former RS Finance Minister Svetlana Cenic. Another candidate
that has been floated is former Central Bank Governor Peter
Nicholl (who holds Bosnian citizenship).


4. (SBU) In a recent meeting on May 15 with the Ambassador,
Dodik said that he would drop the charges against Dixon and
Causevic if the GB could agree to do an audit of 2005
distributions. The terms of such an audit would need to be
agreed upon by GB members. Meanwhile, the lack of
functionality of the Governing Board was highlighted at its
last meeting on May 12, where after almost six hours the
members did not take any decisions on the agenda items. At
the next meeting, scheduled for May 24, the GB is supposed to
decide on an allocation formula for June (Ref A).

COMMENT


5. (SBU) Dodik's proposal for an audit would simply be a
face-saving measure for the political agreement that the
entities still have not been able to reach. The allocation
formula was not updated during 2005 because the Federation
representatives would not agree to the validity of the sales
tax data being submitted by RS, likely because they knew they
would lose out in a revised formula. To agree on the terms
of an "audit", they will essentially have to agree on a
calculation basis that they were unable to agree on before.
The question of what should have been done is still the same,
but the label of "audit" may make the decision easier for
everyone to swallow. End Comment.
MCELHANEY