BOSNIA: STATE COURT BALANCES 2007 BUDGET, BUT

C O N F I D E N T I A L SECTION 01 OF 02 SARAJEVO 001279 SIPDIS SIPDIS DEPT FOR EUR/ACE (ADAMS, NELSON-DOUVELIS, VISOCAN, ROSENBLUM, O'KEEFE),EUR (DICARLO),EUR/SCE (FOOKS, MITCHELL, ENGLISH, SAINZ),D (SMITH),P (BAME),S/WCI (WITTEN, HODGKINSON, LOSS),NSC FOR BRAUN, USNIC FOR WEBER, GREGORIAN, OSD FOR FLORY E.O. 12958: DECL: 05/28/2011 TAGS: KAWC EAID PHUM PREL BK SUBJECT: BOSNIA: STATE COURT BALANCES 2007 BUDGET, BUT GOVERNMENT IN DENIAL OVER FUNDING SHORTFALL REF: BRUSSELS 1165 Classified By: DCM Tina Kaidanow. Reason 1.4 (b) and (d) ¶1. (C) Summary: On May 24 the BiH State Court Registry presented international donors with a realistic plan to balance the 2007 budget and keep the War Crimes Chamber going. This presentation came as a result of collective donor pressure on the Registry to face the fiscal reality that pledges at, and subsequent to, the March 31 Donors' Conference amounted to 7.3 million euros for 2007, not the target 11.5 million. The Registry's new plan involves cutting costs for 2006, accelerating the pace at which international management and support staff will be phased out, and collecting outstanding donor pledges from 2003. However, in a separate donor gathering, BiH officials missed an important opportunity to inform donors about recent initiatives underway to reform the justice sector overall, although such reform is a precondition for additional European assistance. Further, key BiH authorities apparently still do not accept the fact that there is no international funding available for the 14.4 million euro State Prison Project. End Summary. WCC REGISTRY BALANCES 2007 BUDGET ¶2. (U) At the March 31 Donors' Conference in Brussels, North American and European donors pledged approximately 5.3 million euros for the State Court War Crimes Chamber (WCC) in 2007 (REFTEL). This figure fell far short of the Chamber's 11.5 million euro target, and no money was pledged for construction of the 14.4 million euro State Prison. Donor country representatives have repeatedly urged BiH authorities to deal realistically with the financial situation and to be proactive about essential justice sector reforms, noting that these reforms will in turn generate more sector-wide donor assistance. Seeing that it could expect no further funds in the near-term, on May 24 the State Court Registry produced a balanced budget for 2007. In place of the original 11.5 million euro plan for 2007, its budget is now 9.9 million euros. To achieve this figure, the Registry cut costs from 
the 2006 budget, creating carry-over money. It also put forward a more aggressive, accelerated plan to phase-out international staff and judicial secondments, and to have national staff absorbed into the BiH budget. The Registry's Chief Financial Officer said that this target can be reached, provided that certain donors (e.g., Italy) fulfill their pledges from 2003. BiH OFFICIALS CONTINUE APPEAL TO CURRENT DONORS ¶3. (C) However, outside the Court itself, BiH officials have done little to accept financial reality since the Brussels Conference. They have not tried to recruit additional donors for the WCC, and refuse to consider lower-cost alternatives to the State Prison. Justice Minister Kovac has been particularly unhelpful, making weekly press statements that money for prison construction is coming "any day now." No assistance has materialized from Qatar or U.A.E., states that previously expressed vague interest in supporting the Court. ¶4. (C) In a remarkable display of denial, on May 17 Premier Terzic and heads of the various justice institutions in BiH invited ambassadors to what they termed a 'post-Donors' Conference' meeting in Sarajevo. Speaking as if the Brussels Conference had never happened, BiH officials, backed by High Representative Schwartz-Schilling, told current donors in effect, "thank you for past generosity, but we simply must have more money for the Court and the prison." The message was generally coldly received. However, the Swedish Government pledged 2 million euros for 2007 operating costs, conditional upon seeing tangible progress on a comprehensive justice sector reform strategy. According to the Swedish SIDA representative, SIDA became concerned after Brussels that the WCC might collapse before the government had a chance to create a proper strategy. Donor pledges for 2007 now total approximately 7.3 million euros. UNMENTIONED PROGRESS SARAJEVO 00001279 002 OF 002 ¶5. (SBU) The Swedes are not alone in insisting that progress on justice sector reform is a precondition for additional European assistance. Several bilateral donors and the European Union have bluntly told the Bosnians the same. BiH justice institutions have in fact taken initial steps towards developing a sector-wide reform strategy. The Justice Ministry is setting up an Office of Strategic Planning to lead the process. The High Judicial and Prosecutorial Council (HJPC) is working on a phased unification of the judicial budget, which would eliminate many costly duplicative structures at the cantonal and entity levels. The State Prosecutor's office has developed a two-year plan to allocate resources between the War Crimes and Organized Crime divisions. And State Court President Medzida Kreso has formally asked the HJPC to provide additional local judges and prosecutors, so that the costs associated with supporting international professionals can be reduced. However, BiH officials mentioned almost none of these initiatives at the May 17 ambassadors' meeting, focusing instead on retread appeals for funds. ¶6. (C) Comment: While the BiH government as a whole appears still to expect the international community, particularly the U.S., to come to its rescue, it is encouraging to see the State Court Registry deal proactively and responsibly with its financial situation. Although the funding gap for 2008-2009 remains, BiH now has some much-needed time to make progress on war crimes prosecutions and on concrete justice sector reforms. Armed with tangible success, BiH may be able to leverage these accomplishments into additional out-year funding. However, that effort is unlikely to succeed if Bosnian institutions individually and collectively continue to miss opportunities to communicate the sensible initiatives being undertaken, or worse, fail to follow through on those initiatives. Unfortunately, Sweden's additional contribution, while ensuring that the WCC can function through 2007, may have simply reinforced the government's mindset that if it keeps begging, the money will come. End comment. MCELHANEY