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