EU DONOR COORDINATION IN THE BALKANS (BOSNIA)

UNCLAS SECTION 01 OF 02 BRUSSELS 000045 SIPDIS SIPDIS USAID FOR E&E AND ODP; STATE FOR EUR/ACE, EUR/SCE, EUR/ERA E.O. 12958: N/A TAGS: EAID PREL EUN XH ZL SUBJECT: EU DONOR COORDINATION IN THE BALKANS (BOSNIA) REF: A. BRUSSELS 00034 ¶B. BRUSSELS 00043 ¶1. SUMMARY: Development programs in Bosnia-Herzegovina figured quite prominently in a recent all-day donor coordination meeting organized by the European Commission (EC) in Brussels. The main EC goal in the country is clearly "nation building" and EC sponsored development programs are expected to expand over the next three years. At a bilateral level, the picture is more mixed; at least some donors suggested that their programs are moving toward "phase out". ¶2. BACKGROUND: On December 13, the EC hosted an all-day donor coordination meeting in Brussels to seek bilateral input in conjunction with the development of a new EC assistance strategy for the Balkans. Opened by Michael Leigh, Director-General for Enlargement, the event was partly a "show and tell" involving contributions from individual donors. The USAID Representative to the EU attended on behalf of the US; other non-EU members represented included Switzerland and Norway. This is the third of a series of cables summarizing current programs and future plans for various donors now working in the Balkans. ¶3. EUROPEAN COMMISSION (EC): The EC described its main development goal in Bosnia-Herzegovina as "nation building". Approximately one third of the EC budget now focuses on "political areas" (e.g., democracy and governance); social and economic issues are also important; and significant funds are allocated to help the country "attain European standards". A new country strategy for 2008-2010 is being developed, based on expectations of an increase in overall program size from around 70 million euros in 2008 to 80 million euros in 2008 and as much as 100 million euros in ¶2010. ¶4. SPAIN: Spain noted that Bosnia-Herzegovina currently represents its largest bilateral aid investment in the Balkans, with an anticipated budget of 40 million euros for 2008-2010. ¶5. SWEDEN: Echoing the comment from Spain, Sweden indicated that Bosnia-Herzegovina was their largest aid partner in the Balkans in terms of total funding. At this point, Sweden is entering the mid point of its 2006-2010 strategy for the country, with activities focused on good governance, employment and economic growth. ¶6. NETHERLANDS: The Dutch have provided 684 million euros to Bosnia-Herzegovina since 1994. Areas of interest include good governance and refugee return; from a geographic standpoint, there is also interest in Srebrenica in particular. For 2007-2010, the Netherlands expects to provide 60 million euros in aid, with a view toward moving toward program phase-out by 2011. ¶7. AUSTRIA: Austrian assistance to Bosnia-Herzegovina is relatively modest, reaching around two million euros annually. Programs cover several areas, including economic development, vocational training and capacity building; there is interest in banking and judicial reform as well. From an Austrian perspective, the most important donor priority is to promote a strong central government, given the inherent weakness of the state. ¶8. SWITZERLAND: Switzerland ranked Bosnia-Herzegovina as their second highest priority in the Balkans in terms of total assistance. Funding levels for the next three years are estimated at around 10.2 million euros annually. Areas of special interest include governance, democracy, legal issues and minority protection. Echoing the comments of many others, the Swiss representative described economic growth and employment as the two most significant development issues facing the country. ¶9. NORWAY: Norway, too, placed Bosnia-Herzegovina among its priority countries for the Balkans, providing around 75 million euros in assistance. Specific programs include parliamentary development and support for "business incubators." Areas of particular geographic interest include Tuzla and Banja Luka. BRUSSELS 00000045 002 OF 002 ¶10. UNITED KINGDOM (UK): The UK has provided 80 million pounds to Bosnia-Herzegovina since the early 1990s. The current program is budgeted at around 4.5 million pounds annually through DFID; some additional support is provided through a "conflict prevention fund" mechanism. As always, a recurrent UK theme is to help the host country build effective aid coordination systems of its own. The UK is also assisting in a public administration reform strategy. Economic growth and job creation rank as especially important concerns. Some activities related to enterprise restructuring are underway in cooperation with Sweden and the Netherlands. Future programs are going forward with the idea that UK assistance will begin to be phased out during 2010-2011. ¶11. COMMENT: Bosnia-Herzegovina remains an important area of interest as far as development discussions in the Balkans are concerned. The EC program in particular is slated to expand by around 20 percent over the next three years. Support for European integration has been and will remain a central organizing theme. In contrast to the EC, bilateral donors such as the UK and Netherlands, while affirming Bosnia-Herzegovina's current importance, are beginning to look toward the phase-out of their direct assistance to Bosnia-Herzegovina over the next few years. At the same time, economic growth and employment loom as especially formidable concerns across the European donor community. MURRAY