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.

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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