BOSNIA: REPUBLIKA SRPSKA MOVES ON PROPERTY

C O N F I D E N T I A L SECTION 01 OF 02 SARAJEVO 001725

SIPDIS

EUR/SCE FOR FOOKS, STINCHCOMB; NSC FOR HELGERSON; EUR/OHI
FOR KENNEDY

E.O. 12958: DECL: 10/26/2018
TAGS: PGOV PHUM PREF ECON PINR KJUS BK
SUBJECT: BOSNIA: REPUBLIKA SRPSKA MOVES ON PROPERTY
RESTITUTION AFTER TORPEDOING STATE-LEVEL AGREEMENT

Classified By: Michael J. Murphy, for reasons 1.4 (b) and (d).


1. (C) SUMMARY: On November 4, the Republika Srpska National
Assembly (RSNA) passed, on its first reading, a draft law on
the restitution of property which would address outstanding
property issues for victims of expropriation,
nationalization, and forcible donation, including properties
lost during the Holocaust. This follows on the failure of a
state-level restitution law in the BiH House of Peoples in
February at the hands of RS deputies. Member of Bosnia's
religious community, including its Inter-Religious Council
(IRC),remain committed to a state-level law. Jakob Finci,
President of the Jewish Community, stressed to us the Jewish
Community's opposition to the RS entity-level law, and its
potential for discriminatory implementation. The law itself,
a warmed-over version of the 2000 RS laws struck down by
HiRep Wolfgang Petritsch, is both an attempt to gather power
at the entity level and emblematic of Dodik's modus operandi
when it comes to attacking the state and then justifying
those attacks. END SUMMARY.

Summer 2000: HiRep Annuls RS Restitution Laws
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2. (SBU) On August 30, 2000, former HighRep Wolfgang
Petritsch struck down three RS restitution laws, which were
designed to address outstanding property issues for victims
of expropriation, nationalization, and forcible donation,
including properties lost during the Holocaust. In
annulling the laws, Petritsch stated that they were "flawed
both as to procedure and as to substance." This judgment was
supported by the Peace Implementation Council on September
27, 2000. At the time, Petritsch noted that the wide scope
of the laws were financially disastrous, and "the RS (had) no
estimate how much compensation it may have been obliged to
pay." He further stated that the RS had not undertaken
measures to ensure claims would be handled without
discrimination based on ethnicity, or to ensure that cases in
which property records have been destroyed or lost would be
handled correctly.

State Moves to Tackle the Restitution Problem
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3. (SBU) Subsequently, a state-level working group was formed
to draft a Bosnia-wide law on restitution. Beginning in
2006, the working group was led by a Bosniak-Croat-Serb
Troika, and chaired by Mustafa Begic, Director of the BiH
Geodetic and Property Office in the Ministry of Justice.
Based on the information and estimates provided by the
Geodetic and Property office, the working group drafted a law
that garnered broad support, including the members of the IRC
and parliamentarians across the spectrum. The only issue
that met with significant criticism was the decision to limit
compensation for a single property to 150,000 KM (or about
100,000 USD). Given Bosnia's perpetual fiscal difficulties,
however, and the scope of potential restitution, such a limit
was considered necessary, and ultimately accepted, including
by representatives of Bosnia's religious communities. After
several readings, the law passed the House of
Representatives, parliament's lower house, in early 2008 and
was forwarded to the House of Peoples (HoP).

Serbs Kill the State Law
--------------


4. (C) In February 2008, the Serb Caucus, led by delegates
from Dodik's Alliance of Independent Social Democrats (SNSD),
in the House of Peoples blocked the legislation (Note: To
pass, legislation must have a majority of votes in the HoP
with support from at least two members of each caucus --
Bosniak, Croat, and Serb. End Note.) In the end, all five
members of the Serb caucus -- 3 SNSD, 1 PDP, and 1 SDS --
opposed the legislation. SNSD party spokesmen, at the time,
claimed publicly they voted against because they were unhappy
with the limit of 150,000 KM set on compensation for
properties that could not be returned to their original
owners. However, most observers believed that the SNSD-led
opposition simply objected to addressing the restitution
issue at the state-level.

The Shoe Drops
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5. (C) On October 27, Dodik and RS Justice Minister Dzerard
Selman announced that the RS National Assembly (RSNA) would
consider an RS-only restitution law on November 4. Dodik's
central claim for the necessity of an RS law on restitution
was that "the right to property, being a core human right,
has been left unaddressed by the state of BiH." Not
surprisingly, Dodik chose not to note publicly that the
reason the state-level draft law failed was voting by Serb
deputies in the HoP in February 2008. (Comment: It is
notable that the RS draft law was scheduled for consideration
by the RSNA just days after the Council of Ministers adopted
a decision to reestablish a working group on restitution in
order to prepare a new draft law. End Comment.) The law was
adopted in its first reading in the RSNA, which sets the
stage for public comment prior to consideration for final
passage.

Flaws in the RS Law
--------------


6. (C) The new RS draft law is nearly identical to the
legislation overturned by Petritsch in 2000. Observers note
that the law would weaken the hand of claimants (as opposed
to tenants) in property disputes. The RS draft law provides
for "natural restitution" (return of property in question);
restitution in kind (provision of alternative property); and
financial restitution (though with a limit to be specified in
subsequent regulation). Article 17 stipulates that
apartments with occupants who enjoy tenancy rights would not
be returned to a restitution beneficiary, but instead
financial compensation would be offered. Further, article 18
states that "business facilities" would not be returned in
kind if they represent "the basic means" of a company, and if
return would endanger the existence of that business.
Finally, Article 15 stipulates that immovable property being
used by RS government institutions would not be returned in
kind. These provisions, taken together, create a regime in
which government and businesses in the RS (much of which is
politically tied to Dodik) are largely immune from claims by
previous owners.

Religious Communities and OHR React
--------------


7. (C) In conversation with us, religious community
representatives laid out their criteria for a future
restitution law. The IRC's consensus position remains that
any restitution should be done at the state-level, include
both private and community property, with a primary goal of
return of lost property whenever possible. The RS draft
fails on all these counts. Jewish Community President Finci
noted that OHR, having previously struck down problematic RS
laws on restitution, should do so again. Failure by OHR to
deal with this clear challenge, he felt, would suggest a
total inability to confront the RS. The HighRep sent a
letter to Dodik on November 3, which recalled the grounds
Petritsch gave for annulment of the RS laws in 2000, and
stated that those same issues remained a problem with the new
RS draft law. In particular, Lajcak noted the lack of fiscal
analysis, the short deadline for submitting property claims
(one year from the date of the law's passage),and the
limitation of compensation to citizens of successor states of
the former Yugoslavia.

Comment
--------------


8. (C) Dodik's claim that the RS is only stepping in on the
restitution as a consequence of state-level inaction is
pretty rich coming as it does after the Serbs in parliament,
led by his party, blocked a state-level law that would have
addressed the problem. The decision to float a law that
represents a warmed-over version of the 2000 RS restitution
laws struck down by OHR is bolder still. All Petritsch's
misgivings ring true for today's draft law. The entire
episode is illustrative of how Dodik and his allies use their
positions in state-level institution to prevent the state
from functioning or meeting its responsibilities to its
constituents, and then turn around and use that to justify
further attempts to attack the state and/or build up the RS
at the state's expense.
ENGLISH