Local and regional democracy in Bosnia and Herzegovina

Rapporteurs: Christopher NEWBURY, United Kingdom
Chamber of Local Authorities, Political Group: EPP/CD
and
Karsten BEHR,Germany
Chamber of Regions, Political Group: EPP/CD

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EXPLANATORY MEMORANDUM

Introduction

A. Preparation of the report

1. By virtue of Article 2.3 of Committee of Ministers Statutory Resolution (2000) 1, the Congress prepares on a regular basis country-by-country reports on the situation of local and regional democracy in all member states and in states which have applied to join the Council of Europe, and ensures, in particular, that the principles of the European Charter of Local Self-Government are implemented.

2. The state of local and regional democracy in Bosnia and Herzegovina was already the subject of a monitoring report by the Congress in 2002, before the country’s accession to the Council of Europe and the European Charter of Local Self-Government. This report was based on preparatory work by Messrs Haegi and Martini which was subsequently elaborated on by the rapporteurs, Mr Newbury (UK, L) and Mr Kittelmann (Germany, R), a consultant Mr Jorgensen (Denmark), and Mr Bergou from the Secretariat. The result was Explanatory Memorandum CG (8) 23 Part II and Congress Recommendation 103 (2001), adopted on 9 November 2001.

3. After the first few years of application of the European Charter of Local Self-Government in Bosnia and Herzegovina, the Institutional Committee of the Congress decided on 15 April 2005 to draft a second monitoring report on local and regional democracy in Bosnia and Herzegovina, appointing Mr Christopher Newbury (UK, Chamber of Local Authorities) and Mr Karsten Behr (Germany, Chamber of Regions) as rapporteurs, and Professor Dian Schefold (Germany, Group of Independent Experts) as consultant. They were accompanied by a member of the Secretariat of the Institutional Committee, Mr Daniil Khochabo, Secretary of the Institutional Committee, during the first visit, and by Ms Almut Schroeder, Co-Secretary of the Institutional Committee, during the second one.

4. The Congress monitoring delegation visited Bosnia and Herzegovina for the first time from 13 to 17 February 2006, with an extensive programme of working meetings in Sarajevo and Mostar (Appendix 1). A second visit took place from 2 to 5 July 2006, starting with working meetings in Banja Luka and continuing with further working meetings in Sarajevo (Appendix 2). The present report was prepared on the basis of the information obtained during the delegation’s on-site visits, extracts from the relevant legislation and other information and documents provided by the representatives of the authorities of Bosnia and Herzegovina.

5. On this basis a first draft of this report was prepared and submitted to the discussion partners in Bosnia and Herzegovina on 20 August 2006. In the light of their comments, the report was revised and submitted to the Institutional Committee for consideration with a view to being approved at its meeting on 16 October 2006.

6. The help of the CoE office in Bosnia and Herzegovina at Sarajevo was invaluable for the work of the team, and especially for the preparation of the report, and special thanks are due to Mr Tim Cartwright, Head of the Mission, and to Mr Esad Mavric, Executive Secretary. Thanks are also due to the representatives of Bosnia and Herzegovina to the Congress, the representatives of the Associations of Local Authorities in the Federation of Bosnia and Herzegovina and in the Republika Srpska and the authorities of the central State, of the Federation of Bosnia and Herzegovina, of the Republika Srpska, of the cantons and of cities and municipalities that provided information in the working meetings and discussed the draft of the report.

B. Background

7. Monitoring Bosnia and Herzegovina is an extremely difficult task because the history of the last fifteen years, which has been dominated by conflict, the ethnic and religious differences and the complex political and administrative structures that have been created as a result cannot be seen independently from the many international and supranational institutions involved. This is true of the Council of Europe’s efforts to improve the situation through the Parliamentary Assembly, the Committee of Ministers and the Secretary General, as well as through special institutions such as the Venice Commission. There are also several national delegations and experts working on projects for the improvement of the situation in the country. The European Union, seeking to improve co-operation pending the possible future accession of Bosnia and Herzegovina, is highly interested in a stabilisation and association agreement. The OSCE is contributing to local government reform. Above all, there are the military peace-keeping forces and the Office of the High Representative (OHR), a consequence of the international interest in peace-keeping in Bosnia and Herzegovina. The OHR exerts a decisive influence on developments in the country, analysing the tendencies and structures of the various political forces. The present report therefore cannot summarise and even less evaluate or judge all these activities, but will concentrate on local and regional democracy, especially in terms of the European Charter of Local Self-Government.

8. Bosnia and Herzegovina covers an area of 51.129 km2 and has a population of nearly 4 million inhabitants (currently 3,995,000). The country’s problems are largely determined by its ethnic and religious composition: 48% are Bosniaks (Islamic), 37% Serbs (Orthodox), 14.5% Croats (Roman Catholic). Obviously these statistics are a simplification since they fail to take account of the fact that there are other minorities. But they largely determine the legal and political solutions and are therefore a key to understanding the situation.

9. The basis for the monitoring exercise is the fact that the State of Bosnia and Herzegovina signed and ratified the European Charter of Local Self-Government on 12 July 2002. It subsequently entered into force on 1 November 2002. There were no reservations. On the other hand, neither the European Charter for Regional and Minority Languages nor the European Outline Convention on Transfrontier Co-operation has been ratified by Bosnia and Herzegovina. Besides this, it has to be borne in mind that Stabilisation and Association Agreement negotiations were opened with the European Union in November 2005. Other commitments in relation to the Council of Europe, and specifically the Venice Commission, concern constitutional amendments, covering, among others, local self-government issues. Bosnia and Herzegovina has been a member of the Council of Europe since 24.4.2002.

10. Part 1 of the report describes the situation of local and regional democracy in the specific circumstances prevailing in the country. Part 2 looks at the issues from the standpoint of the European Charter of Self-Government. Part 3 discusses current plans for reform and their prospects, leading up to a Conclusion.

Part 1: The situation of local and regional democracy in Bosnia and Herzegovina

A. The State of Bosnia and Herzegovina

11. The current constitutional, legal and administrative structure of Bosnia and Herzegovina must be seen as the outcome of the armed conflict between ethnic groups after the country‘s secession from the former Yugoslavia in 1992 and, subsequently, the Dayton Peace Accords, the General Framework Agreement for Peace in Bosnia and Herzegovina, which, under pressure from the international community, and especially NATO and its forces (IFOR / SFOR), brought the conflict to an end in December 1995. The treaty draws boundaries, ensures peace and sets out the constitution. According to this system, which remains applicable today, the State of Bosnia and Herzegovina is a State under international law and has the Constitution contained in Annex 4 of the Dayton Peace Accords.

12. The State consists of the two “Entities”, the Federation of Bosnia and Herzegovina and the Republika Srpska (Article I 3 of the Constitution). While the latter contains the territories with a population consisting in majority of Serbs (Orthodox), the Federation unites territories where Bosniaks (Islamic) and Croats (Roman Catholics) form the majority, often with a significant minority of other ethnic groups. The Federation is therefore subdivided into ten “Cantons” as members of the Federation with different ethnic majorities. The result is a State with an asymmetrical structure which, as a whole, may be considered as a Federal State, but whose components, the Entities, have a different character. One is centralised, with municipalities as units of local self-government, the other a Federation with members, the Cantons, and these in turn have municipalities as units of local self-government. The inevitable consequence is a great difference in nature between the two Entities. In addition to that, the special status of Brcko District - connecting or separating the two parts of RS- should be mentioned here as well. This district is a separate local self-government unit under the direct sovereignty of the State of Bosnia and Herzegovina, created on account of its special significance to the Serb as well as to the Bosniak population. In preparing this report, the team unfortunately had no opportunity to study the special situation of local self-government in the Brcko District in detail.

13. The powers of the Federation of Bosnia and Herzegovina are listed in the Constitution. They are based on recognition of freedom of movement (Article I 4), State citizenship combined with citizenship of the Entities (Article I 7), and human rights and fundamental freedoms, based especially on international law (Article II). In this context, the State has the powers mentioned and regulated in detail in Article III of the Constitution. These powers are very limited. They do not include questions of local government, but certain additional responsibilities are provided for, e.g. as agreed by the Entities (Article III 5 a). It follows that all powers not assigned to the central State shall be those of the Entities (Article III 3 (a)).

14. As regards the organisation of the State, the Constitution provides for a bicameral system: a House of Peoples consisting of 5 delegates from each of the three ethnic groups, elected by their representatives (Article IV 1), and a House of Representatives directly elected by the people, two thirds from the Federation and one third from the Republika Srpska according to an electoral law contained originally in an annex to the Dayton Peace Accords, currently in the 2002 version. All the three ethnic groups have to be represented in the Chairs of both houses. All legislation requires the approval of both chambers (Article IV 3 (c)), but the decisions of the majority also have to be supported by at least a qualified minority of each ethnic group, and if the delegates of one group in the House of Peoples declare a decision “to be destructive of vital interest” for their group, the decision may pass only with the agreement of all three groups. Complex procedures with the possible involvement of the Constitutional Court should nevertheless allow solutions to be found (see Article IV 3 (d)-(g) of the Constitution).

15. The executive consists of a Presidency composed of a Bosniac, a Serb and a Croat, all directly elected by their ethnic group. The Presidency normally decides by consensus; if that is not possible, decisions may be taken by two members, and a decision “destructive of a vital interest” may be referred to the parliamentary assembly of the relevant ethnic group for confirmation of the veto position (for details, see Article V of the Constitution, especially paragraph 2 (d)). The Presidency, competent for the most important executive decisions (Article V 3 of the Constitution), nominates the Chair of the Council of Ministers, who in turn nominates the Ministers for the individual fields of administration (Article V 4 of the Constitution), subject to the approval of the House of Representatives, to which they are responsible.

16. The Constitutional Court, composed of 9 members, 4 elected by the House of Representatives of the Federation, 2 by the Assembly of the Republika Srpska, 3 (from outside Bosnia and Herzegovina) by the President of the European Court of Human Rights, has wide-ranging powers to decide conflicts between the Entities and between the State and the Entities and to determine the conformity of law with the central State’s Constitution or international law, including appellate jurisdiction and cases referred to the Constitutional Court by any court in Bosnia and Herzegovina (Article VI of the Constitution). Articles (VII to XII) regulate the Central Bank, finances, amendments and other questions.

B. The Republika Srpska

17. Under the current distribution of powers the main State functions are in the hands of the Entities. This is true above all for the Republika Srpska (RS), a unitary authority with a bi-cameral Parliament (National Assembly and Council of Peoples) which, within the limits of the Dayton Accords and thus the Constitution of Bosnia and Herzegovina, fulfils all State functions on its territory. Since it is part of a federated State, there is no regional subdivision, and the organisation of local self-government falls within the powers of the Entity. In fact, the Constitution of RS contains some articles concerning local self-government, mentioning it as a cornerstone of constitutional organisation (Article 5), as well in the context of human rights, and specifying that local self-government organisation in cities and municipalities has to be regulated by law (Article 102).

18. The Law on Local Self-Government, a previous version of which was issued in 1999, was revised in 2004 and is now in force as Law No.01/689/04 of 13 September 2004. It extensively regulates the position, function and tasks of the municipalities in many fields, although further implementing legislation is often required (see Articles 11-27), as well as allowing a transfer of State functions and hence financing to the municipalities (Article 28). A municipal assembly and a mayor, both elected directly by the citizens for four years, are the main bodies of the municipality; the distribution of powers is defined in the law (Articles 29-43). Special rules concern the municipal administration and provide for the setting up of a supervisory board (Articles 44-54). Larger urban areas may acquire city status, either as a single municipality (currently Banja Luka), or as a grouping of several municipalities, which raises the problem of delimitation of the city’s and the municipalities’ powers (currently East Sarajevo). In both cases further State tasks may be transferred to the city (Articles 55-62). Further sections of the law regulate local property and finance (Articles 63-70), acts of local bodies, especially statutory power (Articles 71-75), transparency (Articles 76-82), supervision (Articles 83-92), co-operation between municipalities (Articles 93-95), protection of rights (Articles 96-97), direct participation of citizens, including local communities (Articles 98-109), employees of municipalities (Articles 110-161 – a very broad set of rules) and other matters. The law, which was drafted after the experience of the 1999 version and in close co-operation with the advisors of international organisations, including the CoE, obviously corresponds largely to European standards, including the European Charter of Local Self-Government, and seems to be quite modern. Nevertheless the need for further legislation to implement many parts of the law weakens its impact; for example, at the time of monitoring, the question of local property and finance had not yet been resolved. The regulation which allows a definitive intervention only after a court decision appears extremely favourable to local self-government, but one may wonder whether this does not in fact encourage informal, even para-legal interventions.

C. The Federation of Bosnia and Herzegovina

19. In the other Entity, the Federation of Bosnia and Herzegovina (FBiH), the situation is more complex owing to the fact that the Federation seeks to organise the very mixed Bosniak and Croat population under a single federated structure. Respect for local conditions, which, in this instance, are mostly ethnic, has therefore necessitated a highly decentralised organisation. The Federation, like the State of Bosnia and Herzegovina, has a bicameral structure with a democratically elected House of Representatives and a House of Peoples composed of Delegates from the Cantons according to their ethnic composition (Chapter IV A, Article 8, of the Constitution). In the FBiH too, the constituent peoples may oppose a majority decision by invoking “vital interest”. This results in complex decision-making procedures, with final decisions being taken in extreme cases by the FBiH Constitutional Court (Chapter IV A, Article 18, of the Constitution). Both ethnic groups are also involved in the election of the President and the Vice-President (for details see Chapter IV B, Article 2, of the Constitution). The FBiH Constitutional Court contributes to resolving the difficulties arising from this structure (Chapter IV C, Articles 9-13, of the Constitution). Both in its terminology and in its constitutional organisation it is obvious that the FBiH, as a constituent Entity of the (at least de facto) federal State of Bosnia and Herzegovina, has the character of a Federation, so that for this part of the country we find federalism on two levels – a fairly unique solution in the world.

20. The FBiH is divided into Swiss-style “Cantons”. There are ten, each with a different majority situation. “The Cantons shall have all responsibility not expressly granted to the Federation Government” (Chapter III, Article 4, of the Constitution). The Constitution only sets out a few principles relating to Municipality Governments (Chapter VI), including responsibility for the protection of rights (Article 1), the principle of self-rule on local matters and the establishment of a statute (Article 2), and the principles of government by a Governing Council (Articles 3-5), a Municipal Executive (Article 6) and municipal courts (Article 7). Furthermore, in guaranteeing the application of international treaties (Chapter VII, Article 3), the Constitution gives direct binding force to the European Charter of Local Self-Government, and the FBiH Constitutional Court has the task of protecting the right to local self-government (Chapter IV C, Article 10). But the Constitution does not - at least not expressly - give the Federation Government any power with regard to implementing legislation. For this reason one either may conclude that legislation in the field of local authorities is an exclusive power of the Cantons or, on the contrary, infer from the rules set out in the Constitution, especially Chapter VI, Article 2, paragraph 1, concerning the municipal structure, read in conjunction with the general clause in Chapter IV A, Article 20 d), conferring powers on the FBiH Legislature, that responsibility for adopting implementing legislation lies with the Federation. Furthermore, Article 2 of the European Charter of Local Self-Government, which calls for a clear constitutional or legal definition of local self-government, may be an argument in favour of a definition contained in a law of the Federation.

21. In point of fact, local government has so far been regulated by the Constitutions of the Cantons and, on that basis, by cantonal laws. This system, described in the last monitoring report (Explanatory Memorandum, CG (8)23 Part II, Recommendation 103 (2001)), has many weak points and is therefore criticised not only in the CoE documents, but also by other international and local observers. Draft constitutional amendments and a draft Law on principles of local self government in the FBiH were therefore laid before the FBiH Parliament. The constitutional amendments regarding a new Federation power to adopt legislation in the field of local authorities did not obtain the necessary parliamentary majority this year. However, the draft Law on principles of local self government was passed by both Houses during the monitoring period. Although, given the constitutional situation described above, doubt is possible as to whether the law of the Federation is valid without an expressly conferred legislative competence, there are good constitutional arguments in favour of it. There is a Law on Basics of Local Self-Government dating back to 1995, but the general belief is that new legislation at the level of the FBiH is necessary, and since the FBiH Constitutional Court has not declared the new law unconstitutional (see Chapter IV C, Article 10, paragraph 2, of the Constitution), the new law has to be taken as the basis for further discussion. Nevertheless, in the interests of a clear constitutional situation, an amendment to the FBiH Constitution clearly assigning to the Federation the necessary powers to regulate local self-government remains a matter of urgency, and it is a pity that the recent draft did not obtain the necessary parliamentary majority.

22. The Law on principles of local self-government does not regulate every aspect of local self-government, but it nevertheless contains the guiding principles and main rules, implementing the relevant principles of the Constitution and requiring the FBiH, the Cantons and the local authorities to harmonise their laws and statutes within 6 months (Article 58). It broadly defines local self-government and the municipalities and cities and then the scope of self-government, mentioning the individual tasks, including the possibility of delegation by the Federation or the Canton under certain conditions, especially regarding the transfer of funds (Articles 2-11). As bodies of local authorities, the Council and the Mayor are provided, in a section relating to their powers and relations, with detailed rules on information, arbitration and review, but without regulation of the (direct) election provided for in other laws (Articles12-23). Special attention is given to “local self-management”, organised by local authorities in the form of neighbourhood communities for local purposes operating below the level of the municipality or city and with the direct participation of citizens (Articles 24-32). Further sections concern finance and property (Articles 33-38), publicity of work (Articles 39-42), direct participation of citizens (Articles 43-46), administrative supervision by the FBiH and the relevant Canton (Articles 47-49 and 57), and co-operation between local self-government units in the form of associations, as well as with higher-level institutions (Articles 50-56). Obviously the law, influenced by the European Charter and by modern trends in local self-government, is very innovative in terms of the ideas it contains. But the question may be raised as to whether the extreme variety of legal sources – European Charter, FBiH Constitution, Law on principles of local self-government, Constitutions of Cantons, cantonal laws, local statutes – will not create difficulties in the form of conflicts and a lack of ruling. If supervision, for example, has to be performed, according to Article 47, “by the Federation or Cantonal bodies, each within their respective spheres of responsibility”, and if, on the level of the Federation only, according to Article 57, powers of implementation are vested in the Ministry of Justice and the Ministry of Finance, it is likely that there will be conflicting decisions, or a lack of decisions, and a great deal of bureaucracy will be needed to reach any agreement. A visit to the FBiH Ministry of Justice gave some impressions regarding these difficulties. Here again, the constitutional basis of the question needs to be clarified.

D. Size and asymmetry of units

23. All over the State, the problems mentioned seem to be caused to a great extent by the very complex geographical structures which are the consequence of an organisation based on ethnic criteria. This begins with the existence of the Entities with their enormously long and complicated boundary lines, so that the FBiH may look like a conglomerate of often incoherent territories, separated by parts of the RS, while the latter, as well as being limited in size, consists of two barely connected fragments1. Obviously a border situation of this kind increases neighbourhood problems and the need for co-operation between neighbouring municipalities, which are governed by different and inconsistent legislation and powers of supervision. The problem continues in the associations of two municipalities, those of FBiH and RS, whose influence, although enhanced through bilateral co-operation, e.g. with the Dutch VNG (Association of Dutch Municipalities), and with the help of international organisations, is determined by the relevant government structures. BiH municipalities therefore cannot speak with one voice and defend their interests together, but only in two separate associations.

24. This is clearly a major problem in the RS on account of the long distances between the central government and many municipalities, but it is worse in the FBiH on account of its internal structures based on the Cantons which requires, in this small country, under the central State, the three further levels of Federation, Cantons and municipalities, with the additional problem that the establishment of cities and of the above-mentioned neighbourhood communities introduces further levels. The enormous cost of the corresponding, generally unwieldy administrative structures, the largest budget item, is easy to criticise. Moreover, in the FBiH, with 80 municipalities, the average number of municipalities in each Canton is less than 10, in some Cantons only 3. Even with the best will it must be difficult to frame general legislation on local self-government and afford equal and impartial treatment to individual municipalities under such conditions. It seems much more likely that coalitions are formed between the governing forces in the Canton and the municipalities with corresponding majorities, at the expense of the other municipalities, and with enormous difficulties in remedying the situation as long as supervision by the central State or the FBiH is either not provided, or not sufficiently efficient. The legislation on the principles of self-government adopted by the FBiH government therefore seems highly necessary, but one may ask whether, given the problems on many different levels, it is sufficient.

25. An additional problem has been created by the fragmentation of municipalities for ethnic reasons. It seems that, before the armed conflict, the number of municipalities was 109, while now it is 144 (80 in the FBiH, 64 in the RS). Many of these newly separate municipalities are extremely small and situated near the boundary line between the Entities or the Cantons and thus face difficulties in fulfilling the tasks of a unit of self-government. We heard, for example, about the problems of Domaljevac-Samac, one of the three municipalities of Posavski Canton. Other, even bigger municipalities on the boundary line separate connected areas and populations and destroy public services that operated previously, such as like trolley-buses. One extremely striking example of this is that of Sarajevo (FBiH) and the artificially created separate city of East Sarajevo (RS). There are similar cases in the Mostar region.

26. In conclusion, it can be already stated here that consideration needs to be given to co-operation between municipalities at State level and across the boundary lines of the Entities and Cantons, to further harmonisation and centralisation of legislation, and to territorial reform.

E. Local finance and property

27. One of the most important developments of the last year was the introduction of the new value added tax (VAT) at central State level in place of the old local sales taxes. The modernisation of sales taxes is clearly an important step forward, and given modern economic and tax law structures such as those of the EU, a law of such importance has to be decided at central State level. It also seems reasonable that the tax should contribute to financing local authorities as it replaces old local taxes. According to the State structure, funds have to be distributed first of all to the Entities. But the problem remains that distribution within the Entities, including distribution to the Cantons in the case of the FBiH, necessitates legislation at Entity level guaranteeing consultation of municipalities and their right (along with that of the Cantons) to adequate financial resources in accordance with Article 9 of the Charter. These conditions are not yet met in the RS and were only very recently met in the FBiH where the problem, given the intermediate position of the Cantons and their own interest, is even more urgent.

28. In conclusion, the implementation of the FBiH law on distribution of VAT receipts to the municipalities has to be evaluated and the provisional agreements that have been applied hitherto in the RS will soon have to be replaced by a legal solution following consultation at municipality level.

29. For local property, the situation still seems unclear, although a legal basis now exists in both Entities. The need for practical application of the laws should be stressed.

F. The supra-constitutional position of the OHR

30. No description of the situation in the State of Bosnia and Herzegovina, including the problems of local and regional democracy, can fail to take account of the OHR, which was vested with extensive powers by the Dayton Peace Accords and has hitherto exerted a decisive influence. As well as providing excellent information on the situation in the country, which has been helpful for the present monitoring exercise, the regulatory powers of the OHR have decisively influenced the situation. In course of the monitoring mission this was obvious, especially during the visit to Mostar where the predominantly Croat and Bosniak administrations that had been separated since the armed conflict were reunited by decision of the OHR on 18 January 2004. The advisability and even the necessity of this measure were obvious and justified. But it was also observed that the opposing political forces were dissatisfied with it, criticising the unequal representation of ethnic and thus local groups, and that the protection of minorities, which operates on similar lines in Mostar as in the State and the FBiH, creates difficulties for efficient administration. After a short monitoring visit it is impossible to give a definitive judgment on the details of the decision, and even an argument based on the European Charter of Local Self-Government, especially regarding equality in voting, has to take account of the different groups and entities to be represented. But the opposition to a measure which, at least in principle, can hardly be challenged shows the limits to the “supra-constitutional” power of the OHR and proves the need for implementation of solutions in the country’s decision-making processes.

31. The prospect of the OHR in its present form coming to and end after 30 June 2007 can therefore be seen in two very different ways. On the one hand, the enforcement of self-responsibility in BiH is necessary and positive. On the other, there may be doubts as to whether the time for self-determined integration and an indigenous solution to the difficulties has really come (see Parliamentary Assembly, Resolution 1513 (2006), para.14). At any rate, the abolition of the OHR will place additional emphasis on other international organisations in BiH, especially the CoE.

32. In conclusion, in a situation where the European Union is less concerned with the problems of local self-government than with legal issues on the national and regional level, collaboration with the Congress takes on greater importance and its involvement in BiH therefore has to increase.

Part 2: Problems regarding the European Charter of Local Self-Government

33. As mentioned in the introduction, this report will focus on the application and implementation of the European Charter of Local Self-Government (hereinafter: the Charter) in the context described. Congress Recommendation 103 (2001), based on Explanatory Memorandum CG (8) 23 Part II, contains certain statements, the compliance with which has to be evaluated, taking account of the developments of the last few years. The Resolutions and Recommendations of the Parliamentary Assembly relating to local and regional self-government also have to be taken into account, especially Resolutions 1513 (2006) and 1384 (2004) and Recommendation 1664 (2004), along with other documents of the Parliamentary Assembly, the Committee of Ministers and the Secretary General.

A. The binding force of the European Charter of Local Self-Government

34. A fundamental problem is raised by the lack of power of the central State in local government matters. It is the central State which ratified the Charter and which is responsible for its application and implementation. If the central State has no power in these fields, there is no direct responsibility towards the Congress. The competent Entities and Cantons have very limited power or responsibility in the field of international law, and the State as a subject of international law has no power to fulfil its obligations in the field of local self-government. Monitoring of the effects of the Charter is therefore beset with obstacles. A first statement on the effects of the Charter has to take account of this fact.

35. This statement could nevertheless be mitigated by the binding force of international law in BiH, declared in Article II of the Constitution, especially for human rights. According to Articles III 2 (b), III 3 (b) of the Constitution, each Entity shall provide all necessary assistance to the government of BiH in order to enable it to honour international obligations, and according to Article III 5 (a), BiH shall assume responsibilities for matters agreed by the Entities. This might be interpreted, with the support of a Venice Commission opinion, as the central State’s right to the Entities’ co-operation regarding the implementation of the Charter. Yet this interpretation would only be a very vague legal basis for the implementation of an international obligation.

36. In this connection, the FBiH Constitutional Court has in fact declared several times that it has the task of ensuring these international obligations, including the Charter (FBiH Constitutional Court, judgments nos.U-11/04 of 31 May 2005 and U-5/05 of 21 June 2005). Consequently, Article VI 3 (c) of the central State’s Constitution attributes jurisdiction to the BiH Constitutional Court for determining whether a law on whose validity a court’s decision depends is compatible not only with the Constitution and the laws of BiH, but with the European Convention of Human Rights and its Protocols or general rules of public international law as well. It would be possible to consider the rules of the Charter as rules of public international law and thus to recognise a power of the BiH Constitutional Court to ensure respect for the Charter. Although a power of this kind would not allow the State’s executive to remedy violations of the Charter committed by an Entity or a Canton, it would at least include the right to decide whether the Charter has been violated.

37. However, an argument of this kind, no doubt because it is uncertain whether rules of public international law include treaties like the Charter, actually has little chance on account of the case-law of the BiH Constitutional Court. In a recent decision on admissibility of 31 March 2006 (case no. U-5/04), the Court rejected a request for review of the conformity of certain articles of the BiH Constitution with the European Convention on Human Rights whose direct applicability in BiH, according to Article II 2 of the Constitution, is beyond doubt. Nevertheless, in a conflict between international and domestic law, “the Constitutional Court notes that the rights under the European Convention cannot have a superior status in relation to the Constitution of BiH in view of the fact that the European Convention, as an international document, entered into force on the basis of the Constitution of BiH and hence the constitutional authorities derive from the Constitution of BiH and not from the European Convention.” (para.14 of the Decision). For the Charter this means that the central State’s lack of power in local government matters under the Constitution precludes the BiH Constitutional Court from ruling on violations of the Charter committed by the Entities or Cantons. Consequently, the Constitutional Court, like the other organs of the central State, would have no power to guarantee the binding force of the Charter, while the FBiH Constitutional Court, even if its decisions show a willingness to ensure the application of the Charter, is not an organ of the State which is bound by the Charter. One may argue that it is possible to interpret the decision of the BiH Constitutional Court more restrictively. But the statement quoted above shows the possible consequences of the current constitutional situation.

38. It is easy to criticise this decision of the central Constitutional Court, given the direct applicability of public international law – and, above all, of the European Convention of Human Rights – in BiH according to the Constitution, and it would be preferable to resolve the conflict, as advocated by the FBiH Constitutional Court, in favour of direct application of the Charter. But, as the decision of the central Constitutional Court says at the end (para.18), it is “final and binding”. Consequently, for the purposes of the present monitoring report, drawn up in accordance with Congress Recommendation 103 (2001) para.4 (a), it has to be stated that the current constitutional practice in BiH does not guarantee proper application of the Charter.

39. In conclusion, the State’s Constitution has to be amended to fulfil the international duties accepted by the State of BiH in ratifying the Charter. The recent failure of a constitutional amendment to this effect shows a sharp contrast between the country’s international obligations and the constitutional situation.

B. The delimitation of municipalities and cities

40. A further prerequisite for local self-government and for the application of the guarantees contained in the Charter is reasonable delimitation of municipalities giving the local authorities not only the “right”, but also the “ability” “to regulate and manage a substantial share of public affairs under their own responsibility and in the interest of the local population” (Article 3.1 Charter). If the units are too small and / or have boundaries that hinder efficient exercise of their powers, a guarantee of those powers is worthless. The issue of municipalities that have been divided for ethnic reasons (see 1D above) is therefore relevant to the application of the Charter. Admittedly this document, in Article 5, protects existing boundaries as well and asks for consultation of the local communities concerned in case of changes. A general radical change would therefore only be possible if it enjoyed wide public support which, after the ethnic separations, does not seem very likely. It may, in specific cases, be imposed by institutions such as the OHR. The case of Mostar, where a solution was found to a situation of extreme conflict, is an example that seemed convincing. In contrast to this, the separation of Sarajevo from surrounding areas with which it has historical and economic links seems unfortunate. But a policy based on the Charter will have to look for cautious improvements to territorial structures, preferably through forms of co-operation (see below, H). The RS Law on Local Self-Government (Articles 9-10) and, more generally, the FBiH Law on Principles of Local Self-Government (Article 4) recognise the problem, but leave it to be resolved by further legislation.

41. In conclusion, a policy based on the Charter will have to look for cautious improvements to territorial structures, as far as possible creating municipalities of a sufficient size by means of legislation, and preferably also through legally prescribed and voluntary forms of co-operation.

42. As regards the criticism relating to cities in Recommendation 103 (2001) para.3 d, new regulations have been laid down in the RS and FBiH laws, but the different situations exclude a uniform solution. There are big towns such as Banja Luka in the RS and Tuzla in the FBiH consisting of a single municipality, and agglomerations of several municipalities such as Sarajevo (and East Sarajevo) and Mostar that may form a city. In both cases a special status with additional powers transferred by the Entity and, in the FBiH, the Canton seems reasonable and should be granted. The arguments in favour of a special status put forward by the representatives of large municipalities seemed convincing. But where there is a grouping of several municipalities, the distribution of powers between the city and the municipalities raises problems, and the subdivision into neighbourhood communities (Articles 24 et seq of the FBiH law), although obviously useful in the case of one municipality, may complicate the situation and lead to a multiplication of tiers, e.g. Canton – city – municipality – neighbourhood community. A development in this direction should be avoided.

43. In conclusion, the legal solutions appear complicated but necessary, taking account of the wide variety of de facto situations.

C. The guarantee of local self-government

44. Regarding the above-mentioned fundamental problems, developments in the regulation of local self-government show that some degree of progress has been made. This is less true of the constitutional level in the central State and the FBiH where, for the above-mentioned reason of guaranteeing the implementation of the Charter and the new FBiH law, a formal guarantee of local self-government is absolutely necessary, but still lacking. But the new legislation in both Entities shows the influence of foreign and international co-operation, inter alia of the CoE and the Congress, and especially of Recommendation 103 (2001). These legal texts largely correspond to modern standards and are an undoubted step forward. They even include some interesting experimental elements, e.g. the broad description of municipalities’ functions in the RS law and the concept of “local self-management” by neighbourhood communities in the FBiH law. Admittedly, certain details added during the parliamentary debate are open to criticism, but it has to be acknowledged that the practical application of general principles takes account of the local and national situations.

45. Nevertheless, a weak point in the legislation is its complicated nature. Many sections of the laws, some mentioned in Part 1, need a special law for their application, and a lack of concrete provisions may be seen on such decisive matters as municipal property, distribution of financial resources or delegation of powers. Other regulations, e.g. in the field of supervision, seem so complicated that one may question their practicability. In the FBiH the combination of the (insufficient) influence exerted by the central State and the legislation of the Entity and the Cantons compounds the difficulties. Even after the enactment of the FBiH Law on Principles of Local Self-Government, many matters remain subject to cantonal law, and the relationship between the different legal texts and the different competent authorities on Federation and Canton level creates problems. In the case of the smaller Cantons, it is difficult to ensure an exclusive local power of local authorities in accordance with Article 4.3 and 4.4 Charter. The local authorities in question meet with competition from cantonal activity. In these fields, co-operation with the Congress and the CoE office in Sarajevo will remain important.

46. In conclusion, an amendment to the FBiH Constitution (as well as to the State Constitution, see Part 2 A above) guaranteeing the power to regulate local self-government is an urgent necessity. Enactment of the subordinate laws provided for in the laws on local self-government is a matter of urgency, and a simplification of the rules should be envisaged. This is important especially for the FBiH.

D. Equality of ethnic representation and minorities

47. One of the basic rules of the Charter is, in the context of the election of local councils, the principle of equality and thus of non-discrimination. Application of this principle, of which only an abstract definition is given in catalogues of fundamental rights and in the European Convention on Human Rights, raises special difficulties. These difficulties have their origins not on the local level, but in the ethnic problems that determine all sectors of public life in BiH and therefore local self-government, too. As for parliamentary elections at central State and Entity level, one may and should ask whether an electoral system based on simple proportional representation of all citizens and their groups could and should not be sufficient to ensure the representation of all groups and minorities. In a long-term perspective a system of this kind should be introduced to give effect to the principle of equality set out in Article 3.2 of the Charter. At present, however, there are still several sets of rules determining representation at all levels down to the local councils.

48. The basic problem lies in the fact that the Constitution contained in the Dayton Peace Accords provides not only for a decisive position of the Entities, but also for representation of the Bosniaks, Serbs and Croats as ethnic groups in the House of Peoples of BiH and the FBiH and, at State level, in the House of Representatives too. This situation, continuing at the levels of the Cantons (in the FBiH) and the municipalities, determines the political system. Also the recent elections of Cantonal assemblies in the Federation of Bosnia and Herzegovina - although generally in line with international standards- were conducted according to these ethnically-based rules and thus not in accordance with international committments for universal and equal suffrage. The consequence of this situation is, first, that all citizens and voters have to decide which of these groups they belong to, irrespective of any individual differences of origins (e.g. mixed) or religion which might restrict this belonging. It follows, second, that other groups, e.g. of foreign, Roma or Jewish origin, fall outside this system and are not represented, but discriminated against; it is this aspect which recently came in for strong criticism in Parliamentary Assembly Resolution 1513 (2006) para.10. A third consequence is that, statistical data have to be taken as a basis for the breakdown into groups. Following the displacement of many minorities during the armed conflict and given the fact that the right of return under the Dayton Peace Accords is often not exercised, these data do not reflect the current population figures, so that the latest census, dating back to 1992 before the armed conflict, often has to be taken as a basis, although it may no longer be valid (see, for example, Article 3 of the RS Law on Local Self-Government). Finally, fourth, in this situation the protection of minorities is extremely important and often necessary, e.g. through the previously described procedures of the House of Peoples, the protection of vital interests, the need for qualified majorities, etc, although such restrictions placed on the majority rule again limit the principles of equality and of democratic decision-making.

49. In conclusion, all these limitations or even violations of equality are problematical and underline the need for change. But it has to be taken into account that in the present situation one may seek to mitigate certain consequences, but it is not possible to focus criticism on just one of the consequences while maintaining the other inequalities. This is true above all of the protection of minorities which, in a fundamentally democratic system, would lose some of its importance, but which currently seems necessary, e.g. the administration of Mostar and the frequent calls for a two-thirds majority for decisions of local councils. Obviously the legitimacy of such limitations of the simple majority has to be discussed, but they should not be criticised out of hand. The idea in FBiH Constitutional Court judgment U-5/05 of 21 June 2005 of asking for consultation of the local authorities concerned, on the basis of Article 4.6 of the Charter, before introducing a qualified majority rule, seems to give additional significance to this article of the Charter, but it can be regarded as a compromise between democratic majority rule and the protection of minorities under the given circumstances. Nevertheless, the problem remains of whether in a small Canton consultation of local authorities may serve as an instrument for reducing the protection of minorities.

E. Administrative structures and conditions of exercise of local functions

50. One practical consequence of the fragmented municipal structures, the organisation of the Entities and, in the FBiH, the existence and organisation of the cantonal level is the enormous cost of public administration. Parliamentary Assembly Resolution 1513 (2006), para.2, recently estimated this cost at 60% of GDP. This again underscores the fact that the structures are open to criticism, even from the point of view of Articles 6 and 7 of the Charter, because they do not ensure the effective management that should be granted according to Article 6.1. Nevertheless, the Charter lays considerable emphasis on the conditions of service of local government employees (Article 6.2) and appropriate financial and working conditions for the members of the bodies of local authorities (Article 7.1 and 7.2). Obviously such guarantees cannot work in a situation where structures are too complex and staff too numerous. As the financial situation of municipalities differs considerably, the poor municipalities in particular currently have no chance of offering their staff appropriate working conditions. Although this problem may be considered as one of financial equalisation (see below, G.), it also concerns the adequacy of the current organisation of local government.

51. In conclusion, a simplification of administrative structures remains an important task.

F. Administrative supervision

52. According to Article 8 of the Charter, an essential guarantee of effective local self-government is the limitation of administrative supervision. The RS Law on Local Self-Government and the FBiH Law on Principles of Local Self-Government take account of this principle. In particular both the RS Law (Articles 83-92) and the FBiH Law (Articles 47-49) provide for a strict limitation of powers, control measures, procedures and judicial protection: only the competent courts have the power to declare an act of local self-government illegal.

53. Nevertheless, this solution raises questions. If supervision is limited in that way, its practicability seems uncertain, and one may wonder whether this will not in fact lead to illegal practices, or to decisions by the courts which simply reflect the Minister’s standpoint. According to information received verbally, there have not yet been many cases of supervision.

54. In the FBiH the main problem stems from the simultaneous existence of the federal Law on the Principles of Local Self-Government and the laws of the Cantons which are still in force and from the concurrent supervisory powers of the Federation Ministry of Justice, the Federation Ministry of Finance (Article 57) and the cantonal authorities, each within their respective spheres of responsibility. This necessarily leads to overlapping powers of supervision and hence to complex procedures. Furthermore the lack of transparency criticised in the 2001 Report and Recommendation 103 (2001), paras.2 f, 3 c and 4 e, still exists, although it is mitigated by the Federation Law.

55. In conclusion, the practice of supervision in the RS should be continuously monitored and the impact of the law should be evaluated. In the FBiH the harmonisation of cantonal laws is a matter of urgency, but still seems insufficient. The concentration of supervisory power, preferably in a special federal Ministry for local self-government (similar to that of the RS), seems to be the best solution.

G. Local finance

56. The current VAT reform and the – not yet perfect – legislation on distribution of the receipts among the different levels of government, including the municipalities, as described above in Section 1E, are certainly a step forward. But it seems necessary to underline the requirement to consult local authorities on the allocation of the resources (Article 9.6 of the Charter) and to protect financially weaker local authorities (Article 9.5 of the Charter). As a final, legally binding decision has been taken by the central State to distribute the proceeds from this, the most important tax in BiH, only among the Entities, its distribution among the municipalities (and, in the FBiH, the Cantons) has to be provided for under the legislation of the Entities, following consultation of the municipalities (and Cantons). Otherwise the financial uncertainty and dependency of the municipalities will not be in compliance with Article 9 of the Charter. A distribution formula that will provide a certain share of the VAT directly to the municipalities, currently under discussion, should be analysed particularly in the light of Article 9 of the Charter.

57. Furthermore the replacement of the old local taxes by a central VAT system raises the problem of sufficient own tax revenue for the local authorities deriving from local taxes, in accordance with Article 9.3 of the Charter. FBiH Constitutional Court judgment U-11/04 of 31 May 2005 highlights this problem in the specific context of competition between cantonal and municipal taxation power. The new legal situation probably calls for reconsideration of the consequences of that judgment, taking account of the fact that the introduction of VAT has reduced local taxation power and that compensation for that is needed in accordance with Article 9.3 of the Charter.

58. In conclusion, the enactment of Entity laws on the distribution of VAT among the municipalities according to precise distribution criteria and the protection of financially weaker local authorities, subject to consultation of local authorities, is an urgent step, insofar as this has not yet been done. A new source of own tax revenue for the municipalities is highly desirable to replace the abolished local sales tax.

H. Co-operation of local authorities

59. Given the territorial structures and the difficulty of improving them as described above (Parts 1 D and 2 B), local authorities will only be able to fulfil their tasks by means of co-operation with other, especially neighbouring local authorities. Activities of this kind come up against the problem of the boundary lines between Cantons and the Entities, and those of the State. The differences between legal systems and the powers of supervision impede co-operation.

60. The guarantees contained in Article 10 of the Charter and supplemented by the European Outline Convention on transfrontier co-operation are therefore important, and the fact that this Convention has not yet been ratified by BiH is a major shortcoming (see Parliamentary Assembly Resolution 1513 (2006) para.22).

61. On the other hand, it may be noted that the laws of both Entities, RS Articles 93-95 and FBiH Articles 50-51, actually guarantee local self-government units the right to co-operation. The RS Law even guarantees explicitly the right to co-operate with units of local self-government in the FBiH and abroad. These provisions, if taken literally, offer grounds for hope. One would and may expect inter-municipal co-operation to contribute to resolving practical difficulties and, furthermore, to fostering a new spirit of co-operation and openness. It was striking during the monitoring visit that the meeting with the Mayor of Sarajevo was also attended by a representative of the Mayor of the City of East Sarajevo. Although that was their first meeting for a long time and only a modest start, one may hope that this contact will help towards the organisation and future stabilisation of common work in the interests of the citizens.

62. In the above-mentioned articles, the laws of both Entities also give a legal basis to associations of municipalities as well as to their meetings and activities, which may receive foreign and international support. Nevertheless, it is regrettable that these associations are still strictly limited to their Entity (cf. Recommendation 103 (2001) paras.3 b and 4 j). A united association or at least close co-operation would be useful, especially for the purposes of necessary transfrontier co-operation. The Congress therefore welcomes the recent initiative to revive the liaison board for the two associations and sees this initiative as an important step towards better co-operation between municipalities throughout the territory of Bosnia and Herzegovina.

63. In conclusion, the European Outline Convention on transfrontier co-operation should be ratified. Co-operation between municipalities across the boundaries of Cantons and Entities is necessary and highly desirable, and the associations of municipalities should either unite or at least co-operate closely at State level. This requires the support of the supervisory authorities.

I. Legal protection of local self-government

64. The lack of judicial control in the field of local self-government, as guaranteed in Article 11 of the Charter, was criticised in the previous report. According to the legal texts, the new laws have decisively improved that situation, especially in the case of administrative supervision (see above, F). The question of how this improvement is working out in reality could not be answered during this visit, because the legal provisions are new. But the case-law of the FBiH Constitutional Court does at least reveal cases showing clear respect for local self-government in general and the Charter in particular (judgements U-5/05 of 21 June 2005 and U-11/04of 31 May 2005). However, the refusal of the State Constitutional Court to apply directly the obligations of public international law, and hence the Charter, as mentioned above (A), is a fundamental defect that has to be criticised, even more so because it is a recent development.

65. In conclusion, only a constitutional amendment at State level can guarantee an improvement of the situation and ensure effective protection of the rights of local self-government.

K. The Cantons: between regional and local self-government

66. In view of the country’s complex geographical and political structure, special attention must be focused on the organisations of regional self-government. The two Entities constitute a fact that cannot be neglected. Their organisation and the powers assigned to them clearly give them a position similar to that of the components of a formally federated State, and it seems that the success of this regionalisation depends less on ensuring regional autonomy than on ensuring the coherence of the State as a whole, vested with the necessary powers. In fact, for a State of the size of BiH the existence of two regional entities is a justifiable solution, although the problems with regard to boundaries are not very conducive to efficient administration.

67. But a difficult problem is raised by the existence of the additional level of the Cantons, which constitute units forming another Federation, the FBiH, with the quite exceptional result that one could speak of federalism on two levels. In the 2001 report this result was evaluated as positive. As the cantonal governments follow parliamentary principles, they may be regarded as constituent elements of regional democracy.

68. The situation can obviously be interpreted in this way, even more so because the European Charter of Regional Self-Government is not a definitive text, but a draft with different possible versions and interpretations. However, the latest visits gave the impression that in several fields – and especially the regulation of local self-government, which is the subject of this report – the legislative power of the Cantons has a rather problematical impact. Furthermore, the political systems of the Cantons, with highly structured government bodies and parliamentary control, seemed very complex, expensive and rather an obstacle to an efficient administrative system. The above-mentioned doubts regarding the necessary distance and neutrality of the cantonal governments vis-à-vis the local authorities, especially in such fields as supervision and the distribution of financial resources, appear rather as arguments in favour of shifting these powers to higher levels. Certainly, in the complex ethnic make-up of the FBiH, it would be difficult to call into question the existence and necessity of the Cantons. But one may wonder whether, especially from a systematic standpoint and in a long-term perspective, a classification of the Cantons as second-tier local self-government units (like provinces, “Kreise” and similar units) would not correspond more to practical needs and expediency. According to Article 13 of the Charter, there is no problem in extending the applicability of the Charter to such units as well, so that the practical legal protection of the Cantons would not be diminished.

69. In conclusion, a shift in legislative power, especially in matters of local self-government, from the Cantons to the FBiH, and a scaling down of the political apparatus of the Cantons, notably by concentrating the power of supervision over municipalities in a federal Ministry, should be recommended. The Cantons could and should acquire a clear position as second-tier units of local self-government.

Part 3: Debate on reform

A. General situation

70. The facts and tendencies mentioned in this report show that, since the end of the hostilities, Bosnia and Herzegovina have been undergoing a continuous reform process, promoted and monitored by international organisations, even with a certain amount of pressure. These reforms, supported by the Entities and often by the cantonal authorities, but often recommended and influenced by foreign and international organisations, are leading in a positive direction which should be recognised. The presentation of the reform proposals will therefore have to be largely repeated in the conclusions of this report (Part 4). Nevertheless, the reforms have not yet touched on the ethnic basis of the constitutional, legal and political system. The various forces have maintained their resistance, and that is the fundamental reason why reform proposals often break down.

71. Especially in the current situation, significant progress may be seen in the Entities’ legislation on local self-government and in the tax reform (VAT). On the other hand, the constitutional reforms at the level of the central State and the FBiH, supported by the CoE and its bodies and designed to enhance the powers of the state and the FBiH, did not obtain the necessary majorities and thus failed, and electoral legislation has not been reformed. This has the important consequence that, with the general elections carried out in October 2006, the reform proposals under discussion hithero became largely redundant and the elections, and hence the composition of the newly elected political organs, have followed existing rules and models. Before the elections it seemed unnecessary to continue detailed discussion of reform proposals that have not been approved. Now with the newly compsed political organs a new reform debate should be launched. As far as local self-government is concerned, the application of the Charter in Part 2 has indicated the directions that reforms should take. It therefore remains only to summarise the proposals going in the right direction and necessary to provide effective guarantees of properly functioning local self-government.

B. Constitutional reforms

72. A major theme of the legislature now coming to an end has been the question of constitutional reform at central State and FBiH level, and the failure of the proposed constitutional amendments is certainly a blow to the prospects for change. It was therefore criticised by the Parliamentary Assembly in its Resolution 1513 (2006), which calls for discussion to be resumed (para.18).

73. As far as local self-government is concerned, it follows from what was explained in Part 2 that it is essential to reduce the ethnic factors in the election system as far as possible. The Constitution should provide the central State with an effective power to ensure the application of international law obligations – especially the Charter – at all levels.

74. For the FBiH Constitution, an explicit constitutional basis for the now enacted Law on the Principles of Local Self-Government is perhaps not absolutely necessary, but would help to clarify the situation.

C. Legal reforms

75. At the level of ordinary legislation, the main task in the near future has to be the harmonisation and adaptation of laws, especially those of the Cantons, to bring them in line with the FBiH Law on Principles of Local Self-Government, which prescribes this harmonisation as a task to be carried out over the next six months. Local statutes also have to be adapted. Given the general character of the Entity’s law, these tasks are difficult, but important. Consultation of local authorities may help to identify and resolve the problems.

76. A second field of legislation, which, as far as one can tell, has not yet been resolved in a satisfactory way, is the distribution to municipalities of their share of VAT receipts. In this field, precise distribution criteria and equalising measures in favour of financially weaker municipalities are necessary and should be worked out in consultation with the local authorities.

77. Finally there should be provisions dealing with municipal property issues, which, under Article 63 of the RS Law on Local Self-Government are a matter for special legislation, but which play an essential role in the investment climate at local level.

D. Territorial reforms and co-operation

78. The discussions held to prepare this monitoring report produced a certain number of proposals concerning a simplification of the territorial structure of BiH, especially with a view to overcoming ethnic divisions and improving administrative efficiency. On the other hand, the existence of the Entities and the Cantons has found many defenders. The practical problems created by reforms implemented so far show that the time is not yet ripe for a fundamental territorial and structural reform of the country, although this is certainly desirable in the long term. Gradually improving structures in line with the considerations set out in Parts 1 D and 2 H seem a more promising approach.

Part 4: Conclusion

A. General evaluation

79. An evaluation of development processes in Bosnia and Herzegovina depends on opposing points of view that may lead to a more optimistic, critical, disappointed, radical or pragmatic attitude.

80. The experience of an armed conflict with victims and traces that can still be seen everywhere shows how far the country has to come in achieving a relatively well-functioning public life with public services, administrative and political structures and mostly peaceful co-existence between political, religious, ethnic groups. The simple facts of peace, that the country belongs to the Council of Europe, that there is a currency that functions, that co-operation with the European Union is possible, with the prospect of future membership, and that tourism has achieved a certain level of development may serve as signs of normalisation. Local self-government has made significant contributions to this normalisation and the enactment of the FBiH Law on Principles of Local Self-Government may in itself justify a certain degree of optimism.

81. In fact, this development has only been possible with a large amount of international assistance. In addition to financial aid and grants, this report has frequently stressed the contributions made by international and foreign organisations with offices in BiH, and even, in some cases, the pressure exerted by them; the CoE and even this report are part of this involvement. In spite of this, success is often limited, and resistance to the proposals, suggestions and demands is common. The advisors and their institutions necessarily criticise these positions. They are forced to take note of the fact that the ethnically-based standpoint often still prevails and is not overcome by international help.

82. For this reason, consultation, advice and monitoring in BiH often meet with a degree of incomprehension and resistance that raises the question of whether the wider effort makes sense, especially in the area of constitutional reform. Foreign observers have to bear in mind that ethnic positions, often linked to intolerant religious views, still play an important role. Parliamentary Assembly Resolution 1513 (2006) referred to “perpetual confrontation and obstructionism”, “war-time thinking” and “sectarian political divides” (paras.14, 15 and 19). It comes as no surprise that such experiences cause disappointment and produce doubts as to whether the support techniques employed hitherto are sufficiently efficient.

83. Given these impressions, it seems clear that radical change is needed. One may argue convincingly on the basis of State theory and constitutional law, that there is a fundamental contrast between democracy and ethnic separation, between equality and minority group protection, between constructive State building and invocation of the vital interests of a group, and one may call for a constituent process producing a “normal”, homogeneous State. Yet the fact remains that this creates neither the general will, nor the common ideas, nor the ethnic and religious foundations necessary for a State building process. These have to grow with time and be supported by a continual effort.

84. In this situation, while maintaining the aim of building a sustainable State and political system determined by the constitutional values that are important for BiH, the result of this monitoring report has to be a pragmatic approach to the problems of democratic local self-government, based on the Charter and thus criticising the shortcomings in its application. The following conclusions point in this direction and aim to strengthen the common spirit as the basis of local self-government.

B. Conclusions for the State of BiH

85. At State level and for BiH in general, one key demand is a clear constitutional guarantee of local self-government binding for all tiers of public authorities in BiH, to guide the decisions of the BiH Constitutional Court and ensure compliance with the obligations falling to BiH as a result of its ratification of the Charter (Part 2 A, para.39, Part 2 I, para.65).

86. In line with the commitments accepted a long time ago the State should finally ratify the European Outline Convention on transfrontier co-operation and the Charter for the protection of regional and minority languages (Part 2 H, para.63).

87. Constitutional and legislative policies should tend to reduce and finally eliminate the ethnic criteria for the exercise of political rights, discrimination against minorities and the limitations on political equality, notwithstanding necessary transitional rules for the protection of minorities (Part 2 D, para.49).

88. Simplification of the structure of public administration should continue to be an aim of constitutional, legislative and administrative policies at all levels (Part 2 E, para.51).

C. Conclusions for the Entities

89. The Entities should, as far as possible, provide for improvements to territorial structures, as far as possible creating municipalities of a sufficient size by means of legislation, and preferably also through legally prescribed and voluntary forms of co-operation, supported by the supervisory authorities (Part 2 B, para.41, Part 2 H, para.63).

90. An amendment to the FBiH Constitution guaranteeing the power to regulate local self-government is an urgent necessity. The Entities should enact the implementing laws provided for in the laws on local self-government while focusing on a simplification of the rules (Part 2 C, para.46). The solutions provided for the cities seem, in principle, convincing, but too many tiers should be avoided (Part 2 B, para.42).

91. The practice of administrative supervision over local authorities should be continuously monitored. In the FBiH, harmonisation of the Cantons’ laws, though obviously a matter of urgency, still seems insufficient. Concentration of legislative power with regard to local self-government at Entity level and of supervisory power in a federal Ministry (of the FBiH) for local self-government seems to be the best solution (Part 2 F, para.55, Part 1 C para.22, Part 1 D, para.26, Part 2 C, para.46 and Part 2 K, para.69).

92. The enactment of Entity laws on distribution of VAT receipts among the municipalities with precise distribution criteria and protection for financially weaker local authorities, after consultation with local authorities, is an urgently needed. A new source of own tax revenue for the municipalities is highly desirable to replace the abolished local sales tax (Part 2 G, para.58). Similarly, Entity laws on municipal property are urgently needed (Part 1 E, para.29).

D. Conclusions for the Cantons

93. The Cantons are necessary for the FBiH, but they should be considered less as political and legislative decision-making centres and thus relinquish, in favour of the FBiH, the power of legislation and supervision in the field of local self-government. This will permit a scaling down of the political apparatus. On the other hand the Cantons should be strengthened as second-tier local self-government units enjoying appropriate protection under the Charter (Part 2 K, para.69).

E. Conclusions for the Municipalities

94. To perform the tasks of local self-government, especially under the conditions prevailing in BiH, co-operation between municipalities is necessary, including co-operation across the boundaries of the Entities and Cantons. This applies to intermunicipal co-operation by individual municipalities as well as to the associations of municipalities, which should either unite or at least closely co-operate at State level (Part 1 D, para.26 and Part 2 H, para.63).

F. Conclusions for the Congress of Local and Regional Authorities

95. At a time when the functions of the OHR are being taken over by other institutions, the fact that the European Union is less concerned with matters of local self-government than with legal issues on the national and regional level gives the Congress additional responsibility for co-operation with the institutions of local self-government in BiH. It should shoulder this responsibility (Part 1 F, para.32).

APPENDIX I

Programme of visit to Bosnia and Herzegovina (Sarajevo and Mostar)
13-17 February, 2006

Congress delegation :
Mr. Karsten BEHR (Germany, R, EPP/CD)
Mr. Christopher NEWBURY (United Kingdom, L, EPP/CD)
Prof. Dian SCHEFOLD (Vice-President of the Group of Independent Experts, Germany)
Mr. Daniil KHOSHABO (Secretary of the Institutional Committee)
Accompanied by
Mr Esad MAVRIC (Executive Secretary, CoE Office in Sarajevo)

PROGRAMME OF VISIT

Monday, February 13

Arrival of the delegation

17h00-18h00 Meeting with Mr. Tim CARTWRIGHT, Special Representative of the Secretary General of the Council of Europe

19h00-20h00 Informal meeting with representatives of the Ministry of Foreign Affairs

Amb. Nedzad S. HADZIMUSIC, Assistant Minister, Head of Multilateral Co-operation Department

Tuesday, February 14

09h15-10h15 Meeting with representatives of the international agencies involved in public administration and local self-government reform

Ms Denisa SARAJLIC-MAGLIC, Policy Director, Governance Accountability Project, USAID
Mr. Ćamil OSMANAGIC, Project Manager, VNG International Co-operation Agency

10h30-11h30 Meeting with representatives of FBiH Ministry of Justice

Ms. Borjana KRIŠTO, Minister, member of the BiH delegation to the Congress

12h00-13h30 Meeting with members of the Committee on Constitutional, Legal and Local Self-government Affairs of FBiH PA

Mr. Slavisa SUCUR, former Chairman of the Committee, Policy/Association Advisor, Governance Accountability Project, USAID
Mrs. Hafisa SABLJANOVIC, member
Mr. Mirsad HASANIC, member
Mr. Omer HUJDUR, member
Mr. Fikret BECIROVIC, member

15h00-16h00 Meeting with representatives of City of Sarajevo

Mr. Predrag Mitrović, Deputy Mayor

16h00-17h30 Meeting with members of the BiH delegation to the Congress

Mr. Jasmin IMMOVIC, Mayor of Tuzla
Mr. Husein SMAJLOVIC, Mayor of Zenica, SDA

Wednesday, February 15

09h00-10h45 Meeting with representatives of the Association of Municipalities and Cities of the FBiH

Mr. Tahir LENDO, President, Mayor of Travnik
Mr. Anton ŠTITIĆ, Secretary General
Mrs. Vesna TRAVLJANIN, Executive Director

11h00-12h30 Meeting with representatives of the BiH PA

Mr. Patar KUNIC, MP House of Representatives
Mr. Tomislav LIMOV, MP House of People
Mr. Mirsad ĆEMAN, MP House of Representatives, Chairman of the Committee on Constitutional and Legal Affairs

12h45-14h00 Meeting with representatives of the Association of Municipalities and Cities of RS

Mr. Brano JOVIČIĆ, Secretary General, Chief Government Coordinator, Brcko District

15h00-16h45 Meeting with delegates of the Local Democracy Agencies

17h00 Departure to Mostar

Thursday, February 16

09h00-10h30 Meeting with representatives of the Cantonal Government

Mr. Miroslav ĆORIĆ, Prime Minister, HDZ

10h30-12h00 Meeting with representatives of the Cantonal Assembly

Mr. Omer ČEVRA, President, SDA
Mr. Ljubo ZELKO, Vice-President, HDZ

12h30-14h00 Meeting with representatives of city of Mostar

Mr. Ljubo BEŠLIĆ, Mayor

16h00 Departure to Sarajevo

Friday, February 17

09h30-10h30 Meeting with experts

Prof. Mirko PEJANOVIC, Sarajevo University
Prof. E. SAVIKOVIC, Sarajevo University

12h00 Departure of the delegation

APPENDIX II

Programme of visit to Bosnia and Herzegovina (Banja Luka and Sarajevo)
2nd – 5th July, 2006

Congress delegation :

Mr. Karsten BEHR (Germany, R, EPP/CD)
Mr. Christopher NEWBURY (United Kingdom, L, EPP/CD)
Prof. Dian SCHEFOLD (Vice-President of the Group of Independent Experts, Germany)
Ms. Almut SCHROEDER (Co-Secretary of the Institutional Committee)

Accompanied by
Mr Esad MAVRIC (Executive Secretary, CoE Office in Sarajevo)

Saturday, 01 July

Arrival (Zagreb Airport),
Mr. Christopher NEWBURY, flight CSA-OK 814 at 20h35 from Prague

Sunday, 02 July

Arrival of the delegation (Zagreb Airport)
Mr. Karsten BEHR, flight LH 3494 at 16h40 from Munich
Prof. Dian SCHEFOLD, flight LH 3494 at 16h40 from Munich

17h00 Departure to Banja Luka
19h30 Arrival Banja Luka
Accommodation
Hotel BOSNA
Tel. +387 51 215 681
Fax. +387 51 216 942

Monday, July 03

10h00-11h30 Meeting with representatives of the Ministry for local self-government of RS
- Ms. Milanka Šopin, Secretary General of the Ministry
(Vuka Karadžića 4)

12h00-13h00 Meeting with representatives of the city of Banja Luka
- Mr. Dragoljub Davidović, Mayor
(City building)

13h00-14h Lunch

14h00-15h30 Meeting with representatives of the Association of local authorities of the RS
- Mr. Radomir KEZUNOVIĆ, President
- Mr. Brano JOVIČIĆ, Secretary General
- Mr. Mirko Pavić, Mayor of Prijedor

15h30-16h30 Meeting with representatives of the Represenation Office of the European Commission in Banja Luka
- Ms Claire Fromentin-Kuljanovic, Head of Office

16h30 Departure to Sarajevo
20h00 Arrival, Sarajevo

14h30 Arrival, Ms Almut Schroeder
Sarajevo airport, flight MA 450 at 14h05 from Budapest

Accommodation
Hotel «Europa Garny »
Tel: +387 33 232 855 Fax: +387 33 232 860

19h15 Diner

Tuesday, 4th July

09h30-10h30 Meeting with representatives of BiH Ministry of Justice
- Mr. Slobodan Kovač, Minister
(Trg BiH 1)

11h30-14h30 Meeting with representatives of the Members of the Committee for local self-
government at the Federation BiH Parliament, House of Representatives and other representatives of FBiH PA, presided by

- Mr Slavko Matić, Chairman of HoP and
- Mr Kemal Begović, Secretary General of the Committee for local self-
government at the Federation BiH Parliament, HoR

(Hamdije Kreševljakovića 3)

15h00- 16h00 Meeting with representatives of the OHR, Public Administration

- Mr Julien Berthoud, Senior Policy Advisor
- Mr Mudzahid Hasanbegovic, Legal Officer
- Ms Amra Imamovic, Political Advisor

(Emerika Bluma 1)

16h00-17h30 Meeting with representative of the OSCE, mission in BiH
- Mr Trefor Williams, Director of the Democratisation Department

Wednesday, 5th July

09h00-10h00 Meeting with representatives of the city of Sarajevo and Eastern Sarajevo

- Ms Semiha Borovac, Mayor of Sarajevo
- Mr Josip Jurisic, Deputy Mayor of Sarajevo
- Mr Dragomir Kocoric, Advisor to the Mayor of Eastern Sarajevo

10h00- 11h30 Meeting with representatives of the Constitutional Court of BiH
- Mr Dusko Kalender, Secretary General
- Mr Faris Vehabović
(R.Dz. Casevića)

12h00 Departure of the delegation
Sarajevo international Airport

Mr. Karsten BEHR, flight LH 3501 at 12h55 to Munich
Prof. Dian SCHEFOLD, flight LH 3501 at 12h55 to Munich
Mr. Christopher NEWBURY, flight CSA-OK 843 at 14h05 to Prague

Thursday, 6th July
Departure, Sarajevo international Airport
Ms Almut SCHROEDER, flight MA 451 at 14h50 to Budapest

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