Bosnia

In 1998 the U.S. government, the Peace Implementation Council, and the North Atlantic Council adopted benchmarks to help determine when enough progress has been made to allow NATO-led forces to be withdrawn from Bosnia. Three of the benchmarks--elimination of illegal institutions, creation of a democratic law enforcement system, and reform of the judicial system--are directly linked to reducing organized crime and corruption in Bosnia. However, despite U.S. and international efforts to achieve the three benchmarks, U.S. and international officials and published reports agree that organized crime and corruption continue to pervade Bosnia's civil service, law enforcement and judicial systems, economy, and political parties. Corruption pervades public administration. The judicial system is inadequate and, according to the Office of the High Representative's Judicial Reform Strategy, is incapable of effectively administering justice. Widespread customs and tax evasion has resulted, it is believed, in revenue losses of hundreds of millions of dollars. In addition, although internal controls over international aid appear to be adequate, according to U.S. and international officials, some corruption and fraud have occurred in the international assistance effort. Officials also said that anticorruption and judicial reform efforts have had little success because the political will of Bosnia's leaders is weak or nonexistent. Congress should consider requiring the State Department to certify that Bosnia has undertaken concrete, measurable efforts to fight corruption, smuggling, and tax evasion before providing future assistance. This testimony summarizes the July 2000 report, GAO/NSIAD-00-156.

GAO noted that: (1) GAO found a near consensus opinion among officials GAO interviewed that endemic crime and corruption in Bosnia is threatening the successful implementation of the Dayton Peace Agreement and that until the situation is satisfactorily addressed the conditions for the complete withdrawal of the North Atlantic Treaty Organization (NATO)-led force will not be met; (2) although some of the U.S. and NATO conditions have been met, none of the progress in implementing the agreement is yet self-sustaining according to the High Representative and others; (3) Bosnian leaders from all three ethnic groups have not made a concerted effort to curb corruption and have often acted to obstruct the reform process in general; (4) Bosnia's law enforcement and judicial systems are inadequate and institutionally incapable of prosecuting cases of corruption or administering justice; (5) Bosnian, international, and U.S. efforts to correct weaknesses in these systems have achieved only limited success and have not measurably reduced political influence over the judiciary or the economy; (6) GAO found that international assistance, including U.S. assistance, is generally not being lost to fraud and corruption in Bosnia and that such assistance has been protected by a number of internal controls; (7) however, GAO did find incidents of corruption in the international assistance effort; (8) further, the assistance provided could supplant the hundreds of millions of dollars the Bosnian governments lose each year to customs fraud and tax evasion; (9) moreover, the Bosnians spend a large percentage of their revenues maintaining three competing militaries that are primarily designed to fight each other; (10) according to the High Representative, the size and structure of these forces are incompatible with the defense needs of Bosnia and are financially unsustainable; (11) the international community has provided about $407 million in budget support to cover Bosnia's budget deficits, and most of this support is not controlled or audited; and (12) consequently, the international community cannot be sure how the money it has provided is spent.