June 13 2014

“Mr Genjac, Mr Borenovic, Mr Softic,  Excellences Members of Parliaments.

Let me first of all say that I am honoured and happy to be able to join you here today, in the company of long-serving politicians and Chairs of the EU integration Committees, where I have been asked make several short reflections on the state-of-play of Bosnia and Herzegovina’s European agenda and the way I see it. But first of all let me whole-heartedly thank all MPs present for what they have already done and will do for the European future of  this country. Let me also thank the Westminster Foundation for making this Forum possible.

Ladies and Gentlemen,

It will depend on your activities your creativity and finally your pens and votes as to how you write the European Union acquis into the laws of the State, of the Entities, of the District and of the Cantons in BiH. Adopting this acquis is the way you become a member of the European Union. It will be your persistent scrutiny of the Governments that will keep them on target for EU membership. And as a friend of BiH, as a personal friend of BiH I will say that success will be judged on the way we are able to rally people of this beautiful country to embark on hard and long-awaited reforms and they have to start right now.

There is no secret that it will be a journey, a journey of some length that is in front of us. And it is a journey that is there in order for us to reach what is your strategic foreign policy goal – becoming part of the EU. IPA is the one of the main tools, which, if you put it to the right use, will accelerate BiH’s transition to a competitive market economy and a prosperous society. The ‘track record’ of using IPA assistance that co-panellists have mentioned already this morning does not need to be explained: one just has to look a bit to the west to Croatia or to the North – to 2004 Enlargement countries – to see what the IPA money did for those societies.

One can see how IPA changed the quality of public administration or how it changed the quality of drinking water, how it improved the livelihood of farmers and helped SMEs to create new jobs, secured borders or reformed judiciaries. These countries underwent a widespread reform process and they underwent them with the help of the IPA funds.

On the other hand, the experience of implementing IPA projects in BiH is admittedly a story of many twists and awkward labyrinths and turns, which does leave the external observer shaking their head in order to understand why this country is often failing to take advantage of EU tax payers’ money, that we put to use to improve your country. 

On many occasions, my predecessors and I have seen a lack of local ownership for the projects and failure to take advantage of results. We have witnessed major problems coordinating assistance between authorities at different levels, we have seen stalled projects and we have even lost money that were devoted for BiH – most recently it was agriculture and rural development.

Of course I have to stress that this cannot and should not overshadow many success stories we already had in using the  EU tax payers money  – many of them you could find on our www.europa.ba website if you do not know them already. We have made a concerted effort in the past three years to combine all the efforts we have done since 1996 and we have done a quite impressive catalogue. No-one else has invested in Bosnia and Herzegovina like the EU. I do say though that the difficulties we have had leave a little bit of a bad taste and we have to get rid of it. 

There is a concrete “price tag” for IPA One (2007 – 2013) failures. It is a stunning 45 million Euros, the figure we all know by heart by now. Nearly half of the IPA 2013 programme was lost due to the inability of BiH to implement the judgment in the Sejdić–Finci case and to establish an effective coordination mechanism and to respond to the request we had for cooperation on implementing the programmes. When we have the money we need to implement it, we cannot keep it idle otherwise we send the money to other countries that can use it. We need to avoid that. But what is more important at the moment – is that Governments learn the lessons from mistakes and disagreements that were so often manifested in the IPA One area and do not carry them over to IPA 2.

I truly hope that these lessons will help “re-start” the way the political establishment looks at IPA and its benefits for citizens and public administration of this country. Last, but not least, because the funding from the IPA 2 package of 2014-2020 will be many millions shorter if BiH fails to meet two key conditions. Let me underline, those key conditions are:

•    first, the country has to develop an efficient EU coordination mechanism, both for managing assistance and political coordination. We cannot have more situations like we had with the IPA one – that we make an agreement with BiH and that you run away from it the day after. It cannot be, you are the only country that has ever done that.

•    secondly, to agree on the country-wide strategies in the key sectors like agriculture, energy,  transport and environment in order to allow that the investment we make supports businesses, economy and simply higher standard of living!
You owe that to citizens and you owe it to us. You have to remember we take the money from our tax payers and we give them to you. Therefore, you need to implement those two things. These two criteria have been known for quite some time, we have been stressing them again and again and let me say for the last time IPA 2 will not happen if you don’t do those two things.

Turning away from the political landscape. I have to say, that of course the EU will not leave the citizens of this country standing alone while the country suffers from the largest natural catastrophe of the last hundred years. The EU quickly mobilised its efforts and is finalising a reallocation of 42.24 million Euros from IPA One.

We are looking into allocating 15 million Euro from the 2014 programme so it will actually be a quite significant amount of money we will invest to alleviate the consequences of this horrible thing. The money will be made available using special fast-track decision-making from our side. So please be aware that the obstacles, if the money does not come, will be here. We will need a very high tempo of ratifying by BiH of the financing agreements that need to be put in place. Summertime is here, I hope this will not be the blockage, because as I said, the EU is ready with money, we now need the action by BiH.

As the local authorities, the EU and its partners (UN, World Bank) are finalising the Recovery Needs assessment report due on June 18th, it is clear that economic recovery will be even more dependent on the urgent economic and social reforms, which were delayed for years.

Your neighbours in Serbia were very clear. They also said: we might have been hit by floods but the reform agenda does not stop. The same thing will be the case here. You need to show the willingness to do the necessary economic  reform in order to justify the assistance coming in.  

These reforms should make your companies more competitive on the European markets by cutting red tape and providing for healthy business environment, by aligning your legislation and standards, like the ones on food safety, to the European ones.
We intend to support all of these reforms, including direct grants to local economic development needs (includes SMEs) with IPA2 funds, with regional multi-beneficiary funding and funds coming from International Financial Institutions. 

And this is not the end of it. In line with the overall increased focus on better economic governance that Commissioner Fuele announced in February it is our intention to broaden our agenda to also include the economics. The European Union, together with partners (IMF, WB, EBRD) will be later this year proposing a Compact (Agreement) for Growth.

To prepare for the Compact, at the end of May I hosted the first event of the Compact – `A Forum for Prosperity and Jobs`. Some 400 representatives, from all segments of the society, academia, political parties, think tanks and business community came. More importantly, besides the 400 people in the room we had  4,000 people interacting with us over the social media. Actually, this Forum for Prosperity and Jobs has a very broad base in the society. I would say the broadest base, the broadest discussion that has ever been conducted in BiH.

The Forum concluded with six specific priority areas for reforms before and beyond upcoming elections. I would like to share them with you, because these are also areas where EU and international financial institutions will focus their attention and financial resources over the coming years. The priority areas are:

1.    Tax burden on jobs (spur employment and improve competitiveness by reducing labour costs)

2.    Lowering barriers to jobs (revitalizing the process of collective bargaining and promoting inclusion of the young population in the workforce)

3.    Business climate (improve competitiveness by approving a results-based plan, aimed at improving indicator rankings to match the regional average)

4.    Enterprises (work on the reforms necessary to strengthen the insolvency framework, stimulate privatization and stimulate new business creation)

5.    Corruption (it kills initiative and investments in economy. Fighting corruption will require further adherence to the rule of law and deep public administration reform)

6.    Targeting of social protection (improve the targeting of social assistance through a set of measures that would make social protection policies more effective, efficient and equitable).

The Forum was the beginning of debate on economic reform, which will continue in the coming months. But it will be the basis for our assistance hence I welcome all the participation from the institutions from the parliamentarians and so on.
To conclude, I wish every success to those who will run again for the parliaments, I want to repeat myself once again — a country with such wealth of natural and human resources that BiH has should find the courage to reform itself and address the needs of the citizens. But more importantly for us also is to address the hurdles and targets that are out there to become a member of the EU.

It is very clear the offer of membership is there. It is very clear that our offer of assistance to get you through to membership is there. It is very clear that there are problems, for reasons we all understand and know and 20 years of history is the witness to that. The problems in implementing IPA should not be there and we need to overcome them.

And with those words I thank you very much once again for inviting me to address you this morning and thank you very much for the very good event because I think refocusing on how to use the IPA funds is exactly what we need here.

Thank you.