On 6 November 2007, the 2007 Progress Report was formally handed over to Mr. Nikola Spiric, President of the BiH Council of Ministers by Mr. Jan Truszczynski, Deputy Director of DG Enlargement and Ambassador Dimitris Kourkoulas, Head of Delegation of the European Commission to BiH.

The Progress Report is currently available in English language and will soon be available in translation.

The key findings of the Report are:

Negotiations on a Stabilisation and Association Agreement (SAA) with Bosnia and Herzegovina began in 2005. Discussions on the technical content of the foreseen Agreement were completed in December 2006. The conclusion of the SAA, however, depends on Bosnia and Herzegovina meeting four conditions: achievement of police reform in accordance with the EU’s three principles[1], full co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY), public broadcasting reform, and public administration reform.

Political criteria

As regards the political criteria, Bosnia and Herzegovina’s progress has slowed down. Some progress has been made in the area of public administration, but significant further efforts are needed. Co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY) has improved and is now at a generally satisfactory level. The country participates actively in regional co-operation and has agreed to the regional free trade agreement (CEFTA).

However, Bosnia and Herzegovina’s political leaders failed achieve police reform. Lack of progress on this and other important issues is seriously delaying the conclusion of the SAA, as well as reforms in general. Full co-operation with the ICTY remains necessary.

Economic criteria

Bosnia and Herzegovina has made little further progress towards establishing a functioning market economy. The persistence of very high unemployment remains a major cause of concern. Major reforms are needed to enable it to cope over the long term with competitive pressure and market forces within the Union.

Economic growth remained high and accelerated. Inflation has been reduced. FDI increased significantly in 2007 and helped financing the external deficit. Price competitiveness was to a large extent preserved.

However, weak domestic consensus on the fundamentals of economic policy led to a slow-down of reforms both at entity and other levels of government. Significant structural rigidities hamper the functioning of the labour market. The public sector remains large.

European Standards

Bosnia and Herzegovina has made limited progress in aligning its legislation and policies with European standards. In areas such as, competition, transport, energy, education, visa management and asylum, some progress has been made.

In other areas, however, such as movement of persons, social policies and employment, little has been achieved.

The handover was followed by a Press Conference. Details of this event will be available here tomorrow.