Shortly after the referendum on independence in the spring of 1992, war exploded in Bosnia- Herzegovina (BiH) and ended only when the Dayton Peace Accords were agreed to in November 1995 and formally signed in December 1995. Expected to bring peace and stability to the area, many critics today are declaring Dayton a failure. Yet, to conclude that the Dayton Peace Accords are a failure after less than five years of implementation is premature.

This complex agreement has addressed many of the major problems in BiH and there is evidence of progress today . For example, there is a level of dialog and cooperation that exceeds all expectations and refugee repatriation is finally increasing dramatically. Thus, rather than emphasize Dayton's weaknesses, it is important to recognize the successes of these Accords.

From a development point of view alone, BiH faces at least three separate tasks: rebuilding from a devastating war; creating a new country; and moving from a socialist to a market economy.

In an attempt to address all areas of concern, the Accords themselves are quite broad. They cover the BiH constitution, military aspects, the role of the international community and that of neighboring states, internal borders, elections, refugees and displaced persons, public corporations, and international policing.

The Accords are directly responsible for creating portions of the current political and economic structures in BiH. In order to understand the region, and recognize its recent progress, it is imperative that one understands the Accords and their components.

The Political and Economic Structures of BiH

Dayton created a minimal state consisting of two Entities: the Federation of BiH and the Serb Republic (RS). The state itself plays a limited role whereas the two Entities have charge over all powers and functions not explicitly granted to the higher level. The Entities are even allowed parallel relations with neighboring states, as long as those relations are consistent with BiH sovereignty.

Furthermore, the Federation of BiH and RS were both, under the terms of the Accords, permitted to have their own armies, police, fiscal systems (with the exception of customs policy), and social policies. Yet, Dayton also has a clause stating that Entities cannot interfere with the free movement of goods or people between the two regions.

The only joint institutions of the State included: a tripartite ruling Presidency, the Council of Ministers, a two-house Parliament and the Central Bank. For the six years following the signing of the Constitution, the Central Bank is to be run by a four person governing board, each with a six year term. The governor is to be appointed by the IMF and is not to be a citizen of BiH (the first Governor was French, and the current one is from New Zealand). The other three governors are: two from the Federation, who split one vote, and one from the RS. The Central Bank acts as a currency board, which means that it may not extend credit by creating money during the first six years, though Parliament may give it that authority after six years.

The Economy

Economically, BiH shows visible progress. In some ways, stability has been achieved, but at a low and ultimately unsustainable level. Inflation is low (including in the RS after adoption of the new currency), and GDP growth is strong.

Privatization, however, has been disappointing. Though the level of privatization differs in the two Entities, both Entity governments have actively worked against progress in privatization. The leaders do not want to give up control of the few money-making enterprises, such as the electric and oil industries. As a result, little or no progress has been made in this arena.

The Office of the High Representative

Some of the progress can be attributed to the Office of the High Representative , which was established by Annex 10 of Dayton to assist in implementing the Accords. Over time, the High Representative has been given progressively more authority and is empowered to impose laws or replace politicians who block implementation, though the High Representative does so only as a last resort.

Some successes that have made a major difference are the single BiH-wide license plates, which made travel and trade across the country possible, and the new currency introduced June 1998. Until 1998 BiH was using three separate currencies and payment systems. In the RS, the Yugoslav Dinar was used and the Payment Bureau was linked with Belgrade's. The National Bank of BiH introduced the Bosnian Dinar at the end of 1993. In the majority Croat area, the Croatian kuna was used. Now, a single currency is used by both Entities. Though the pictures differed and the name of the country at the top of the bill was written in Cyrillic or Latin letters (depending on where the bills were printed), the differences are almost imperceptible and the two types of bills are already well disbursed among the two Entities.

The High Representative also chose a flag, national anthem, and passports, when the three groups could not agree.

More controversially, the High Representative removed the RS president in 1999 and there has been parliamentary gridlock since then. This year a number of local officials in both Entities have been removed as well. The removal of these politicians, however, creates a problem in that removing people does not change the parties that appoint their replacements and the gridlock continues. The RS has yet to agree on a new president.


The implementation of Dayton in BiH has revealed some valuable lessons - lessons which can be, and have been, transferred to the situation in Kosovo. To briefly compare the setup in Kosovo, there are two major differences. In Bosnia, the International Community, through Dayton, created an outline and framework of issues, but it was the State and Entity governments which passed the actual legislation. This is different from the structure in Kosovo, where the international community is directly administering the region by both writing and putting into effect an entire set of laws, with only input from local experts.

UNMIK, the UN Interim Administration Mission in Kosovo, holds executive authority over all judicial, legislative and other civil activities in the territory. However, the Kosovo Transitional Council (set up in July 1999), consisting of the leaders of the major ethnic Albanian parties as well as representatives of the Serb community, has direct input into the decision making process. Among UNMIK's main tasks are: performing basic civilian administrative functions and maintaining civil law and order.

Another basic difference is that of status. Dayton set up an independent country, limited in scope, but internationally recognized. Kosovo is still recognized as an autonomous part of the Federal Republic of Yugoslavia and no decision has even been made on a date to make a decision on Kosovo's future status.


Some argue that Dayton would be more successful had we dictated the new system from the beginning. Yet, without some local commitment, it is not clear that such a method would have worked. Perhaps the slow combination of persuasion and experience is the only way to move a country that lacks consensus.

This is not to say that Dayton's efforts have been flawless. On the contrary. As mentioned previously, the lack of privatization in BiH is shameful. Unemployment hovers around 30-40%. Ethnic-based political parties continue to exert too much influence over policy. And there remains a continued absence of the rule of law.

Regardless, it is obvious that BiH is making progress and it is imperative that we continue to provide support. We must recognize that we will need to remain in BiH for the long- term. Our presence can continue to help improve the situation in BiH and ensure further progress, so long as we commit to staying the course

Jean Tesche spoke at an EES Noon Discussion on June 14, 2000