Interview with Hasan Muratovic'

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Hasan Muratovic', former premier of the Republic of Bosnia- Herzegovina and today minister of foreign trade in the Council of Ministers (government) of Bosnia-Herzegovina, in the context of a discussion about the new and highly controversial draft law on customs, explains the demoralizing conditions under which the present government has to operate. Revealing mistakes made by the Bosnjak leadership and describing the blackmail tactics of their 'partners', he concludes: 'This is a wretched situation: the day is near when we shall have to tender our resignations.' Interview conducted by Mirsad Sinanovic' and published in Liljan on 9 April 1997.

At a recent meeting of the Council of Ministers at which co-premier Haris Silajdzic was not present, Minister, a draft law on customs was approved that envisages customs revenue belonging to the 'entities'. This seems to mean that the state budget is left without any direct source of income. Do you have any comment on this?

The law was approved under the normal procedure. We had a dispute, of course, about the article relating to the problem you raise of customs revenue. In one paragraph it is stated that customs revenue belongs to the entities. A second variant was: customs revenue belongs to the state of Bosnia- Herzegovina.

How did these two variants come to be formulated?

They came from this ministry, under what might be called the normal procedure.

The experts prepared a law for us in which there were these two variants. In the drafting commission, the Serbs and the Croats by and large wanted the definition according to which customs revenue belongs to the entities, the Bosnjaks the one according to which it belongs to the state of Bosnia- Herzegovina. So we agreed the law - apart from the article under which parallel relations are envisaged with Yugoslavia and with Croatia - and then accepted arbitration by the Office of the High Representative, as provided for in such circumstances by the Dayton Accords. In his interpretation, the High Representative claimed that, according to Dayton and the Constitution, customs revenue belongs to the entities.

So what are the powers of the parliamentary Assembly, in relation to financing the state?

You're right, we're talking not just about customs, but about how to finance the state. The Dayton Agreement deals with this question very badly. The state is supposed to be financed through contributions from the Federation and from Republika Srpska, in a ratio of two to one. But there is also an article saying that the parliamentary Assembly can determine other sources of financing: i.e. it can decide to raise money directly, implying that customs revenue can go to the state budget rather than to the entities. If you want to find the source of the confusion, it lies in the whole conception of Dayton and relates to the economic existence of Bosnia-Herzegovina. That's where a really big blunder was made.

The Dayton Agreement, unless I'm mistaken, didn't define how the army, police, etc. were to be paid for.

First, under Dayton the state doesn't have its own army or police, it doesn't have its own customs, and it doesn't have much else either. Even Steiner say: 'You'll raise 600 million Deutschmarks in customs revenue for the Federation budget, while for the state budget the draft proposal envisages 40 million dollars. These are the absurdities of Dayton.

So what will be the fate of this customs law?

We'll put it before parliament, because it's simply a draft law, and parliament can decide that customs revenues go to the state budget. But personally I'm in favour of abolishing customs duty altogether.

Wouldn't that just mean an extra bonus for blackmarketeers, and not just the ones from 'Herzeg-Bosna'?

Yes, precisely because we don't control the frontiers. They're held by 'Republika Srpska' and 'Herzeg-Bosna'. This would be a counter-measure. Then Serbia and Croatia would have to establish frontiers, because goods would start flowing in the opposite direction - out of Bosnia towards them - and without any customs.

But how would you protect domestic production?

We'd use the tax system to provide means for protecting production and for the budget.

How would you assess the work of the Council of Ministers, broadly speaking?

I wouldn't rate it very highly, to be honest. The key thing is results, and they're modest: a few resolutions, and three laws forwarded to the Assembly. On the other side, we have the non-existence of ministries as organizations, and the absence of any law governing the Council of Ministers - which means the latter is not organized internally and has no apparatus. The whole way in which it reaches agreements is in acute crisis. Far more topics are removed from its agenda than are decided upon. Everything is subject to endless negotiation, starting from who will be struck off to introduce a topic. To be frank, the result of our work is that there exists neither a single institution of the state of Bosnia- Herzegovina, nor a single law that the parliamentary Assembly may adopt.

Thanks to which, our people still remain without the 1.4 thousand million dollars pledged by donors?

The key problem is that the Serbs want RS to be in a single monetary, customs, payments and general economic system with FR Yugoslavia, and not with Bosnia-Herzegovina. That's the essence. So they haven't yet taken the decision to join either the economic system or the institutions of B-H. And until the international community makes this a precondition for them to be given credits or aid, it won't happen. The international community made the holding of a donors' conference conditional upon our passing five laws. The normal thing would be for us not to stop working until those laws are ready. However, we meet once a week and do nothing but waste time. Recently we got four million dollars to convert the Assembly building, but the Council of Ministers had to decide who would sign the contract. The Council will do this only in two months' time - or perhaps never. We've also got three millions for the miners, as a gift from Poland, but once again we have to agree among ourselves. So we can't even accept a gift without everybody agreeing in the Council of Ministers. The normal thing would be for me, as a minister, to go on signing what the finance minister in the old B-H government used to sign. But the Council of Ministers is called upon to authorize someone for every signature - and then the calculations begin.

Actual production in Republika Srpska is eight percent of what it was before the war, average pay is 40 Deutschmarks a month, living standards can't be compared even with ours in the Federation. How come the Serbs aren't cooperative, when they have even greater need of money from the international community?

The Serbs try to be cooperative in order to get aid, but without moving away from the policy decided on by Pale. If the international community puts pressure on them, they resort to some trick, perhaps letting a decision apparently be taken that they won't implement. They say: 'OK, we agree to everything except...', but that 'except' is the essential thing. For instance, they said: 'OK, we'll have a Central Bank, but lets also have a branch in 'Republika Srpska' that will be called the RS central bank.' The representatives of the international community discuss tricks of this sort for days on end, because they aren't used to such procedures. They may think that some agreement has been reached, but the Serbs then drag things out for months, while disguising their refusal in various ways.

Is Momcilo Krajisnik's letter to the representatives of the international community of this kind too?

Exactly. He says the Serbs must be rewarded for cooperating, because they are in favour of a Central Bank. But this would be according to the formula proposed by RS, with their own bank empowered to hold reserves and exchange money.

According to the Dayton Agreement, the new B-H currency is to be purchasable only for Deutschmarks. So the sole legal tender should be this new currency. Just as in Germany you can pay only in marks, so in B-H you should be able to pay only in the new B-H currency. However, the Serbs and Croats want it to be possible to make payments in other currencies as well, i.e. in dinars, kune and other foreign currencies. What would this mean? It would mean they wouldn't have to exchange dinars or kune for Deutschmarks and then buy the new B-H currency; while we in Sarajevo would get paid by them in dinars and kune - especially import-export firms, which is absurd. Croatian kune would enter B-H, Deutschmarks bought for kune in B-H could be transferred to Croatia. But our currency would be purchasable only for marks, so the firms would have to sell kune to Croatia and return marks to Bosnia (where the Deutschmark is the reserve currency) in order to buy the new B-H currency. This is where the problems begin, because 'Republika Srpska' and 'Herceg-Bosna' are hanging on to their own currencies.

If I remember right, before the Council of Ministers was formed you said you'd accept the post of minister for foreign trade if you thought you'd be able to achieve adequate results in that position. But aren't you saying there are no such results?

This is a wretched situation. Just imagine working for days and achieving nothing. I did say exactly that: I'll work in the Council of Ministers only if I can achieve something. So I'm very close to a decision: either the Council of Ministers produces results, i.e. serves the people, or I'll tender my resignation - in fact we all will.

The RS representatives say of the Council of Ministers that it does not preserve the continuity of the state of B-H, while Carl Bildt has called the old state government headed by you a 'technical government' and has removed its authority in contacts with the international community.

We have made mistakes too. We shouldn't have held the elections. We had state legitimacy. All the organs of the state were recognized by all institutions from all countries. That's why we could work normally. The National Bank of B- H, our ministries of B-H, everything functioned. We signed all international agreements, developed relations with the World Bank. But after the elections the High Representative of the international community proclaimed my government 'technical', and excluded us from international affairs.

The Federation government has adopted a budget. We have learnt that the Bosnian Croats with positions of authority in the Federation made its adoption conditional on the Bosnjaks accepting an ethnic division of donor funds, rather than a division according to needs as provided for in the conclusions of the London Conference.

It's no secret that inside the Federation there has been an insistence on ethnic division One large donor told me last week: 'We have had complaints about the donations not being shared out fairly.'

Which donor?

I'd rather not say, because the donor in question is a very valuable one. I told him we don't distribute donations on an ethnic basis, but according to needs: i.e. donations are used for projects. If the donation is for a pipeline, then it's for a pipeline wherever it may be; if it's for a power station, then it's for a power station that serves everybody. I told him that when funds are given for Sarajevo, neither Bosnjaks nor Croats nor Serbs say that the funds are given to them. Apart from that, 30,000 Serbs live in Sarajevo, after Banjaluka it's the largest Serb city in B- H, and it's also the largest Croat city in B-H. That's the truth. But when the donor funds are being distributed, the Croats ask: 'How much is going to the Croats?' And they don't count the mixed cantons; in other words, they count only funds going to municipalities where just Croats live. Now things have become still more complicated, and they're asking the Council of Ministers for some kind of balance.

Will the mini donors' conference be held in April?

I don't think Mr Bildt is calling that meeting a conference. He has devised some way of ensuring funds for the most elementary humanitarian needs.

It will no doubt be an opportunity for us to meet our obligations in respect of the foreign debt?

Funds will be coming in for the foreign debt, and that's an obligation we must honour.

Is the international community sticking to its earlier position, of being unwilling to put pressure on the people who aren't cooperating, but instead penalizing the cooperative ones?

They're still putting conditions on the people of Bosnia-Herzegovina. However, you have to understand them. Why should they solve our problems, which we have to solve ourselves, because we've signed the agreements. Why should the international community forgive us, if we won't set up the Central Bank as we promised to do at Dayton? This is a big blunder on the part of the international community, but it can't change its mind now. There are two solutions. Either it can leave, or it can say to the Serbs: 'We won't negotiate with you over projects, we won't negotiate over credits or over any money whatsoever, until you pass those five laws and until you set up the Central Bank.' However, just this week something unexpected has happened. At the World Bank in Washington negotiations are taking place exclusively over projects for 'Republika Srpska', to the tune of 17 million US dollars. The Serbs are being rewarded for destroying everything agreed upon. Cooperation in implementing the Dayton Accords is no longer a condition.