Balkan breakthrough?

There has been little cause for optimism in the course of the past decade in the Balkans, but signs of positive change are finally becoming apparent. Refugee returns in Bosnia and Herzegovina (Bosnia) have been accelerating this year. Croatia, long shunned by the international community, has been transforming itself since the death of the former president, Franjo Tudjman, last December. The international community is, via the Stability Pact, pursuing a regional approach to tackle the problems of southeastern Europe as a whole. Nevertheless, the scale of the task ahead remains daunting and many years of international engagement are in prospect.

Groundbreaking electoral victories for centre-left reformers in Croatia at the beginning of the year have, understandably, fuelled optimistic speculation about a chain reaction of democratic change extending else-where in the former Yugoslavia, into Bosnia and even into Serbia. Despite some gains for moderates in Bosnias spring municipal elections, however, nationalist parties continue to dominate that countrys politics. Despite predictions that he was about to fall from power in the wake of his fourth military defeat in Kosovo last year, Yugoslav President Slobodan Milosevic has been stubbornly rebuilding and reinforcing his authority in Serbia. Even in Croatia itself, the challenges facing the new government are enormous as it struggles to overcome the Tudjman legacy.

The new authorities in Zagreb charted a radically different course from that of their predecessors literally from the moment they came into office. Just minutes after the former ruling party, the Croatian Democratic Union (Hrvatska demokratska zajednica or HDZ), held its final government session in February, the tourism minister was handcuffed and taken to prison, indicted for transferring government funds to his wifes construction firms bank account. Since then, with the Croatian press revealing details of scandals and implicating key figures in the ancien regime on virtually a daily basis, another 20 or so individuals have to date been arrested for a range of economic misdemeanours.

If the task facing the new Croatian government was limited to holding members of the former ruling party accountable for abuses of power committed during the past decade, it would already be difficult. But it goes much deeper. The covert operations, corruption and nepotism which characterised Tudjmans Croatia are the legacy of almost half a century of communist rule, the best part of a decade of war or media-generated war hysteria, and several years of largely self-imposed international isolation.

The new Croatian government is having to make the transition from authoritarian rule to democracy and to switch from a largely state- or party-controlled economy to the free market, at a time of high unem-ployment and declining living standards. The task is further complicated by war-related economic turmoil and the need to balance the interests of the countrys Croat majority and Serb minority, a principle that Zagreb has committed itself to in both word and deed. Structural reform is the order of the day. Gradually, the new Croatian government will have to restructure the countrys key institutions, including the military, media and secret services, as well as the way the economy is run, taking on deep vested interests every step of the way.

Although the years ahead are likely to be tough in Croatia, the signs are, nevertheless, good. Tudjman's death removed the principal obstacle to reform. Civil society - that is, a vibrant, independant press and dynamic non-governmental sector - emerged as a powerful force during the 1990s despite official contempt, and the transition to date has been remarkably smooth. Policy reversals concerning Bosnia, cooperation with the International War Crimes Tribunal in The Hague and a thoughtful, diplomatic offensive have generated International good will, providing prospects of much needed economic and expert assistance to ease the transition. Critically, Croatia's destiny is very much in Croatian hands, a situation which is not necessarily the case in the former Yugoslav republics immediately to the south.

As in Croatia, Bosnia has to come to terms with the transition from authoritarian to democratic government, and the move from the command economy to the free market. But in Bosnia, this already daunting undertaking is complicated by the legacy of almost four years of continuous war, the existence of rival armed forces and a delicate, three way ethnic balance. Almost five years since its war came to an end, Bosnia remains on an international life support machine, dependant on foreign aid and internally divided. The task of rebuilding a functioning society has proved so complex that Bosnians have handed much responsability to the international community.

Sustained conflict turns society on its head and allows misfits to prosper. In Bosnia, many individuals, who are unlikely to have got far in peacetime, seized the opportunities offered by war and rose to positions of power for which they were singularly ill-qualified. Individuals, who could have helped rebuild their shattered society, either emigrated or found themselves marginalised. Many able and well-educated Bosnians who remained in their own country are today working as interpreters and drivers for the international community. Meanwhile, by manipulating the nomenklatura system inherited from the communist era (the system by which the Party controls appointments), whipping up nationalist fears and hatred at critical moments to maintain a high state of tension and in the absence of any mechanism for bringing them to book, hard-line nationalist politicians were able to slow down the peace process during the first 18 months or so.

Reconstruction began in earnest in Bosnia when, a year and a half into the peace process, the international community stepped up its efforts to stand up to the domestic authorities, arrest indicted war criminals, dismiss local officials and take over and then restructure the local media. However, building the conditions for a self-sustaining peace process that locals can identify with is proving extremely slow and painstaking.

Whereas Croatian reformers know exactly what they are up against in attempting to restructure their own society, international envoys in Bosnia have, during the past five years, been on the steepest of learning curves to adapt to local circumstances to bring in the kind of reforms, which might put the country back on an even keel. As international expertise has grown, the scale of the undertaking has begun to become apparent. It is far greater than anybody could have realised in 1995 at the time of the Dayton peace talks, ending the Bosnian war. Almost every issue the international community has to tackle from banking reform to providing security for returning ethnic minorities and building democratic structures in a multiethnic state is uncharted territory where improvisation, experimentation and empirical analysis offer the best way forward.

A recent evaluation of international efforts in Bosnia by the Berlin-based think tank the European Stability Initiative (ESI) highlights several areas in which, despite massive vested interests, the international community has been successful in introducing reforms and building functioning local institutions. These include the creation of a single Bosnian Central Bank, currency board and new Bosnian currency; media reform and the creation of a domestic regulator in the form of the Independent Media Commission; and tax and customs reform as a result of the work of the European Unions Customs and Fiscal Assistance Office to Bosnia and Herzegovina (CAFAO). But even policies that fail to achieve their goals can be turned into success, as long as the reasons for failure are learned and taken on board.

As the peace process has evolved, international officials have been obliged to take on an ever more intrusive role in Bosnian life. Illegal structures are being dismantled, including the sprawling secret services. Mechanisms to build transparency and accountability and to fight corruption are being introduced. At the May 2000 meeting of the Peace Implementation Council the body of states and international organisations overseeing the Bosnian peace process international officials decided to establish new institutions to build a level economic playing field, particularly in the telecommunications and energy sectors. These lucrative markets are currently divided into three ethnically based monopolies. By reforming them, international officials hope to starve the nationalist parties, which have systematically worked against the peace process, of the cash to fund their covert operations.

A key lesson of the peace process to date, illustrated in the ESI research, has been that money alone does not resolve problems. Some international aid, especially in the immediate aftermath of the war, has inadvertently added to the difficulty of reconstruction by reinforcing power structures fundamentally hostile to the peace process. Local elites have, for example, on occasions been able to turn reconstruction projects into their own lines of patronage. Rebuilding shattered infrastructure may generate spectacular and rapid physical results, but it does not address the underlying problems of Bosnian society. Indeed, roads and bridges that were rebuilt with international money in 1996 have since fallen into disrepair because the society remains too dysfunctional to maintain them.

In the wake of what Kosovos senior UN administrator, Bernard Kouchner, described as forty years of communism, ten years of apartheid, and a year of ethnic cleansing, the issues in Kosovo are as new and as complex as those in Bosnia. The peace process is barely a year old, so, despite being able to draw on some lessons of the Bosnian experience, international officials there are still at the beginning of the learning curve. The question of Kosovos final status and the nature of its future relationship with Serbia and other Albanian communities in the Balkans is inevitably the subject of much speculation. In the meantime, officials on the ground are exploring which policies generate results, which do not, and how best to build functioning local institutions to balance the interests of majority and minority populations. As in Bosnia, there are no easy solutions and the process is inevitably proving slow and painstaking.

The cloud hanging over both the Bosnian and Kosovo peace processes and the entire Balkans is, of course, Milosevics Serbia. Indeed, as long as the largest successor state of the former Yugoslavia remains an international pariah, it is difficult to see how self-sustaining settlements can be reached anywhere or how regional initiatives such as the Stability Pact can yield comprehensive solutions. Worse still, Milosevic, now an indicted war criminal, shows no desire to leave office.

Some analysts have portrayed Milosevic as a genius, forever able to outmanoeuvre the international community. He is actually a career apparatchik who, like other unscrupulous dictators, has managed to hide behind and abuse the legal concepts of sovereignty and non-interference in the affairs of independent states to justify all manner of repression within Yugoslavias borders. In the past, he has also relied on divisions within the international community to avoid paying the price for his actions. The result has been the appearance of short-term successes and the prospect of long-term disaster.

Since staging a bloodless coup in 1987 at the eighth plenum of the Serbian League of Communists, at which he ousted the post-Titoist government for being soft on Kosovo, he has never looked back. He placed the republics media on a war footing and set out to extend his authority across the rest of the former Yugoslavia. As Serbia fought and lost successive wars in Slovenia, Croatia, Bosnia and Kosovo, Serbian society progressively lost touch with reality. Eight years of economic sanctions, more than a decade of media distortion and successive purges have all taken their toll.

During 13 years in power, Milosevic has transformed a country with proud traditions and some democratic credentials into a surreal and warped caricature of a state. The problems of Serbian society, therefore, are likely to be deeper rooted. Indeed, some of the most respected Serbian analysts, such as Sonja Biserko of the Serbian Helsinki Committee, believe that Serbia today requires a deep and comprehensive restructuring, which goes far beyond anything seen to date in the other successor states to the former Yugoslavia.

Policy-makers attempting to devise strategies to help promote democratic change in Serbia are, however, to a large extent operating in a vacuum. As a result of international sanctions, the Kosovo war and Milosevics indictment for war crimes, only a handful of Westerners remain in Serbia. Understanding of how Serbian society really functions is at an all-time low. One day, possibly soon, Milosevic must fall from power and, whether or not comprehensive restructur-ing is required, fundamental reforms will be critical to recreating a stable and functioning society. Large amounts of international aid have already been earmarked in Western capitals for the reconstruction of Serbia, but the task itself will inevitably take a very long time.