Carl Bildt, the European Union's High Representative, outlines the social, economic and political challenges ahead

Economic success will be the key to a peace that endures. But to go from the destroyed and militarised economies of today to the peaceful and prosperous economies we seek to build for tomorrow will be an enormous challenge both for all the peoples of Bosnia and for us in the international community who have promised to help and assist.
We all know the tragic economic situation of Bosnia today. The war has left some 1 million people dead. Between 80 and 90 per cent of the population are more or less dependent upon food aid. Industrial production is less than 5 per cent of pre-war levels. Agricultural production is more or less destroyed.
If peace is to last, this situation must be changed quickly. Soldiers that are now demobilised must be able to return to work. Agricultural production must restart, and dependence on outside food aid must be dramatically reduced. Infrastructure and industry must be repaired and rebuilt.
The economies of war must be transformed into the economies of peace. Working instead of fighting. Producing instead of receiving. Co-operation instead of confrontation. Rebuilding as part of the process of reconciliation.
As High Representative, I have been given the task of monitoring the implementation of the peace agreement, of co-ordinating the different civilian, political, humanitarian and economic sides that will determine whether peace will take hold after these terrible years of war. And for these to succeed, there must be a genuine will for genuine reconciliation between all of the parties to the war.
In this context, I would stress five points that must be taken into consideration.
First: time is a commodity in short supply.
When winter gives way to spring, and summer starts to come to the plains of Bosnia, it must be obvious to everyone throughout Bosnia that peace is beginning to change things for the better, that the international community is starting to help in a way that shows, and that further political progress is likely to bring further economic progress.
This is critically important. There must be early action in Bosnia, action that must be visible and obvious and important, to make clear that a start has been made, and that more will come as the political process proceeds towards the fulfilment of peace.
Second: our task is to unite, not to partition, Bosnia. This means that our efforts must be directed towards all of the country and all of its peoples according to the needs of different parts of the country. And that means that our efforts should also put a premium on co-operation and integration between the Federation and the Serb Republic to help in bringing together what must come together in the months and years to come.
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There are obvious problems that need to be tackled here. We must start a dialogue with the Serb Republic. Sarajevo will be of particular importance in this regard. The survival of Sarajevo as a united, multi-ethnic city in which Muslims, Serbs and Croats can feel equally secure and at home is of key importance for the future prospects of the whole of Bosnia as a multi-ethnic, pluralist and open society.
Third: there is a clear relationship between the economic help we are ready to give and the full respect for the peace agreement that we demand.
We must now operate under the clear assumption that the agreements that have been signed by all of the parties will also be fully implemented by all of the parties, and plan our activities accordingly. There might well be bumps on the road in coming months, but the direction in which everyone will be travelling should be clear. As we progress, the situation will have to be re-assessed. Political developments will be of particular importance in this regard. Let me mention the importance of progress towards elections, the full respect for human rights and the work of the International Criminal Tribunal for Former Yugoslavia.
The High Representative, following discussions with the Steering Board of the Peace Implementation Conference, must then be ready to give the political guidance that might be necessary. It should be clear that failure to fulfil the obligations undertaken will have its impact on the future course of international assistance.
Fourth: It is primarily the efforts of Bosnia itself that will determine economic developments in coming years.
No amount of international economic assistance can ever help if there are not the right conditions for economic activity to start, take hold and prosper. There is practically no limit to the damage that bad economic policies and wrong structural measures can do to an economy and to a society.
It is therefore of the utmost importance that the governments of the Federation, as well as the Serb republic, begin as soon as possible to develop the right macroeconomic framework for economic development, and that they are ready to do this as much as possible in close co-operation. The function of the High Representative, through the Joint Interim Commission, is ready to offer its help also in this respect.
There must be clear property rights. There must be sound money. There must be the freedom to trade and to start businesses. There must be the legal framework necessary for an open and prospering economy, and there must be the financial system ready and able to support it. There must be sound public finances, with revenues sufficient to cover all the expenditures that will be necessary.
If all of this is in place, the efforts of the international community can make a most important contribution to the economic development of Bosnia. But we must understand that if these conditions are not there, no amount of assistance can help. The example of Yugoslavia during the 1980s serves as a reminder of what might happen under these circumstances.
Fifth: No country can prosper without free and close economic relations with its neighbours and the outside world.

Free trade is the key to medium- and long-term economic developments. It is absolutely essential that there is free movement of goods, services, capital and manpower between the Federation and the Serb Republic provided for in the Constitution. But it is equally important that as many obstacles to free trade as possible are removed. This includes obstacles between Bosnia and all of its neighbours, as well as between Bosnia and the rest of Europe and the rest of the world.
And here the development of structural relationships between Bosnia on the one hand and the EU on the other will be of critical importance, since they will also serve to establish the regional context that will be so important for future economic developments.

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©Kensington Publications 1996