Mr President, Ladies and Gentlemen,

I first spoke to you a year ago as Bosnia and Herzegovina was facing the challenges of transition – transition by the Bosnia and Herzegovina’s authorities towards ownership; towards exercising the rights and responsibilities of a democracy; and towards becoming a fully functioning European State.

The international community was also facing the challenges of transition: handing over the reins to the government of Bosnia and Herzegovina; not doing their job for them, but standing close by to assist, advise and guide where needed.

Ownership is a difficult learning process as recent experience has shown. An election year that saw the resurgence of nationalist rhetoric has proved this. The ongoing prominence of discussions about events of the recent past – about who is to blame and who are the victims – has created a hostile political environment. And finally the long, difficult process of government formation took many months. The result is that political reforms have now been blocked in Bosnia and Herzegovina for over a year.

That does not mean that the ownership path is wrong – but it is a warning we should not ignore. A warning that transition cannot be taken for granted; that Bosnia and Herzegovina’s authorities must increase efforts to live up to their responsibilities; and that serious, long-term international engagement must continue.

Last June, the Peace Implementation Council decided in principle to close the Office of the High Representative in June of this year. This decision was made in the context of positive developments and solid progress in Bosnia and Herzegovina towards joining the European Union and NATO.

But nationalist and backward-looking rhetoric did not recede after the elections last autumn. Political tensions only increased through continued confrontational rhetoric by the leaders in both Republika Srpska and the Federation. And tensions have continued to rise this year following reactions to the judgement of the International Court of Justice, which some politicians have sought to exploit.

As my concerns for the political stability of Bosnia and Herzegovina grew, I discussed the situation with members of the PIC Steering Board. After in-depth consultations with both capitals and with Bosnia and Herzegovina’s authorities, I recommended to the Peace Implementation Council to extend the Office of the High Representative based on the situation in Bosnia and Herzegovina and the region.

The Peace Implementation Council agreed with the aim of closing by 30 June 2008, with reviews in October 2007 and February 2008.

 The continuation of the Office of the High Representative is intended to assist Bosnia and Herzegovina make those final but significant steps from peace implementation to full Euro-Atlantic integration as soon as possible.

Progress can come soon. Bosnia and Herzegovina has a unique opportunity to move an important step closer to Europe, if its leaders can step up to the task.

The European Union has approved technical negotiations with Bosnia and Herzegovina for a Stabilisation and Association Agreement. The document is ready to be initialled – but political conditions must first be met.

Concrete progress is urgently needed on police reform and full cooperation with the International Criminal Tribunal for the former Yugoslavia. European Commissioner Olli Rehn reminded Bosnia and Herzegovina’s leaders again last week of the urgent need to overcome their differences and show unity for the country to progress towards the European Union.

Party leaders came close to a compromise solution on two occasions. But agreement was prevented by a lack of political will; by an unwillingness to make compromises for the sake of the country as a whole’ and by a lack of vision to make the changes that will serve citizens better and bring them closer to Europe.

On the International Criminal Tribunal for the former Yugoslavia, coordination between relevant-law enforcement agencies in Bosnia and Herzegovina has improved. However, fugitives, in particular Ratko Mladic and Radovan Karadzic remain at large.

The International Court of Justice judgment confirmed the essential obligation for the Republic of Serbia to cooperate fully with the International Criminal Tribunal for the former Yugoslavia.

Let me be clear: Serbia has not delivered on this obligation. Serbia was found guilty of not preventing genocide. Serbia should be active in supporting the International Criminal Tribunal to carry out its mandate to prosecute those responsible for this genocide.

This is more than a moral and ethical obligation. It has significant implications for the stability of Bosnia and Herzegovina and the region.

Against this background and in my capacity as High Representative, I wrote to President Boris Tadic of Serbia last month. I welcomed his positive statements regarding cooperation with the International Criminal Tribunal for the former Yugoslavia and asked him to inform me of measures being taken. However, President Tadic did not write in response.

I would ask you the UN Security Council to remind all parties to the General Framework Agreement for Peace to comply with their obligation to cooperate with the International Criminal Tribunal for the former Yugoslavia.

I also ask you to note that no results have been forthcoming since the International Court of Justice, another organ of the United Nations, issued its judgement over two months ago.

I believe that the Security Council needs to consider seriously how Serbia can be brought to implement the ICJ judgment. This is a matter of stability in the region and the Security Council must live up to its responsibilities in this regard.

Radical rhetoric has poisoned the political environment and the issue of Srebrenica has returned to the headlines. There has been ruthless political manipulation of the issue by irresponsible politicians motivated by their own ambitions. This only distracts from the real issues that require concrete action.

I have appointed an envoy, former US Ambassador Clifford Bond, to play a coordinating role with local actors on the ground, political leaders and the international community. We have set up a high-level coordination mechanism between the major international players and the local authorities. Key recommendations are being developed to improve the situation in real terms.

Bosnia and Herzegovina’s authorities must carry out their own responsibilities and ensure concrete measures are taken to improve conditions in the area: This is an issue of justice and law-enforcement institutions doing their work. It is also about upholding returnees’ rights. And it is about economic livelihoods and decent social standards being restored to the region.

It is not, however, about overturning the constitutional and territorial order of the country. A unilateral change of the Dayton Peace Agreement would pose grave risks to peace and stability. The Security Council should consider making this point very clear.

The ICJ verdict acknowledged that genocide occurred in Srebrenica. The United Nations in particular has special responsibilities for the people of Srebrenica. I would like to take this opportunity to urge you to establish a UN Day of Srebrenica to mark the tragic events that occurred there in 1995, and to pay respect to the victims of genocide and their families.

And I would like to take this opportunity to urge the leaders of Bosnia and Herzegovina to act responsibly and constructively to improve the situation on the ground in the Srebrenica area.

They can do this, as events last weekend showed. Constructive cooperation between the relevant authorities at all levels of government, with the international community on hand to facilitate, ensured that the families of victims were able to bury their loved ones in peace and dignity in Bratunac.

 Such constructive cooperation is needed on a wider level across the country. It is high time that Bosnia and Herzegovina’s leaders return to discussing concrete action in the interest of all its citizens across the whole range of political, social and economic issues.

Economic reforms are not completed on paper or in practice. Necessary laws for local and foreign investment are not yet in place.

More effective efforts are needed to implement reforms of public administration and public broadcasting.

And education reform lacks serious engagement by Bosnia and Herzegovina’s authorities, supported by the international community.  This lies at the heart of the country’s regeneration and prospects for the future.

I would like to remind you of the simple words that stand at the entrance to Kabul Museum: “A nation is alive, if its culture is alive.” These words were recently praised by a director from the United Nations’ Institute for Training and Research who recommended that: “The far-reaching implications of these simple words should become the mantra of all aspiring nation-builders.”

And I believe that Bosnia and Herzegovina can come alive. I know that there is great potential waiting to be tapped.

Despite the current blockages, there is a difference between where Bosnia and Herzegovina stood when I took over on 31 January 2006 and where it stands today. There have been steps forward.

Bosnia and Herzegovina held elections last October, which were in line with international democratic standards. Though government formation was a long and frustrating process, it was carried out by Bosnia and Herzegovina’s politicians themselves without international intervention. Such painful learning experiences are part of the important lessons of ownership.

Bosnia and Herzegovina joined NATO’s Partnership-for-Peace programme last December. This was in recognition of key achievements in the field of defence reform and marks a significant step forward on the path to Euro-Atlantic integration.

In regional development, Bosnia and Herzegovina has the opportunity to play a central role. Last December, Bosnia and Herzegovina joined other countries in the region to sign the CEFTA agreement to create a free trade area in Southeastern Europe. This economic and political achievement should promote economic development and contribute to stability.

Just last week, the Regional Cooperation Council, until now known as the Stability Pact, decided to locate its seat in Sarajevo, placing Bosnia and Herzegovina at the heart of regional integration.

There has also been movement on other long-standing issues.

I would, in particular, like to thank the UN Security Council for the constructive role it has played in issuing a presidential letter in April on the issue of police officers denied certification by the United Nations’ International Police Task Force.

To reach such a solution, my staff worked together with Bosnia and Herzegovina’s institutions for several years. I would also like to comment the Council of Europe, the EU Police Mission, the Department of Peacekeeping Operations and the UK Presidency of the UN Security Council.

I am confident that Bosnia and Herzegovina’s authorities will abide by their international obligations and carry out the provision of the UN Security Council Presidential letter.

It is my understanding that the UN Security Council expects the decision taken by Bosnia and Herzegovina’s government in December to establish a national review commission to be annulled. The Office of the High Representative stands ready to assist with implementation.

Finally, I would like to emphasise one significant reform that remains without progress, one of the most difficult, yet one of the most important and one that Bosnia and Herzegovina’s leaders urgently need to start: constitutional reform. It will not be solved quickly.

But it is my strong conviction that this reform is critical to ensuring Bosnia and Herzegovina serves its citizens better and becomes an effective, functioning state capable of full membership in Euro-Atlantic institutions.

I believe that Bosnia and Herzegovina needs to establish a constitutional reform process within its own institutions that would provide the political parties, parliament and wider civil society with the forum for both substantive debate and technical preparations of the complex issues involved.

Of course, Bosnia and Herzegovina’s leaders need to take full ownership of any process to reform their own constitution. And Europe and the United States must stand together as partners with Bosnia and Herzegovina’s authorities to advise on standards and share experience and expertise with them.

I hope that party leaders will agree to establish such a process. I intend to start political talks and work to set this process in motion during my remaining time in office.

In conclusion, the road to Europe must be unblocked. Police reform must be agreed so that the Stabilisation and Association Agreement can be signed and implemented. The remaining war-crimes indictees must be urgently transferred to the Hague Tribunal. Constitutional reform must be set on track. Transition must be completed.

It is time for Bosnia and Herzegovina’s leaders to step up to the plate.

Of course, the international community must not waver from its commitment to assist. It must continue actively its policy of advising and guiding Bosnia and Herzegovina’s authorities to the point where the OHR and the Bonn Powers are no longer needed.

And Europe, above all, must understand the real responsibility that comes with supporting Bosnia and Herzegovina on its journey towards the European Union. Moreover, Europe must appreciate and respond to the complex and unique demands of assisting European integration in Bosnia and Herzegovina.

There remain many challenges in this critical period when Bosnia and Herzegovina tries to stand fully on its own two feet. The international community should not look away or get impatient at this point, even though its role is changing. The job is not yet done. There will be further hurdles and obstacles.

But Bosnia and Herzegovina’s progress towards Euro-Atlantic integration will be determined by its own achievements and those alone. It will not be determined by outside factors.

There are many challenges for the country’s newly elected government. There will be many challenges also for my successor, Ambassador Miroslav Lajcak of Slovakia, who was appointed by the PIC Steering Board last week and to whom I will hand over on 2 July.

I would like to thank the Secretary General and the Security Council for the support I have received during my mandate. I have been engaged in Bosnia and Herzegovina for 15 years in various roles and it has been a particular honour to serve there as High Representative and EU Special Representative. I shall continue to assist in whatever way I can.

I intend to stay close to Bosnia and Herzegovina, a country I have come to know and love. I will watch closely and share its journey as it travels on a challenging but promising path to a brighter future.