The Principal Deputy High Representative,
Donald Hays, will speak at a Stability Pact conference in Brussels
tomorrow

Ambassador Hays will note the positive institutional developments that have
taken place in BiH during 2004, including setting up SIPA and the ITA, reaching
agreement on resolving the domestic debts issue (which has until now scared away
the investors who are needed in order to create jobs), and the establishment
earlier this year of a new BiH bank giro-clearing system, a major step forward
in consolidating the already vibrant banking sector.

The trade figures are also improving. For 16 of the 23 months from October
2002 to August 2004, export growth exceeded import growth, on a year-on-year
basis.  In the 12 months from September 2003 to August 2004, the value of
BiH exports was14.8 percent higher than the previous 12 months, while the value
of imports only increased by 6 percent during the same period.

Nevertheless, there is still a major trade imbalance. At the current rate of
export and import growth, exports would only cover half of the import bill by
2039.

Ambassador Hays will point out that “in the short term, as Free Trade
Agreements come into effect, relative weaknesses in key sectors of the BiH
economy – agriculture is the obvious one – have been exposed, with significant
negative economic impact.”

The Stability Pact must therefore intensify its engagement in regional crime
fighting, regional customs coordination, regional infrastructure building, and
regional energy markets so that tangible improvements in citizens lives can be
secured sooner rather than later and so that people associate the Stability Pact
with long term gain as well as – in some cases – short-term pain.

Ambassador Hays will also call on the Stability Pact to articulate a vision
of

Southeast Europe ten years from now. In other parts of
the world this has worked as an engine for reform and development. “In

Southeast Asia politicians have constantly found that
they had to “keep up” with a popular aspiration fanned by upbeat publicity. It’s
not a case of appearance and reality being disconnected, but a case of reality
working hard to catch up with appearance.”

The full text of the speech will be posted on OHR’s website tomorrow.

Electricity Sector Reform Taking BiH into
Europe

On Sunday the BiH economy will receive a huge boost when the electricity
system is resynchronized, after being divided for more than a decade. This will
make it easier for the Elektroprivreda’s to sell electricity to one another and
to customers elsewhere in
Europe. It will also integrate
the whole of BiH in the continental power system and will fulfill a major
requirement in the EU integration process. There will be a press event at the
Joint Electricity Coordination Centre (ZEKC) in

Sarajevo
on Sunday, and we will be
giving out more details on that in the course of the week.

Reform of the electricity sector currently being implemented in BiH follows
the EU Electricity Directive and aims to ensure that the requirements for
establishing the regional market are met. It is therefore crucial for BiH’s EU
integration prospects that successful and timely implementation of all aspects
of this reform is achieved.

The Entity Governments agreed a year ago to implement recommendations
on restructuring the electricity sector on economic and technical criteria. This
includes a series of mergers of electricity plants belonging to the three EPs so
that they can improve services and prices for BiH consumers. Representatives of
the three EPs have been consulted throughout the planning process.

The Principal Deputy High Representative, Donald Hays, has been involved in
lobbying the relevant government ministers to implement the restructuring plan,
as they have committed to doing, sooner rather than later so that BiH citizens
can get the benefits sooner rather than later and so that BiH can fulfill a
basic requirement of the European integration process.