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US toughens aid for boot-strapping Bosnia

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United States diplomats are toughening their approach to the slow pace of postwar recovery in Bosnia-Herzegovina ahead of a crucial aid donors' meeting in Madrid.

Three years after the Dayton agreement ended the Bosnian war, 32,000 foreign troops enforce peace in the country, while the Office of the High Representative, an internationally mandated quasi-governmental body with a staff of more than 500, oversees postwar reconstruction and supervises domestic politics. The country has made only fitful political and economic progress, however, and corruption is widespread.

A four-year, $5.1 billion international aid effort coordinated by the World Bank has failed to jump-start the economy. The program will have run its course by the end of next year, by which time the Bosnian economy is supposed to be ready to go it alone.

Selling off state-backed firms, though, has been stymied by a lack of public accountability, particularly among banks, and elements of the prewar, centrally planned socialist economy remain in place.

High Representative Carlos Westendorp, the Western official who effectively runs Bosnia, has begun to make more use of the powers granted him by the Dayton accord. Mr. Westendorp has introduced a new currency, new flag, and new vehicle license plates, in each case ignoring reservations from national leaders and winning approval from the population at large.

But efforts to convert economic clout into political leverage have been hamstrung by the remarkably diverse sourcing of international aid. "Projects have a life of their own. Freezing the money is like stopping a train or a supertanker," says Colin Soloway, a political analyst at the Sarajevo office of the International Crisis Group, a policy think tank.

The very presence of so many international operatives in Bosnia is cited as a hindrance to real economic reform and an inducement to corruption. By one estimate, the 10,000 to 15,000 international personnel assigned to Sarajevo are pumping $35 million monthly into the city's economy.

The multibillion-dollar international aid program has been a cash bonanza. "Everyone was hanging out plenty of loot without checking where it was going," Mr. Soloway notes. "It's like leaving a bag of money in the street. Most people won't grab the bag and run, but a certain percentage will."

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