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Highlights

Pursuant to a congressional request, GAO reviewed the impact of organized crime and public sector corruption on the efforts of the international community to rebuild Bosnia and meet the benchmarks for the withdrawal of North Atlantic Treaty Organization (NATO) forces, focusing on: (1) how organized crime and public sector corruption might affect the successful implementation of the General Framework Agreement for Peace in Bosnia and Herzegovina (Dayton Agreement) in Bosnia; (2) whether the international community's anticorruption efforts have improved Bosnia's law enforcement and judicial system and reduced corruption; and (3) whether international assistance resources are being safeguarded and whether such assistance is being used by Bosnia in place of domestic revenues lost due to crime and corruption.

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Recommendations

Matter for Congressional Consideration

Matter Status Comments
Congress may wish to consider conditioning future U.S assistance to Bosnia on an explicit requirement that State certify that the Bosnian governments have taken concrete and measurable steps to implement anticorruption efforts and significantly improve their ability to control smuggling and tax evasion.
Closed - Implemented
The Committee on International Relations, U.S. House of Representatives, does not plan to introduce the actions suggested in the matter for congressional consideration into legislation.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of State The Secretary of State should take the lead in conducting a reassessment of the U.S strategy for assisting Bosnia to achieve the objective of establishing a democratic government and a market economy. The Department of State should evaluate unilateral and multilateral options for modifying the type and amount of assistance provided (including a review of the appropriateness of providing general budget support), place strict conditions on future assistance, and possibly suspend assistance until Bosnian political leaders independently demonstrate their determination to fight organized crime and corruption.
Closed - Not Implemented
The Department State stated in its comments on the draft report, the 31 U.S.C. 720 report to Congress, and in testimony before the House International Relations Committee on July 19, 2000, that a reassessment of its strategy in Bosnia is not required since: (1) a reassessment was completed in 1998; (2) the strategy developed in 1998 is still valid; and (3) its strategy is continuously reevaluated and modified to meet changing needs. In addition, it said that it does place strict conditions on U.S. assistance and encourages other donors to do the same. Further, the Department believes conditioning certain types of assistance is counterproductive.
Department of State The Secretary of State should take the lead in conducting a reassessment of the U.S strategy for assisting Bosnia to achieve the objective of establishing a democratic government and a market economy. The Department of State should consider whether direct budgetary support is an appropriate form of assistance in the current environment in Bosnia.
Closed - Not Implemented
The Department State stated in its comments on the draft report, the 31 U.S.C. 720 report to Congress, and in testimony before the House International Relations Committee on July 19, 2000, that it had discontinued the use of direct budgetary support. It added however, that it believed that budgetary support, with strict conditions, was an appropriate form of support for international financial institutions to provide.
Department of State The Secretary of State should take the lead in conducting a reassessment of the U.S strategy for assisting Bosnia to achieve the objective of establishing a democratic government and a market economy. The Department of State should determine how it can support those political leaders in Bosnia whose goals for addressing the problem of crime and corruption are consistent with the goals of the U.S. and the international community.
Closed - Not Implemented
The Department State stated in its comments on the draft report, the 31 USC 720 report to Congress, and in testimony before the House International Relations Committee on July 19, 2000 that a reassessment of its strategy in Bosnia is not required since: (1) a reassessment was completed in 1998; (2) the strategy developed in 1998 is still valid; and (3) its strategy is continuously reevaluated and modified to meet changing needs. It added that it is working with political leaders that support the implementation of the Dayton Peace Agreement and is supporting the Office of the High Representative's efforts to make all Bosnian leaders comply with the provisions of the Dayton Agreement.

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