Ladies and Gentlemen,
Dear Friends,

This conference brings together many of us who have grappled for years with the Balkan dramas. I very much agree with the conference organisers that the 10th anniversary of the Dayton Agreement is a good occasion to reflect on what happened then - but also to draw some lessons for the future.

The wars in the former Yugoslavia scarred a generation of European political leaders, myself included. They reached their nadir in the conflict that raged for 4 years on the territory of Bosnia and Herzegovina. It was Bosnia that lay at the heart of these wars. And it was Bosnia that suffered most.

The price of nationalist extremism and of our collective failure to end the fighting, has been high: up to 150,000 deaths; 2 million refugees and displaced persons - nearly half the population - and a society torn apart.

During the summer of 1995, inside what we call the ’international community’ a consensus had firmed up that the madness had to stop. If necessary by coercive diplomacy.

And that is what happened, first when UNPROFOR and then NATO took action that Summer. And then at Dayton itself when an agreement was reached to end the war. It brought peace, yes. An end to the nightmare, yes. But a peace that came late and that was full of painful compromises.

I remember those days vividly. Spain had the Presidency of the EU in the second half of 1995. As Foreign Minister, my main goal was to end the bloodshed. And as NATO Secretary General, my main pre-occupation was to oversee the implementation of the military aspects of the Dayton/Paris Agreement.

Dayton confirmed Bosnia and Herzegovina’s external borders and created a framework in which post-war recovery could begin. Sceptics decried the Agreement’s weaknesses and loopholes. Doubters thought it would never work. Certainly, it contained provisions that could be - and were - exploited by the opponents of reform.

Nevertheless, the Agreement has stood the test of time. It ended the war and laid the foundation for peace. The NATO-led IFOR and SFOR worked in tandem with the Peace Implementation Council and the UN-mandated Office of High Representative.

Bosnia and Herzegovina ten years on

Immediately after Dayton, there were clear imperatives: to build the peace and get the country up and running. This was an enormous task.

The state barely existed. Its central institutions met only under international pressure and achieved little on their own. There was no common currency, no common licence plate, no common identity card, no flag and no national anthem.

When the guns fell silent, Bosnia and Herzegovina had three armies and over 400,000 men under arms. It had three secret services, spying on each other, on their own people, and on the international community.

There was no freedom of movement between the Republika Srpska and the Bosnian-Croat Federation - sometimes not even between neighbouring communities. Sixty-five percent of all houses were heavily damaged. The regular economy was shattered. Organised crime was gaining ground.

So our task was great. But we managed. We as a collective: the EU, the UN, the US and NATO. But above all, the Bosnian people themselves.

Bosnia and Herzegovina has made enormous progress since 1995. Peace and security have become entrenched, even if many pitfalls remain. The risk of a return to violence is low and international troop levels reflect this. IFOR deployed 60,000 troops in 1995. Today, EUFOR is doing its job with just over 6,000 troops.

Bosnia’s state institutions remain weak but they are getting on with the business of government.

There are only 16,000 soldiers left. At the end of this year, they will be brought under a single statelevel system of command and control. Bosnia and Herzegovina also has a single state-level secret service and a single "FBI", known as SIPA.

Over one million displaced persons and refugees have returned, a great number to places where they will be in the minority. This is a remarkable testimony to the courage and tenacity of this country’s people. There is now freedom of movement throughout the country.

At long last, the economic situation has started to improve. Bosnia and Herzegovina is becoming a single economic space and an easier place to invest, with a single taxation and customs system. It has the most stable currency in the region.

True, poverty and unemployment remain high. But the economy is growing around 5.6 percent - faster than any other economy in the Balkans. Inflation stands at 0.5 percent. Jobs are created through investment and business development, not only - as in the early years - through short and medium-term international aid. Foreign direct investment is up 25 percent since last year.

With the support of the EU and others, the judiciary is being strengthened and the country’s fragmented police forces are being reformed. Within five years, there will be a single police service, drawn on the basis of technical, not political, criteria.

Finally, there has been progress on co-operation with the Tribunal in The Hague. Today, only five of those indicted for crimes committed in Bosnia and Herzegovina are still at large. The Bosnian Serb authorities have transferred, or assisted Belgrade in the transfer, of 12 indicted people this year, compared to zero in the nine preceding years.

All this is proof of the progress of the past ten years. The reasons for this success have been threefold: unity of purpose; a long-term commitment; and a comprehensive approach to peace building that includes conditionality.

Let us be clear: European Union engagement has been central to this success. European aid financed the bulk of the reconstruction effort and continues to be the main source of institution and capacity building programmes today.

Our police mission has been working for the past three years to establish sustainable policing arrangements, under Bosnian ownership, and bringing them up to European standards.

EUFOR took over from NATO in a seamless transition one year ago. It has moved quickly to demonstrate its readiness to take on existing as well as new security challenges - including organised crime and the support networks of war criminals.

Paddy Ashdown, who is double-hatted as High Representative and EU Special Representative, has done a terrific job in giving political direction to these efforts, and in communicating the Union’s advice to the Bosnian authorities.

So European Union engagement on the ground has been vital. But in recent years, the prospect of eventual EU membership has been the overwhelming transformational force in Bosnian politics. That has been the decisive factor.

The European perspective as driver of essential reforms.

This week - today in fact - we are finally starting negotiations on a Stabilisation and Association Agreement.

We in Brussels tend to give bureaucratic and off-putting names to much of what we do. But the political significance of this decision is enormous. It represents a major step forward on Bosnia’s path towards its eventual destination: EU membership.

My message today is that Dayton achieved what it was meant to do. But now we are entering a new phase. It is time to move beyond the Dayton set-up.

The current system of government is unsustainable. To integrate itself progressively with the European Union, Bosnia and Herzegovina needs stronger state-institutions. To deliver the benefits that its citizens deserve, it needs to cut the cost of government. No state can win the loyalty of its citizens if it spends 70 percent of their taxes on government and only 30 percent on services.

It is also time to change the form of the international community’s engagement. The Peace Implementation Council has said it is ready to phase out the Bonn Powers and move to a mission led by an EU Special Representative, perhaps as early as the 2006 elections.

This is a step in the right direction. Bosnia and Herzegovina’s journey to Europe can only be led by responsible local forces, not by outside players.

While Bosnia is ready for the next phase, this does not mean that the EU or the international community should disengage. Bosnia and Herzegovina still needs concerted support, including that of EUFOR, the EU Police Mission, and non-EU actors.

Bosnia and Herzegovina is not yet a "normal" pre-accession country. It is a country recovering from a devastating war and that trauma still marks the body politic.

The leadership’s consensus on moving towards Europe is not yet matched by a similar consensus about the country’s constitutional future. We, the international community, must remain engaged - and we will.

Indeed, I am convinced that the coming years will require a renewed focus by the European Union on the Balkans. This includes Bosnia but also, of course, Kosovo, Serbia-Montenegro, FYROM and the rest of the Western Balkans.

This focus should leverage the prospect of EU accession, combining it with proactive political engagement.

It is good that all countries are taking the next step on their journey towards Europe. But the Western Balkans are far from finished business. More than other regions, this is a European responsibility. We cannot afford to fail.

Dear friends, let me end with some final thoughts. For one of the purposes of today’s conference is to draw some lessons. I would like to offer the following five:

First, a clear lesson from the Balkan dramas is that when the EU, the US and NATO are united and work together, we can achieve great results. That has been the story of the past ten years. The opposite, as the war itself illustrated all too clearly, is also true.

Linked to this is the point that we Europeans have to be willing and able to act ourselves to tackle security situations where we feel more strongly or differently than the US does.

I expect that European and US views will continue to coincide on almost everything - as is the case today. But you cannot be certain. And it is wise to take a side bet on the possibility that there may be circumstances where we want or need to do something on our own. That, amongst others, is a solid reason behind the ESDP.

Second, it is possible to end conflict through intervention and then build a state out of the ashes of war. Bosnia and Herzegovina proved both the nation-building sceptics and the isolationists wrong. This is important to bear in mind as we grapple with the aftermath of crises on our doorstep - or indeed when new ones appear on the horizon.

But, and this is the third conclusion, peace building is a long-term and expensive affair. We need to be ready for the long haul and flexible as to the nature of our engagement. IFOR initially started with a one-year mandate. In the beginning, the international community’s reconstruction plans for Bosnia spanned a five-year period. We now know that assistance will be needed for many more years to come.

Fourth, a close relationship between the military and civilians aspects of peace implementation is essential. There can be no simple sequencing of "military first and civilians after." Both are needed from day one - and both depend on one another from day one.

Rupert Smith’s book, The Utility of Force, makes a number of very pertinent points about the need for a coherent political strategy if crisis-management operations are work. I recommend it to everyone.

Fifth and finally, there is a lesson for European foreign policy. There is no point denying that the war in Bosnia and Herzegovina was a dismal low for Europe. But look where we are today. We are united around a single, comprehensive strategy for the region. The Western Balkans are now one of the success stories in EU foreign policy. And it is recognised as such around the world.

Indeed, this points to one of Europe’s key strengths. After every setback, we re-group, learn the lessons and emerge stronger.

Of course, there is no room for complacency. Europe bears a special responsibility for the Balkans - for its past and its future. Enormous challenges remain, not least in Kosovo. But we should draw strength and inspiration from what we have accomplished, as we prepare for the next part of the journey in Bosnia and other parts of the region.

Thank you very much.

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