Corruption impeding Bosnia peace plan

WASHINGTON, Jul 8, 2000 -- (Reuters) Widespread crime and corruption are thwarting implementation of the Dayton peace accord in Bosnia and the White House should consider suspending U.S. aid until steps are taken to curb it, a Congressional watchdog agency said on Friday,

A report by the General Accounting Office (GAO), Congress' investigative arm, said that unless Bosnian officials made a concerted effort to curb crime and corruption, complete withdrawal of NATO-led forces would not be possible.

"Crime and corruption continue to pervade Bosnia's political, judicial and economic systems," the GAO report concluded. "U.S. and international officials further stated that this situation exists largely because Bosnian leaders from all ethnic groups have not demonstrated the political will to reform."

The GAO recommended that the Clinton administration reassess assistance to Bosnia and consider suspending aid if local authorities fail to take steps to curb crime and corruption and control smuggling and tax evasion.

In a response to the critical GAO report, the State Department said the U.S. government has made tackling corruption and fraud a main priority in Bosnia and that it saw no need for a comprehensive reassessment of priorities.

The department also said that while some Bosnian government officials oppose reform "more moderate officials have cooperated with the international community and others have been pressured into cooperation."

House International Relations Committee Chairman Benjamin Gilman, a New York Republican who, along with ranking committee Democrat Representative Sam Gejdenson of Connecticut, requested the GAO investigation, said the report has implications for international peacekeeping efforts in Kosovo as well.

"We need to make fighting crime and corruption a top priority in the Balkans," Gilman said in a statement. "Until we do so, our other objectives cannot be fulfilled."

The U.S.-mediated Dayton, Ohio, peace accord was signed in December 1995, ending nearly four years of fighting during the breakup of Yugoslavia. Since then, the international community, including the World Bank, the European Union and the United States, committed more than $4 billion to finance reconstruction and help political and economic reform in Bosnia. President Clinton has asked Congress to provide more than $100 million for assistance to Bosnia in 2001.

The GAO report said the U.S. and international donors have established procedures for safeguarding aid to Bosnia and the agency saw no evidence that assistance was being lost to large-scale fraud or corruption. But it said international aid may be replacing Bosnian revenues lost to crime and corruption.

The report noted that the United States has yet to recover about $900,000 in U.S. Embassy operating funds and loan payments deposited in a now bankrupt bank that was involved in corruption.

It also said $340,000 in World Bank funds were lost to a fraudulent procurement scheme. The report also expressed concern that most of some $407 million committed by international donors to provide general budget support to Bosnian governments were not controlled or audited.

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