960414

Aid donors attempt

to push Karadzic

from power

BRUSSELS: Aid donors, led by the United States, raised the pressure on Bosnian Serb hardliners at the weekend pledging more than $1.2 billion for Bosnia but warning little would go to the Serbs while their war leaders remained.

Sanctions such as withholding economic aid may be applied to any faction breaking the terms of the Dayton peace deal, which includes the banning from office and handing over of indicted war criminals such as Bosnian Serb leader Radovan Karadzic and his army chief Ratko Mladic.

"We all agree that it is imperative that they not remain in power," Deputy U.S. Treasury Secretary Lawrence Summers told reporters at the end of the 50-nation aid conference on Bosnia.

"The big losers at this conference are the Bosnian Serb people," he said. "People will see that the course their leaders are following will have very adverse consequences."

U.S. diplomats said that to date none of Washington's reconstruction money had gone to the Serb entity, Republika Srpska, but Summers said that could easily change if the Bosnian Serbs simply handed over Karadzic and Mladic.

The international community's high representative in Bosnia, Carl Bildt warned of more sanctions if the two were allowed to remain in power much longer.

The threat is far from hollow. A banking source said about 70 percent of the money pledged at the weekend was grant aid which tends to be bilateral or nation-to-project cash.

Contrary to early protestations that most of the money - targeted to reach a total of $5.1 billion over the next four years - would be run through the international institutions in order to ensure impartiality, each donor country could pick the reconstruction projects it wants to contribute to.

That means countries can cherry-pick projects they consider will produce the best dividends for them.

But it also allows them to limit the geographic scope of any project they become involved in.

Diplomats said that this meant the bulk of the reconstruction money would go to the Moslem-Croat Federation - at least until the Bosnian Serbs had begun to rehabilitate themselves internationally by dumping their hardliners.

Bosnian Prime Minister Hasan Muratovic assured the donors' meeting his government would be even-handed in distributing aid money around the country.

But diplomats said senior government officials had sworn that the special committee set up to administer aid distribution - which has two seats for the Bosnian Serbs that have never been occupied - would never approve any loans for the Serb entity as long as Karadzic and Mladic remained at large.

Most of the money from the international institutions such as the World Bank, whose aid pledges totalled about one-third of the total promised at the weekend, has to be offered as loans to governments, albeit in some cases at concessional rates of zero percent interest over 40 years.

Therefore the final distribution of this money will be at the mercy of people who have seen their people slaughtered and their countries carved up by the shifting alliances of the war and who might not qualify as impartial assessors.

With little international sympathy for the Bosnian Serbs - even $10 million was promised to Bosnia as a whole by Serbia proper - and most of the promised aid being either bilateral or having to flow through the Bosnian government, the international leverage on Republika Srpska to toe the line is substantial.-Reuter