Bosnia officials 'turn blind eye to crime'

UNITED NATIONS (Reuters) -- Bosnia is losing $500 million year in revenues because of corruption that probably involves high-level government officials, the Netherlands' U.N. envoy has told the U.N. Security Council.

Dutch ambassador Peter van Walsum said in a Security Council debate on Tuesday on the former Yugoslav republic: "It has been estimated that every year $500 million of domestic revenue is lost due to smuggling, particularly of cigarettes.

"Without this loss of revenue, there would be no budget deficit. Smuggling on such a huge scale implies that high level government officials must be involved."

Van Walsum noted that the budget deficit kept the government from meeting World Bank and International Monetary Fund requirements and could jeopardise further disbursements.

Representatives from the IMF and the World Bank told Bosnian officials earlier this month that the government needed urgently to revise its 2000 budget to avoid a deficit of nearly $93 million.

The IMF cited smuggling and tax evasion and said about $230 million had been lost due to cigarette smuggling alone.

In July, the General Accounting Office, the U.S. Congress' investigative arm, suggested Washington consider suspending aid until local officials curbed crime and corruption, which it said continued "to pervade Bosnia's political, judicial and economic systems."

Since a December 1995 peace accord, international financial institutions, the European Union and the United States have committed more than $4 billion for Bosnian reconstruction.

The 1995 peace agreement in Dayton, Ohio, ended nearly four years of fighting, after which Bosnia was effectively split into a Moslem-Croat federation and the Bosnian Serb republic, both under international supervision.

President Clinton has asked Congress to provide more than $100 million for assistance to Bosnia in 2001.

At the Tuesday meeting, several Security Council members also noted the upsurge in returning refugees over the past six months. But they also called for more efforts to build common state institutions and reform the judiciary.

Bernard Miyet, the undersecretary-general for peacekeeping, said some 19,500 people had returned to areas dominated by an opposing ethnic group as compared with 2,000 people in the same period a year earlier.

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