Interview with Richard Sklar

Oslobodenje-Svijet, Sarajevo-Ljubljana, Bosnia-Hercegovina, 12/19/96

In USA, he manages a construction company, O'Brien-Kreitzberg, which has more than 700 employees and has worked on many important infrastructure projects. Among these projects are international airports in New York, railways in Los Angeles, San Jose and Dallas... For seven years, Sklar headed a managerial team which worked on the improvement of quality of life in San Francisco, where he currently lives with wife Barbara and their four children. Since 1982, he has been working in the private sector.

Your function in Bosnia-Hercegovina has been questioned several times by the officials in the government of Bosnia-Hercegovina. Can you explain the reasons for that? Could you tell us more about your task here?

In June 1996 the President of the USA was dissatisfied with the progress of the economic reconstruction in Bosnia-Hercegovina. That's why I came here; I am working under the auspices of the USA government and in co-operation with the whole international community; we are trying to speed up the economic reconstruction as much as possible. After the Dayton peace agreement, president Clinton expressed concern that peace may simply become lack of war; he believed that the peace should also mean the return to normal living. And normal living starts when people find employment, an apartment and start feeling well and safe. Therefore, I was sent here to speed up the efforts on normalization of everyday life. I work in co-operation with the USA government, which provides approximately 60 percent of the total foreign aid, but also with the rest of the international community; our goal is to speed up reconstruction of airports, roads, railways, buildings, in order to provide conditions for the development of market economy and private initiative in this region, and also to provide all other kinds of assistance.

Could you list for us the main American aid projects and give us your opinion about their implementation?

USA currently funds and runs three large projects. The first one is the reconstruction of housing. This program encompasses the reconstruction of 2,500 houses and apartments and its value is $23 million. I believe that we will complete the reconstruction of the planned number of dwellings before the start of the next winter. The second program provides financing for the realization of various small and large scale infrastructure reconstruction projects in Bosnia-Hercegovina. The value of this program is between $40 and $50 million, and it involves repair of sewage and water works, reconstruction of electrical plants and distribution network, reconstruction of bridges, roads, schools... We will set up all projects, or a large part of them, by March or April, 1997. The largest project in this group is the work on the reconstruction of installations in the thermal power plant Kakanj and Central Bosnian coal mines, which provide coal for the Kakanj power plant; this project is worth $23 million. First, we worked on the turbo generator number 6, which has been repaired and started working a few weeks ago. Director of the Bosnian electrical utility company, Mr. Bicakcic was present at the reception which marked the beginning of the work of the new generator. At the moment we are working on generator number 5. The work on this power plant will continue throughout 1997. The second and equally important part of the project is the re-opening of the central Bosnian coal mines, especially the strip mine which provides coal for the power plant. This mine was heavily damaged during the war and requires a lot of work before it can start with production. All this was an example of good co-operation; we've just received a letter from the Japanese embassy which states that the Japanese government will provide $10 million for additional work within the scope of the same project. Within the same assistance program, we've realized numerous smaller projects. For example, in the so-called American zone of responsibility in the north of Bosnia, we've realized smaller projects worth about $10,000, in co-operation with mayors and local authorities. These projects were identified by the local authorities and population as the most urgently needed. The third part of the American program of assistance to Bosnia-Hercegovina is the program which provides loans to small and medium size companies. These loans go up to DEM1 million [about $625,000] and are provided to those companies which expect to be privatized and whose owners or management can demonstrate the ability to use the financial aid effectively and immediately restart production and provide jobs for the locals. During 1997 we will continue work on reconstruction of infrastructure and continue the loan program but will probably pull out of the reconstruction of housing.

You listed the programs which are currently going on, or have already been more or less successfully completed. What about those programs which were never started? Why did that happen?

There are a lot of problems. For example, I am very disappointed with the implementation of the personnel mine removal project. In this case I lay all blame on the government of Bosnia-Hercegovina. The mines were placed by the Bosnians and they kill Bosnians. The mines were not placed by Americans, nor Germans, nor French, but by Bosnians. According to the Dayton agreement, the mines should be removed by the soldiers of the three armies in Bosnia-Hercegovina. On the other hand we said that we were willing to establish schools in which local soldiers would learn how to safely defuse and remove mines from the ground. We were prepared to provide tools, ambulance cars and trucks. But we were adamant that the mines must be removed by Bosnian soldiers. The response from the government of Bosnia-Hercegovina was: "no, you must pay us to remove the mines". In practice that would mean paying a tax of 97 percent of salaries of the people who would work on the removal of mines. We couldn't accept that, and until today I haven't received a satisfactory response from the Bosnian government as far as the demining is concerned. I find that extremely irresponsible.

Regarding problems with smaller projects, French government has provided $3.1 million for the flight control equipment which was supposed to be installed at the Sarajevo airport. Until we applied very strong pressure on the Bosnian government, it failed to express the will to carry out a small engineering task, worth DEM2,000 [about $1,500], and install the equipment at the airport. That left a very bad impression on us.

Seventy percent of drinking water for Sarajevo today leaks from the pipes laid under the city streets. That is not a result of the war. That can only be a consequence of the errors in the main water supply system. International community has nothing to do there. That work doesn't require special technology, it simply requires work. The Bosnian government will have to order the start of work in order to prevent water shortages. I am also somewhat disappointed by the attitude of the government regarding the call on the population to help with the clearing up of ruins. All citizens, all former soldiers who are now sitting in cafes, cinemas and walking around with their girlfriends, must help with the reconstruction. The international community is rebuilding apartments, but the volunteers should help, especially to the elderly who have nowhere to live. The Bosnian government should start the privatization as soon as possible. It must provide opportunities for the private sector. Bosnia must introduce market economy. Bosnia-Hercegovina will become a part of Europe and the modern world when it implements privatization and introduces market economy. Communism and state property do not function anywhere else in the world. They have failed, but here, we still haven't seen the laws which would open the door to the privatization.

What do you think about the freedom of press and electronic media?

If Bosnia-Hercegovina wants to become a democratic country, it will have to have free access to the media. It must have radio and television which will educate the population. One shouldn't be afraid of truth. Of course, newspapers must also be entertaining, they cannot provide only news.(...)

What is the role of the assistance which the local media receive from the international community?

The international community can provide some funding for the technology and maybe some training for the journalists, but the media and their content should be regulated by the local authorities. There should be no influence from abroad. Media should be accessible to everyone, and supported by the government. The process of applying for a broadcasting licence and frequency should not be complicated.

Do you know how much money has so far been provided to the local media?

Most likely somewhere between $7 and $10 millions were invested in one TV station, TVIN, an open station which co-ordinates program of five local stations. However, all that was followed by a lot of difficulties and requires much more work.

Our government officials have been saying recently that electricity shortages arise because of the problems in the distribution network, that the production of the electricity if sufficient for our needs. Can you explain the problems?

Until now, we have only worked on generators and main supply lines; the reconstruction of the local electricity distribution network is in our program for the next year. We didn't realize before the outset of this winter how necessary this would be, but we couldn't do more. At the moment the distribution network is not strong enough. But the real problem is the lack of gas. If there was more gas, it wouldn't be necessary to use electric heating; consequently, the distribution system wouldn't be overloaded. This is yet another mistake of the Bosnian government. They didn't negotiate with the Russians in time to secure uninterrupted supply of gas. The Bosnian government owes a lot of money to the Russians; despite everything, the Russians showed a lot of understanding and continued with the deliveries of gas. The problem with the Russians and money should have been addressed in July and August, not in December. the Bosnian government failed to take necessary steps in time to solve this problem.

Various government representatives claim that we shouldn't only rely on natural gas for our heating needs?

Gas is a natural source of heat. You can choose to use gas, coal, old newspapers, twigs, whatever you like, but gas is a natural source of energy and should be accessible to all this winter.

But it isn't.

No, it isn't, and all of us are working on that. Negotiations with the Russians are taking place at this very moment...

You've clashed with prime minister Hasan Muratovic several times since your arrival to Bosnia-Hercegovina. Why?

Personally, I have nothing against Mr. Muratovic. I believe that my suggestions are useful for the people of Bosnia- Hercegovina, but Muratovic has a different opinion. I think that he could be much more aggressive with respect to the government and make sure that our decisions are implemented faster. That is the main difference between the two of us.

About two months ago, you publicly challenged Mr. Muratovic to a public debate in the presence of journalists. What made you decide to take that step? How come the debate never took place?

I cannot tell you why the debate never took place; I am still prepared to take part in it, at any time. I suggested that because he accused me of lying. After that, I said that I was prepared to face him in front of TV cameras, so that we can publicly discuss all outstanding issues. If that happened and it turned out that I was right and he wrong, then everyone would know about it. That's why I suggested that we face the cameras, domestic, foreign, pro-government and opposition media and discuss all problems. That would be a democratic step. However, you must ask him why it never took place. I'm still prepared to do it.

Can you give us a general assessment of the reconstruction efforts in Bosnia-Hercegovina during the last year?

Well, in 1996 we made some progress, but we still have a long way to go. 1996 was the year of reconstruction based on humanitarian assistance and realization of minimal conditions for comfortable living. Next year, we'll have to diversify our activities. We'll have to try to restart the production of furniture, clothing and textile; several larger factories will have to re-open. We'll have to provide employment opportunities. If we don't, we'll end up in serious troubles; the international community will not provide assistance forever. If the assistance goes on for another two years, that would be a success. Because of that, Bosnia-Hercegovina must begin to provide for itself. At this moment, American experts are working in Bosnian furniture factories, trying to prepare them for new production with some financial, technical and marketing assistance. We haven't made a lot of progress; a lot more needs to be done. Next year, we will have to produce much more electricity. At this time next year, rebuilt infrastructure should provide opportunities to start new projects, not only to run restaurants, cafes and retail shops; service sector is an important part of economy but we need to restart production in order to provide jobs.

However, above all, these programs should be run by managers, not government officials. Managers should be given employment based on merit and not because they are related to someone important or are members of a certain party. We cannot allow that the privatization here follows the model in the two neighboring countries, Serbia and Croatia, where the leading companies became the property of the members of the two ruling parties. Ownership should be accessible to all. Taxes must be significantly reduced. Bosnia-Hercegovina has the highest taxation rate in Europe. Regarding job creation, smaller taxes mean more jobs, not the other way round.

Do you know what happened with the money collected through taxation?

No, do you? No one can know what happens with taxes, since there is no open budget. International Monetary Fund made a whole list of things the government should do in order to influence changes in the economy. However, the implementation is taking too much time.

This year, international assistance to Bosnia-Hercegovina was supposed to reach $1.8 billion. However, significantly less was spent. Why?

$1.8 billion was promised, and $1.6 billion delivered. Between $300 and $500 hundred million was spent and the remainder will be spent next year. Also, more financial aid will be provided next year. Situation is slowly moving in a positive direction, a lot more needs to be done and that money will be spent. However, we should bear in mind that the international community has spent much more than that. Another $2 billion were spent on the refugees in the Western Europe, some $5 billion on the IFOR troops... All together, some $10 billion were spent in Bosnia-Hercegovina during last year. That is $4,000 per every Bosnian, which is more than was invested in any other country during 1996.

Translated on 2/12/97