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                     Office of the Press Secretary
                     (Sarajevo, Bosnia-Herzegovina)
For Immediate Release                                      July 30, 1999
                           PRESS BRIEFING BY

                             Zetra Stadium
                      Sarajevo, Bosnia-Herzegovina

2:55 P.M. (L)

MR. LOCKHART: Welcome to this afternoon's addition of the White House briefing. Joining us today will be the President's National Security Advisor Sandy Berger, who will give us a readout of this morning's events, including the meeting and some of the other bilats that the President had. And Gene Sperling, the NEC Director, will be here to take any questions you have on the package that the President brought here.

MR. BERGER: I will do this in the sequence of the meetings that the President has had, starting when we arrived, with the tripartite presidency of Bosnia. Mr. Jelavic, who is Croatian who is now in the chair; Mr. Izetbegovic, and Mr. Radisic who is the Serb. I think this was a very striking meeting for the President and for me and for others who were here two years ago. The atmosphere was entirely different. The relationship among the three was entirely different both in terms of the way in which they related to one another, but also in what they particularly had to say.

Mr. Jelavic began. He said how significant this summit was for Bosnia, and how meaningful it was for the Bosnian people that the international community placed its trust in the Bosnians to put on this summit. He said they used to divide time "Before Dayton" and "After Dayton", and now maybe they'll divide time "Before the Summit" and "After the Summit." It's had that kind of transforming effect.

They talked about how the joint institutions are functioning, particularly the joint presidency, in a much more satisfactory way. For example, in the context of refugee returns, which continue to be one of the more difficult challenges here in Bosnia -- although the last six months the numbers have gone up -- the three members of the joint presidency are going to travel around Bosnia, to Mostar and other cities, and try to work on this problem together.

They indicated that they were taking an initiative to reduce military expenditures in Bosnia, so that less of a percentage of their gross domestic product was going into the military. And this is something they were obviously quite proud of, and they'll be able to, obviously, spend that money on economic and social programs. And they indicated they hoped this would be a model for the region. In fact, it did come up in the meeting later.

Izetbegovic, who, of course, is the longest surviving member of that trio, I must say seemed in very good form. Mr. Izetbegovic is a rather dour individual by nature, and he seemed quite happy and pleased with the way things were going. He said there was a new atmosphere in the region, particularly in the wake of the defeat of Milosevic in Kosovo, a positive spirit of cooperation and he thanked the President very much for contributing to that.

Radisic, again, the Serb member of the presidency, described this as an historical turning point for the region. The last time we met with the three Presidents, Karadzic was the Serb President, a real hard-line, anti-Dayton, recalcitrant. This is an entirely different kind of leader. He said, I don't want Bosnia-Herzegovina any longer to be a barrel of gun powder, that they were going to radically be undertaking economic reforms so we can be compatible with Europe. He also cited a new, more tolerant climate, people respect each other more.

The President, after listening to the three of them, noted how different this had been than the meeting they had had two years ago, which had been kind of contentious and dark. He talked about the need now to focus on economic development, creating jobs so that people can continue to look to the future, instead of looking toward the past. The President talked about putting aside both the imagined and even the legitimate grievances that each group has had, and creating the magnets that pull groups together, and said to Mr. Radisic how impressed, in particular, he had been with what he said, and how different that had been than the past.

We then met with the prime ministers of the two entities. As you know, Bosnia is two separate entities, the Federation, which is essentially the Croat-Bosniac portion of the country, where Prime Minister Bucakcic is the top official, almost essentially like the governor; and the Republic Srpska, in which Prime Minister Dodic is the Prime Minister.

Dodic, as you may know, has been a reform figure, a pro-Dayton leader of Republic Srpska, who has fought Milosevic's efforts within Srpska to have him ousted. He said that he had great gratitude for what the President had done. He thought the political situation in the country now is quite good; the economic situation was still weak. He said the relationship between Srpska and Belgrade is diminished greatly, that he had worked very hard to keep the situation calm in Srpska during the Kosovo fighting, and that he told Milosevic that the Republic of Srpska can take responsibility for its own affairs, thank you very much.

So all in all, I think these meetings were really quite interesting and hopeful, in the sense of really both from -- let's say this -- the leaders of Bosnia-Herzegovina have not, over the past several years, been reluctant to express their grievances to us about each other and about the international community. That was totally different. These meetings were about the future and about what they hope to accomplish. And I was quite encouraged by that.

Now, going up to the Stability Pact meeting, let me sort of give you snippets of this, because obviously one speaker after another does not unfold in a coherent narrative. The meeting was opened by President Ahtisaari of Finland, who, as you know, also right now has the presidency of the EU. He said that the patchwork of solutions to the problems of this region was insufficient, that the goal was closer integration of this region with the rest of Europe, and it was an undertaking that everybody had to engage in together.

He noted Sarajevo as being an appropriate place to have this meeting -- the history of this century that you're familiar with, the first world war beginning here over conflict in 1914. We're now ending the century here with 60-some-odd leaders gathered together to talk about how to build a united, peaceful Europe.

The -- I guess he's called the coordinator of the Bosnia Stability plan -- Bodo Hombach, spoke. I think maybe you were all -- at least the pool was still in at this point. He said the fact that this meeting came so quickly, was organized so quickly, itself sent a very strong political message of commitment. I think we felt particularly pleased by this, because it was the President who proposed this meeting when he was meeting with Chancellor Schroeder, and doing it very quickly for precisely that reason.

But I thought a particularly good quote from Ahtisaari -- going back one step -- he said, this is the starting gun for a marathon, and he described this as --

Hombach struck a theme that many, if not most, of the leaders spoke to, and that is the democratization of Serbia. Many of the leaders said there's a conspicuous absence here of a representative of Serbia; we would like the former Yugoslavia to be part of the Stability Pact, but it cannot be part of the Stability Pact so long as it's led by Milosevic and so long as it does not embrace the principles that go to the heart of the Stability Pact.

Then there were a series of presentations by leaders from the region -- Constantinescu from Romania; Stoyanov from Bulgaria; Djukanovic from Macedonia -- in which they outlined their vision, their plans, what they plan to do with respect to economic reforms and investment reforms, what they plan to do with respect to democratization and human rights, protection of minorities; confidence-building measures within the region, inter-cultural dialogue, rule of law programs.

Working with the OSCE, they intend to set up a Southeast regional initiative for democracy and human rights -- if it was an acronym it could probably not be pronounced. But it essentially will bring together not only the governments of this region, but the NGOs, human rights activists, civil society and government, both in an annual forum in each country to talk about human rights and democracy, and then region-wide.

I'm now going to just sort of give you bits and pieces here. Prime Minister Blair said, Kosovo must be a turning point not only that we are leaving behind the barbarism that has marked so much of the 20th century, but that we are proceeding in a new direction going forward. And he described that new direction as one of having open frontiers -- that is for trade -- an investment charter which would provide the conditions for greater investment, commitment to develop free media, and basically said, I want to bring the same energy and effort to this task -- we need to bring the same energy and effort to this task as we brought to the war in Kosovo.

Prime Minister Majko from Albania quoted Churchill as saying, "The Balkans have a penchant to produce more history than it can consume." I think that's quite an interesting quote which certainly has proved to be true even after Churchill's time.

Prime Minister Stepashin spoke. He said that Sarajevo has shown what war can mean to a country, to a city. Now it must be a symbol of moving ahead with stabilization in the region. We, too, should play a role -- we the Russians -- too, should play a role to restore stability. He talked about the oncoming winter and the humanitarian issues that was going to cause in the region. He talked about the need to develop democracy in the region, and he said that Russia is prepared to actively support the Stability Pact.

And then, finally, let me tell you what the President said. First of all, he noted the changes in Bosnia since he was here two years ago, and thanked the Bosnia leadership for holding this conference. There was a lot of skepticism, I can tell you, about whether this conference could be put together this quickly in this city, in an airport that can only take seven planes in the airport at one time. And the Bosnians obviously feel very proud of the fact that they have done this and done it with great skill.

The President said, five years ago, many of us embarked on a vision to create a peaceful, democratic and united Europe, and made a good deal of progress, but that has been disrupted by what has happened in the Balkans, in Bosnia and then in Kosovo. He said, the goal of this conference is not, as conferences in the past have done, to rearrange borders; the goal here is to integrate this region -- begin the process of integrating this region into the mainstream of Europe.

We can't do it one country at a time; we have to have an overall plan, an overall strategy, and everybody has responsibilities. Nations in the region have to work and plan together; the rest of us must do our part to help and assist in each of the three areas that are the pillars of the Stability Pact -- that is, economic reform and development, security, and democracy and human rights.

The President then announced the initiatives that Gene spoke to some of you about earlier today that we intend to take: unilateral trade preferences for most products from the region, and OPIC fund of $150 million for investment and a $200 million credit line, and $50 million of $130 million EBRD trust fund, and then to cooperate in establishing $200 million IFI investment fund.

If you have specific questions about that, Gene is here.

He then said, finally, that we look forward to a day when Serbia can join the Stability Pact, but that day is not now; that we cannot provide -- we should not provide other than humanitarian assistance; that will simply prolong the suffering of the Serbian people. And he said that he intended to seek $10 million this year to work to strengthen non-governmental institutions, trade unions, independent press, democratic opposition, groups in Serbia who are working for democratic change.

And he finally said that he was grateful to the partners in the EU for their willingness to be the principal contributors to the Bosnian Stability Pact -- something that is important to us in terms of fair burden sharing.

That's it.

Q Sandy, apart from restoring the region, was anything concrete said about what might be done to spur increased repatriation of these refugees and did the President respond in any way?

MR. BERGER: There was rather significant conversation about it in the meetings with the various Bosnian leaders. There were a number of things. I think the common theme was the most important thing was jobs; that is, that if there were jobs in these areas people could come back and not be in competition.

The President asked the leaders to focus on, right now, particularly on Sarajevo and Banja Luka. Sarajevo, obviously, is not only the capital, but it personifies Bosnia and this is a place where Serb returns have not been as numerous as we would like. Banja Luka, which is a city in Srpska, where many Bosniacs would like to go back to their homes, similarly has not been as open as we would like. So we talked about focusing on key cities. We talked about this initiative of the three Presidents to travel around, to try to get local government more engaged in this. But I would say the leaders indicated that the most important variable here was the economic activity.

Q Were the guaranteed commitments on economic reform that were made by the leaders of the region sufficiently credible in your view that they will actually bring the private investment that you're hoping for?

MR. BERGER: Well, I think we're in the beginning of a process. I think President Ahtisaari's phrase, a starting gun for a marathon -- I think we now -- this will now be organized into what they call three tables -- very European way of describing this kind of an organization -- and one table will be on economics and investment. And in the course of that, there will be discussions of specific economic reforms. Mr. Camdessus from the International Monetary Fund talked about his desire to work strenuously, as they already are with many of the countries in the region, to remove obstacles to trade and investment.

So I don't think -- this was not a meeting at which each country spelled out the fact that they were going to change their property law in the following way. But there was, I think, a pretty strong commitment -- more than a commitment, an understanding -- that if they want to join the world economy, the European economy, the transatlantic economy, they're going to have to be more competitive.

Gene, do you want to add anything here?

MR. SPERLING: I think that Prime Minister Blair spoke about the need to have concrete actions. I think the President did accelerate the dialogue by actually putting some specific initiatives. And I think, in terms of the ongoing work on the economic table, that will push forward.

There was an excellent presentation made by the Prime Minister of the Netherlands, who did talk about that they were willing and ready to set aside, fairly specifically, funds for these type of investment funds. And he spoke also very specifically about the small business development as related to our fund, and I think they may have some interest in that. And also the notion of the countries having to take ownership.

So I think what you do hear from the countries in the region is a very -- and the President heard it in the bilaterals today, too -- is you are hearing, almost before the President can say anything, very clear declarations of the need to take the tough steps to attract investment, and the type of fiscal and legal infrastructure, financial infrastructure steps that have had to take.

But I think the President, being a little more specific, will -- it is a marathon, but I think that his comments will, I think, accelerate the debate forward, and I think push the other countries to get to a more concrete stage earlier, the developed countries. And I think that will, in turn, help the countries in the region start taking steps as they see the large carrot of capital investment funds out there for those who can most quickly start creating the kind of environment that will attract that capital.

Q Gene, did any other country match the U.S. --

MR. BERGER: I'd like to add one more thing to the point we were just talking about. I think it's important to recognize that we're dealing with a region that is not monolithic by any means. You have, on the one hand, Slovenia that is preparing for EU accession, and at the same time countries like Macedonia and Albania, where the per capita income is quite low and the level of economic activity is far different. So I think there's going to be -- this is not going to all proceed at one pace.

Q Sandy or Gene, did any other country of the Stability Pact roughly match what the United States offered today, in terms of trade preferences and investment funds -- specifics?

MR. BERGER: Well, the EU will have to take these steps as a unit. We have the advantage of being, obviously, able to operate as a single nation. The EU plans to take up, as Prime Minister Blair and others noted, a borders initiative, essentially an open trade initiative, as well as an investment initiative. So I would expect that these things would come on line in the next weeks and months.

Q Did they provide any detail on that, the EU? Did they come out with a specific trade initiative? Or did they just say that they would work on a trade initiative? And did the three prime ministers or leaders who spoke for the recipient nations speak for the region or did they speak for their own country?

MR. SPERLING: Let me just follow up on the first question, Scott's question. We were not expecting them to be at that stage. That was, frankly, part of the strategy of us coming forward, was to -- while what we're doing will be helpful to the Southeast, while our Southeastern Europe trade initiative will be helpful, the thing that will make all the difference for them is the degree of market access they have into the EU.

And so while I think Prime Minister Blair was probably the most specific, and I think he talked of a free borders initiative, part of the purpose of the President doing this was to lead by example and, therefore, provide more encouragement and challenge to the EU to accelerate their opening of trade access to these countries as a region, as opposed to operating country by country.

Q Sandy, when the President met with Djukanovic, what did he say to him, and how are you going to --

MR. BERGER: He may be meeting with him -- he had not met with him by the time I came down here, but I expect that he will.

Q Can you explain how you plan to get assistance to Montenegro without having Belgrade siphon it off first?

MR. BERGER: Well, I think there are ways to do that.

Q How? How do you do it?

MR. BERGER: I think there are ways to do it.

Q -- and economic reform and turning over accused war criminals, why not tie some of this investment to performance on their part in those three categories?

MR. BERGER: I'm sorry, the three categories being?

Q Being economic reform, market reform, political reform and turning over accused war criminals.

MR. BERGER: Well, I think, as a practical matter investment will be tied -- will be related to reform. You can't force investment. You can simply provide incentives for companies to invest if they believe the climate for investment is one that is worth taking the risk. We can provide guarantees, we can provide credits. But the countries, the region -- and almost all of them spoke to this -- understand, and many of them are doing this, many of them like Bulgaria and Romania are doing this -- that they have to be investment-friendly.

So I think the market creates that, and I don't know that there's any problem in terms of war criminals with respect to any of the countries here. The only place that --

Q The Republic of Srpska has a very bad record on returning war criminals.

Q Mr. Berger, could I ask a question as an independent journalist from Belgrade?

MR. BERGER: Let me finish this question, okay? We have arrested roughly 30 war criminals in both the Federation and in Srpska over the last two years, and I expect that we'll continue to do that. And I think our assistance to the Republic of Srpska, to those elements in Srpska who believe in Dayton, who believe in a unified Bosnia-Herzegovina, is very much in our interest and has proved to be quite a successful policy on our part.

Q I'm just worried as my people -- I'm coming from independent media -- and if you isolated us because of Mr. Milosevic, do you expect that we have a new conflict first in the area and after that Stability Pact? Or could we solve that problem a different way?

MR. BERGER: I'm not sure I understood your question.

Q I mean, if you think that we first could solve our problem with Mr. Milosevic and then after that we could be a new member of the Stability Pact, for example, do you think that we could do that just after we solve that problem with a new conflict, or you could support us before we have a new conflict?

MR. BERGER: No, I think that most of the leaders made it very clear that the moment that there is a different government in Serbia committed to democracy, Serbia will be welcomed into the Stability Pact. And the countries that are here will be eager to help reconstruct Serbia.

So there really is only thing that stands between the people of Serbia, the reconstruction that is so desperately needed in that country and not achieving that, and that is the leader who has created the suffering in the region in the first place.

Q Even if that means civil war? Even if that means having a civil war in Serbia before --

MR. BERGER: Well, I think that there are many democratic forces, many opposition leaders in Serbia. I'm not going to -- it's not for me to prescribe to the Serbian people how they handle and change governments. But I believe that most people of Serbia believe that the government they currently have has taken them down the wrong road, and it's a road that has caused great pain and suffering. And it will be for the people of Serbia to determine their future, not for us.

Q Sandy, just how shaky do you think Milosevic's hold on power is? Two, what is the United States doing to further destabilize him, or are there things that you can't talk about? And three, if Milosevic had shown up here today, would he have been arrested?

MR. BERGER: Well, he certainly would be subject to be arrested, yes. Every nation in the United Nations has an obligation to apprehend indicted war criminals and turn them over to The Hague.

How are we helping -- how do I assess the situation? I think that a large majority of the people of Serbia would like to see new leadership, would not like to be isolated from what is revival of a region and left behind and fall even farther behind. I believe that is manifest in many, many ways. Obviously, he still has control of the apparatus of repression, and that is not easy to overcome. But I have faith in the Serbian people, that they will find a way to do that.

Our role is to provide assistance -- to independent labor unions, to free media, to other institutions that are not controlled by the government, that are part of the process of democratic change -- just as we did with Poland, for example, before the collapse of the Berlin Wall.

Q How could you justify the fact -- sorry, just one. From independent journalist from Sarajevo, please. I was asking for one time. How could you justify the fact that 175,000 people left Kosovo after major troop deployments to Kosovo?

MR. BERGER: I think it's very regrettable, and I think one of the things that we need to try to do in Kosovo is to try to create the environment in which the Serb population feels that it can come back in safety.

We didn't fight in Kosovo for the Albanians and against the Serbs. We fought against the principle of ethnic cleansing, against the brutality that we saw in Kosovo. And therefore, it is our very strong hope and desire that we can create conditions in Kosovo where the Serb population will feel, over time, free to come back. I think that the leaders of Kosovo have an obligation to try to create that kind of environment, break the cycle of hatred.

Q Question from a independent United States reporter? (Laughter.) Sandy, did you discuss the electrical grid at all with the European leaders?


Q Didn't come up?

Q What about the compensation for China, for the embassy?

MR. BERGER: Got to go. You had your shot.

END 3:25 P.M. (L)