Bernard Kennedy in Istanbul -

Kosovo's independence has certainly cast a pall over the Balkan region, but Bosnia-Herzegovina's Foreign Minister Sven Alkalaj told bne that his country won't be thrown off course by developments there and insists that comparisons between the situation with Serbia and Kosovo, and Bosnia's own ethnic divisions are simply misguided.

Speaking on the fringes of the Marmara Group Foundation's "Eleventh Eurasia Economy Summit" in Istanbul on May 2, Alkalaj said that the long-awaited Stability and Association Agreement (SAA), a first step to joining the EU, would be signed by Bosnia in Brussels on May 26. He predicted that his country would become a candidate member of the EU next year and a member of Nato within the next three years. In these circumstances, Bosnia is expecting to attract more foreign investment, especially to its energy and transport sectors.

Questioned on the impact of February's declaration of independence by Kosovo in February, Alkalaj noted that initial outbursts of violence in Belgrade and Banja Luka, a town located in the Serb part of the Bosnian federal republic, had died down. With ethnic Serbs making up 35% of its population, Bosnia-Herzegovina would not "jeopardise its path" by discussing whether or not to recognise Kosovo, he said.

While Serbia is at loggerheads in the south with its newly independent neighbour Kosovo, Belgrade's relations to the west with the Bosnian Serb Republic have never been better. A growing influx of investments is raising hopes in the minds of some Serbian nationalist politicians of an eventual union.

However, Alkalaj insisted that any comparison's between the situation of Serbia and Kosovo, and the Bosnian Croat Federation and the Bosnian Serb Republic (or more accurately, Republika Srpska), are unfounded. "These are two different issues and any calls for the secession of Republika Srpska were quickly denounced by the international community - practically, there is no legal basis in the Dayton Peace Accords for calling a referendum or for the secession of any part of Bosnia-Herzegovina," he said. "Our political leaders are now concentrating on the reforms within the country and we will leave the great powers to deal with Kosovo."

Union bound

The European Commission gave the green light to the SAA in April after Bosnia adopted controversial legislation that will draw its divided police forces closer together. Procedural delays prevented the SAA from being signed at the end of April. But provided the paperwork is finalised by May 26, Bosnia will be eligible to start receiving EU funds as of July 1.

"This is the first contractual agreement with the EU and it will open new doors," the foreign minister enthused. "Immediately, it will provide access to €450m worth of funds available for different projects in public sector reform and in all aspects of life in order to speed up the reforms which will bring Bosnia-Herzegovina - I believe in a year from now - to the candidate status."

With regards to Nato, the alliance declared at its Bucharest summit that it was ready to begin an "intensified dialogue" with Sarajevo - a possible prelude to a Membership Action Plan. According to Alkalaj, "The road to Nato is very close, and we believe we will be able to achieve fully-fledged membership by 2010 or 2011... This is bringing us closer to the EU and creating a feeling among investors that Bosnia is becoming stable and that it is worthwhile investing and safe to invest."

Key areas for investment include the power sector and the further development of the 5C transport corridor linking Budapest to the Croatian port of Ploce via Bosanski Brod, Zenica, Sarajevo and Mostar. Alkalaj said that Bosnia was seeking "strategic partners among the countries which are very strong in energy" to rehabilitate and construct thermal and hydroelectric power plants to meet the needs of Bosnian industries and generate additional revenue.

Addressing the Summit earlier, the minister had warned member countries of the eight-nation South East Europe Free Trade Area (SEEFTA) not to impose non-customs barriers to trade - an issue of concern to Bosnia's modest manufacturing industries and members of parliament. Speaking to bne, Alkalaj refused to single out countries or products, but insisted that all stipulations of the accord should be "fully respected to the letter" in order to bring down the cost of goods and help the member countries to prepare for EU obligations.

Alkalaj added that his government was in favour of maximum cooperation under the Regional Cooperation Council, which replaced the OSCE-monitored Stability Pact earlier this year, and has its secretariat at Sarajevo, with a mandate that ranges from policing and judicial cooperation to transport, energy and housing. "We are supporting as strong regional cooperation as possible," he declared.

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