SECURITY COUNCIL AFFIRMS READINESS TO CONSIDER EXTENDING MANDATE OF UNTAES

In a statement read on its behalf by its President, Tono Eitel
(Germany), the Council recalled that the mandate could be extended by up to
12 months at the request of one of the parties to the Basic Agreement on the
Region of Eastern Slavonia, signed on 12 November 1995 by the Croatian
Government and the local Serbian community. The extension could be granted
on the basis of the Agreement, Council resolution 1037 (1996) and a
recommendation from Secretary-General Boutros Boutros-Ghali, according to the
Council text.

Turning to the funding of public services in UNTAES-administered
territory, the Council -- while expressing appreciation for the recent
agreement on the matter between UNTAES and the Croatian Government -- noted
that the amounts agreed to will not cover all of those services. It expressed
its expectation that the Government will urgently and unconditionally provide
more funds and reminded it of the need to contribute to the mission's
operational costs.

Also reminding the Croatian Government of its responsibility to
cooperate with UNTAES and create conditions conducive for maintaining
stability in the region, the Council called on it to take the necessary action
without further delay.

Then, noting with concern that the amnesty law and actions taken by the
Croatian Government were insufficient for creating confidence among local
Serbs in Eastern Slavonia, the Council again urged the Government to adopt a
comprehensive amnesty law for those who had served in the civil
administration, military or police forces of the local Serb authorities in the
United Nations Protected Areas (UNPAs). The law, according to the text,
should cover all those who had served either voluntarily or by coercion, as
long as they had not committed war crimes.

Noting that Presidents Tudjman and Milosevic had agreed in Athens on
7 August that a general amnesty was indispensable for the safe return of
refugees and displaced persons, the Council stated that it expected concrete
measures to follow up on that agreement.

The Council welcomed the progress UNTAES has made in promoting the
peaceful integration of Eastern Slavonia into Croatia and stressed that the
restoration and maintenance of the Region's multi-ethnic character were
important to international efforts to maintain peace and stability around the
former Yugoslavia. It underlined the importance of Eastern Slavonia's
economic rehabilitation, the creation of a Transitional Police Force, the
holding of elections and the Croatian Government's promotion of the return of
displaced persons and refugees to their homes of origin in Croatia.

The meeting, which was called to order at 10:21 a.m., was adjourned at
10:34 a.m.

Presidential Statement

The text of the statement, to be issued as document S/PRST/1996/35,
reads as follows:

"The Security Council has considered the report of the Secretary-General
of 5 August 1996 (S/1996/622) on the United Nations Transitional
Administration for Eastern Slavonia, Baranja and Western Sirmium (UNTAES), and
the letter from the Secretary-General of 2 August 1996 (S/1996/632) concerning
the funding of the existing local administrative structures in the area of
operations of UNTAES.

"The Security Council welcomes the progress made by UNTAES in
implementing the Basic Agreement on the Region of Eastern Slavonia, Baranja
and Western Sirmium (S/1995/951, annex) signed on 12 November 1995 (the Basic
Agreement), and in promoting the full and peaceful reintegration of the region
of Eastern Slavonia into the Republic of Croatia. It stresses that the
restoration and maintenance of the multi-ethnic character of Eastern Slavonia
are important to international efforts to maintain peace and stability in the
region of the former Yugoslavia as a whole. It reminds both parties of their
obligation to cooperate with UNTAES. It underlines the importance of economic
rehabilitation of the Region, the establishment of a Transitional Police Force
and the return of displaced persons and refugees to their homes in the Region,
as well as the importance of the promotion by the Government of Croatia of the
return of displaced persons and refugees to their homes of origin elsewhere in
the Republic of Croatia. It further underlines the importance of the holding
of elections in accordance with the Basic Agreement, once the necessary
conditions have been established.

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3688th Meeting (AM) 15 August 1996

"The Security Council reminds the Government of Croatia of its
responsibility to cooperate with UNTAES and to create conditions conducive to
maintaining stability in the region. It calls on the Government of Croatia to
take the necessary action without further delay.

"The Security Council recalls the statements of its President of 22 May
(S/PRST/1996/26) and 3 July (S/PRST/1996/30) and again urges the Government of
Croatia to adopt a comprehensive amnesty law concerning all persons who,
voluntarily or by coercion, served in the civil administration, military or
police forces of the local Serb authorities in the former United Nations
Protected Areas, with the exception of those who committed war crimes as
defined in international law. The Council notes with concern that the amnesty
law and the action subsequently taken by the Government of Croatia, as
described by the Secretary-General in his report of 5 August, have been
insufficient to create confidence among the local Serb population in Eastern
Slavonia. The Council notes the general agreement reached by President
Tudjman and President Milosevic in Athens on 7 August 1996 that a general
amnesty is an indispensable condition for the safe return of refugees and
displaced persons. It expects this agreement to be followed up by
corresponding concrete measures.

"The Security Council notes with appreciation the agreement reached by
the Government of Croatia and UNTAES on issues relating to the funding of
public services on the territory administered by UNTAES (S/1996/648, annex).
It notes, however, that this funding is not sufficient to cover all the costs
of such services and it expects further funding to be made available by the
Government of Croatia urgently and without conditions. It stresses the
importance of ensuring a functioning civil administration so as to maintain
stability in the region and help ensure the fulfilment of the mission
objectives of UNTAES. The Council, having regard to its resolution 1037
(1996), also reminds the Government of Croatia of the need to contribute
towards the costs of the UNTAES operation.

"The Security Council recalls that the Basic Agreement provides for a
transitional period of 12 months which may be extended at most to another
period of the same duration if so requested by one of the parties. It
stresses the importance it attaches to UNTAES being able to complete its
mandated tasks, included the organization of elections as provided for in the
Basic Agreement, promptly and in full. These tasks are, as the Secretary-
General notes, the building blocks for the difficult process of
reconciliation. To that end, the Council affirms its readiness to consider,
at an appropriate time, extending the duration of the mandate of UNTAES, on
the basis of the Basic Agreement, its resolution 1037 (1996), and a
recommendation from the Secretary-General.

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3688th Meeting (AM) 15 August 1996

"The Security Council expresses its appreciation to the Transitional
Administrator and his staff, and reaffirms its full support for the efforts of
the Transitional Administrator.

"The Security Council will remain seized of the matter."

Report of Secretary-General

In his current monthly report on the United Nations Transitional
Administration for Eastern Slavonia, Baranja and Western Sirmium (UNTAES)
(document S/1996/622), the Secretary-General asks the Security Council to
consider indicating its intention to extend the UNTAES mandate by up to a
further 12 months to enable it to accomplish its tasks. He emphasizes that
uncertainty over the mission's duration is having a negative effect on the
confidence of the local Serb populations and UNTAES work. While the mission
is making progress in implementing its mandate, it is not expected to complete
its tasks by the end of its mandate on 15 January 1997. The UNTAES was
established by resolution 1037 (1996) to help administer, demilitarize and
reintegrate Eastern Slavonia into Croatia under the terms of the Basic
Agreement on the Region of Eastern Slavonia, signed on 12 November 1995
between the Croatian Government and the local Serbian community (the Basic
Agreement).

Stating that the mission's most immediate concern was to get funding to
administer the Region, the Secretary-General asks the Council to remind the
Croatian Government of its responsibility to contribute to UNTAES costs and to
financially support the region's administration. The Croatian Government has
not yet been prepared to provide such funding, despite the Council's repeated
demands that it help offset the mission's costs. Unless negotiations with the
Government are soon concluded satisfactorily, the Secretary-General states
that he might consider informing the Council that one party has significantly
failed to comply with its Basic Agreement obligations.

The Secretary-General further states, in a 2 August letter to the
Council President (document S/1996/632), that the precarious state of finances
for running the region is eroding public confidence in UNTAES, with several
demonstrations already held outside UNTAES headquarters. The mission may be
facing a rising tide of social unrest as the situation worsens and if funds
for local administration are not disbursed in the next three to four weeks.
He asks for the urgent provision of $10 million in extraordinary financial
support for the administration of Eastern Slavonia for five to six months,
starting 1 August, pending the provision of a reliable source of funding by
Croatia. The sum would be used to maintain local administration and public
services, set up and control the Transitional Police Force and launch
reconstruction projects to reduce unemployment and absorb demobilized fighters
into the economy.

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In both his letter and report to the Council, the Secretary-General
explains that the financial situation has been deteriorating since April's
closure of the Djeletovci oil field. The local administration has been unable
to pay the salaries of some 3,600 civil servants and operational costs. While
the Croatian Government initially indicated it would provide some $2.2 million
monthly, it has so far made a one-time payment of about $1.2 million.
Meanwhile, efforts to agree on how to use the Djeletovci oil field revenues to
administer the region have stalled, with the Government maintaining that its
national oil company cannot afford to make regular monthly payments and that
profits would not be generated from the oil fields for two to three months.
While the European Commission has pledged $10 million for reconstruction, part
of which may be used to support local administration, the funds will not be
available until September at the earliest.

According to the Basic Agreement, the Secretary-General recalls, the
mandate may be extended by another 12 months at the request of a party to the
document. Based on exploratory discussions with some Croatian officials,
UNTAES estimates that they would contemplate an extension of a few months with
a revised mandate under certain conditions, one of which is the holding of
elections in the Region by December. The local Serb Regional Assembly decided
on 6 June to ask the Council to extend the UNTAES mandate to 15 January 1998.
Meanwhile, an electoral needs assessment mission, sent to the Region from 13
to 21 July, has reported that, under current conditions, the earliest date for
holding elections could be late February or early March 1997.

Turning to the mandate's other political aspects, the Secretary-General
states that, while progress is being made to reintegrate the Region into
Croatia, the local Serbs' fears have increased. They are related to the
deterioration of the economic situation, the absence of funding for
administration, delays in disbursing international help and the Croatian
Government's pressure for the termination of the UNTAES mandate in January.
While it is quiet on the military front, the Secretary-General expresses
concern over the presence of Croatian Special Police at several positions in
the zone of demilitarization (formerly the zone of separation) which is under
UNTAES control.

In a subsequent note (document S/1996/648), the Secretary-General
transmits the text of the Agreement on Interim Co-financing of Public Services
on the Territory Administered by UNTAES concluded on 8 August by the Croatian
Government and UNTAES. By its terms, the Government will regularly pay
4,500,000 kuna monthly to co-finance public services on the territory
administered by UNTAES. Those services include health and social welfare,
education, police, administration, operating costs and related administration
expenses. The Agreement also stipulates that the proportion of the designated
funds to be used for the Transitional Police Force shall be defined by a
separate agreement between the Ministry of the Interior and UNTAES.

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