Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 32713

IMPLEMENTATION COMPLETION REPORT (IDA-32690 TF-39456 TF-23554 TF-23567 TF-50274 TF-29809 TF-50257 TF-50455)

ON A

CREDIT Public Disclosure Authorized IN THE AMOUNT OF US$4.0 MILLION

TO THE

BOSNIA AND HERZEGOVINA

FOR A

Cultural Heritage Pilot Public Disclosure Authorized

June 22, 2005

Infrastructure/Energy Sector Unit Europe and Central Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective June 22, 2005) Currency Unit = Convertible Mark (KM 1 KM = US$ 0.62 US$ 1 = 1.60 KM

FISCAL YEAR January 1 December 31

ABBREVIATIONS AND ACRONYMS

AKTC The Aga Khan Trust for Culture BiH Bosnia and Herzegovina EU European Union FMS Financial Management System ICB International Competitive Bidding ICE International Committee of Experts IDA International Development Association MOU Memorandum of Understanding NCB National Competitive Bidding OHR Office of the High Representative PAD Project Appraisal Document PCU Project Coordination Unit UNESCO United Nations Educational, Scientific and Cultural Organization WMF World Monuments Fund

Vice President: Shigeo Katsu Country Director Orsalia Kalantzopoulos Acting Sector Director Motoo Konishi Task Team Leader/Task Manager: Lawrence M. Hannah

BOSNIA-HERZEGOVINA Cultural Heritage Pilot

CONTENTS

Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 7 6. Sustainability 9 7. Bank and Borrower Performance 9 8. Lessons Learned 11 9. Partner Comments 11 10. Additional Information 12 Annex 1. Key Performance Indicators/Log Frame Matrix 13 Annex 2. Project Costs and Financing 14 Annex 3. Economic Costs and Benefits 16 Annex 4. Bank Inputs 17 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 19 Annex 6. Ratings of Bank and Borrower Performance 20 Annex 7. List of Supporting Documents 21

Project ID: P059763 Project Name: Cultural Heritage Pilot Team Leader: Lawrence M. Hannah TL Unit: ECSPE ICR Type: Core ICR Report Date: June 23, 2005

1. Project Data Name: Cultural Heritage Pilot L/C/TF Number: IDA-32690; TF-39456; TF-23554; TF-23567; TF-50274; TF-29809; TF-50257; TF-50455 Country/Department: BOSNIA AND HERZEGOVINA Region: Europe and Central Asia Region Sector/subsector: Other social services (69%); Sub-national government administration (31%) Theme: Other social protection and risk management (P); Participation and civic engagement (P); Conflict prevention and post-conflict reconstruction (P)

KEY DATES Original Revised/Actual PCD: 04/22/1998 Effective: 08/27/1999 12/03/1999 Appraisal: 11/16/1998 MTR: Approval: 06/28/1999 Closing: 12/31/2002 12/31/2004

Borrower/Implementing Agency: Bosnia and Herzegovina/Project Coordination Unit, City of Mostar Other Partners: UNESCO, Aga Khan Foundation, World Monument Fund, Governments of Italy, Netherlands, Croatia, Council of Europe Development Bank

STAFF Current At Appraisal Vice President: Shigeo Katsu Johannes F. Lynn Country Director: Orsalia Kalantzopoulos Christian J. Poortman Sector Director: Motoo Konishi (Acting) Ricardo Halperin Team Leader at ICR: Lawrence Hannah Adrienne Nassau ICR Primary Author: Lawrence M. Hannah; Maha J. Armaly; Vesna Francic; Anita Correa

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S

QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project’s development objective was “to improve the climate for reconciliation among the peoples in Bosnia and Herzegovina (BiH) through recognition and rehabilitation of their common cultural heritage in Mostar”. Further, “reconciliation among the peoples was described as a prerequisite for economic revitalization and social cohesion in Bosnia's post conflict situation”. A special dimension of the stated objective was that it was “to be pursued through a unique cultural support partnership that includes the local community, national and regional governments, UNESCO, the World Monuments Fund (WMF), and the Aga Khan Trust for Culture (AKTC)”.

Reconciliation (improving the climate), as an objective, was clear and, in reality, the only plausible rationale for the project at the time. For a city, a country and a region that was just emerging from a devastating war, nothing could have been more important. Both the Government and the Bank emphasized this objective in their statements of purpose at that time. Mostar was one of the communities that suffered most during the war as well as being one of the most politically sensitive towns in the entire Balkan region. The reconstruction of the old bridge (known as Stari Most), that for centuries had linked the three ethnic communities in Mostar, was chosen to symbolize the restoration of a peaceful coexistence among the peoples. Stari Most was the symbol of Mostar and BiH throughout the world.

The cautious wording of the objective, “to improve the climate for reconciliation” explicitly recognized that the project could not be, and was not, the only instrument promoting reconciliation. So the objective was amplified in way that the indirect consequences could also be considered. Specifically, the subsequent reference to the reconstruction of the bridge being a precursor to economic revitalization suggests a causal (attribution) linkage to more measurable events which is used later in this evaluation to illustrate the impact of the project on the achievement of the objective.

The last sentence in the statement of project objectives, requiring the “unique cultural support partnership”, foreshadowed the now obvious complexity of the project design. In technical, as well as institutional, and perhaps political, terms the project required many disparate parts to come together in a carefully orchestrated manner to produce a successful outcome. Much of the complexity flowed from the division of responsibility among the partners and from the need to deal with numerous donors. In retrospect, however, it is quite clear that a less complex design, which, for example, omitted a component, would have lost the opportunity for the project to make a major contribution toward the fundamental objective of reconciliation. (see subsequent discussion of monuments component)

The high level of abstraction and the complexity of the project’s objective was however handled well by the implementing agency and government who were always flexible to accommodate the shifting environment. The Bank also showed flexibility and patience in approving extensions in order to facilitate the implementation of the project and the achievement of its objectives.

- 2 - 3.2 Revised Objective: The original objective did not change.

3.3 Original Components: RECONSTRUCTION OF THE OLD BRIDGE AND TOWERS: This component included the reconstruction the Stari Most, the adjacent two towers of Tara and Halebija and associated buildings. The reconstruction was undertaken with technical supervision by UNESCO who formed an International Committee of Experts to provide guidance. The basic materials used in reconstruction and the construction technology were identical to the original ones. The reconstruction of the old bridge also required careful and urgent interventions in the surrounding areas such as strengthening the underwater rock formations, not all of which were anticipated at the outset.

This component is intimately linked to the project’s objective. The Mostar Bridge Complex is one of the most important cultural treasures in BiH, built almost 500 years ago by the Ottoman Architect Hajrudin. It is considered an architectural marvel for the times and had long symbolized the connections and coexistence of the various ethnic communities of Bosnia and Herzegovina. Its destruction during the war was intentional and aimed at exacerbating divisions among the people.

RESTORATION OF SELECTED MONUMENTS IN THE HISTORIC DISTRICTS; This component focused on establishing a framework for rehabilitation and adaptive re-use of damaged monuments and historic buildings. Following a protocol signed between the AKTC, the WMF and the City of Mostar, preliminary selection of damaged structures in the historic area was made. During implementation, three monuments representing each ethnic community in Mostar were selected for their potential for attracting important neighborhood and community activities.

The PAD was somewhat ambivalent about this component in that it was recognized as an important instrument for highlighting the unique cultural contribution of each community but the component was described more in planning or framework terms than actual construction targets, reflecting the uncertainty about available financing when the project was designed. However, as the project unfolded, the availability of funding did make realization of the component possible.

NEIGHBORHOOD UPGRADING OF INFRASTRUCTURE, OPEN SPACES, ETC.: This component was to be carried out with the assistance of the AKTC and the WMF aiming to preserve the Old Town's historic character through a series of neighborhood initiatives and the adoption of architectural guidelines. Again this component had a dual purpose. First it was designed to support the centerpiece of the old bridge complex by extending the benefits to the surrounding neighborhood and indirectly addressing the economic revitalization aspect of the project’s objective. Second, it sought to bring the related activities of other institutions, such as AKTC and WMF, under a common umbrella for reasons of coordination and efficiency.

TA: PROJECT MANAGEMENT AND TECHNICAL SERVICES: This component provided for (i) creation of Project Coordination Unit (PCU); (ii) feasibility studies for reconstruction and renovation work; (iii) supervision for construction management of the bridge and towers, (iv) project monitoring and evaluation; (v) and preservation studies for Mostar, including capacity building for the International Stari Mostar Foundation, the proposed successor of a local

- 3 - foundation at the time. A sub-component on urban planning included assistance with the preparation of a strategic development plan for the city in order to set out priorities for reconstruction and new development and to reinstate viable and sustainable urban management. Special emphasis is given to the definitions and guiding principles in land use, municipal infrastructure and public facilities, adaptive re-use of damaged buildings for public purposes, housing and institutional support. This component combined the administrative arrangements necessary to implement the program with some broader activities designed to maximize the impact of the project and assure the sustainability of results.

A crucial design element of the project was the decision to partner with UNESCO and to have them create and manage an International Committee of Experts charged with maintaining the historical and cultural integrity of the reconstruction of the Bridge and Towers complex. Since the World Bank could and should not claim authority and expertise in this area is was indeed appropriate that the premiere institution in the UN family on cultural heritage, UNESCO, be selected for this responsibility. The decision was necessary and the result good but the actual management of this aspect of the project was probably more cumbersome than need be. Conceptually the design was right but more attention to the actual Memorandum of Understanding (MOU) with UNESCO may have led to smoother implementation.

This component provided for the necessary technical studies for the design and supervision of the reconstruction of the Bridge and Towers and for the Monuments Component. The AKTC was responsible for the neighborhood component. The component also provided financing for the PCU to implement the project with attention to Bank fiduciary and safeguard requirements. The PCU was staffed with technical experts for the monitoring of project progress, dealing with consultants and contractors as well as providing a platform and participation in the technical discussions. One item of this component was changed during project implementation by mutual agreement between the Borrower and the Bank. The proposed International Stari Mostar Foundation was substituted by the creation of a city-level agency in Mostar to operate and maintain the project assets as well as to protect the historical integrity of the old city.

In summary each of the components was tightly linked to the project’s objective. The apparent complexity is more a product of dividing the work into discreet tasks corresponding to institutional responsibilities (such as the tasks assigned to AKTC and WMF). The tasks assigned to the small PCU were both ambitious and necessary.

3.4 Revised Components: The components were not revised.

3.5 Quality at Entry: Quality at Entry of the project was satisfactory and the project was consistent with the then CAS objective of rebuilding BiH. Extensive studies had been prepared for the reconstruction of the bridge and towers by UNESCO. The City of Mostar, with the assistance of UNESCO, AKTC, and the WMF, had also developed an ambitious plan for the urban revitalization and restoration of the old city section of Mostar, which was the basis for the selection of components for the project. These documents provided a solid basis for proceeding with the project preparation and implementation.

- 4 - While financial management arrangements were not up to Bank requirements at the time of project approval, this did not cause major problems, since the PCU kept good records that were later adapted to a financial management system. The PCU upgraded the system to meet Bank requirements and continued to adapt it as the financial package was being put together. The system provided necessary reports for the financial management of a reasonably complex and dynamic multi-donor financing package. FMS specialists have praised the financial management aspects of the PCU's work.

Perhaps the major Quality at Entry issue was that financing for only about 25% of the estimated cost of the project was available. Although fund raising from other donors was ultimately successful it took longer than anticipated. On the other hand, without the firm IDA funding commitment it may have been impossible to get other donors to commit. The funding strategy proved to be a risk worth taking.

4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The achievement of the project objective, "to improve the climate for reconciliation" is rated satisfactory. There are many indications that the climate for reconciliation in Mostar has improved over the implementation period and this project has made a significant contribution to that process. Mostar has, in many respects, become a normal city where differences are settled in political forums rather than by open conflict or street demonstrations. This war-destroyed and divided city again has a single administration and economic revitalization is taking place on a extensive scale. The project contributed to these outcomes in several ways.

First, the project became the symbol and the focus of both local and international efforts to bridge the differences which surfaced during the war. Locally, the project enjoyed unwavering support from political leaders of all ethnic factions and the PCU itself was frequently cited as a model of inter-ethnic cooperation, both, for how it worked internally and for how it managed relations with the community. For example, no ethnic favoritism in awarding contracts became an issue as a result of the objective procedures applied to procurement by the PCU. The international community rallied solidly behind the project, shining the spotlight of international attention on Mostar (hundreds of articles, books, TV programs and films were produced) and generously funding the investment components of the project. The opening ceremony in July 2004 capped a successful process of exposing Mostar to the world and the world to Mostar. Surveys conducted in 1997, 2003 and 2004 show a trend toward increased optimism about the future of the city, in general, and, specifically, movement toward reconciliation expressed in attitudes toward the project by those that were least favorably inclined at the outset, the Croats. Somewhat surprisingly, the completion of the three monuments at the very last moment, one each for the major ethnic communities in Mostar, has yielded the most vocal and positive local statements about how the project has promoted ethnic reconciliation in Mostar. The Bank itself has extensively used the reconstructed bridge to symbolize the successful reconstruction effort in BiH and beyond.

Second, the project has stimulated a significant economic revitalization of the city. According to

- 5 - city officials, tourist arrivals in 2004 stood at 220,000 up from only 50,000 the preceding year and almost none five years before. Preliminary indicators for 2005 show further growth in this respect. The implication for local business is evident both in terms of the new establishments opening and the reported spending. A specific example of how the project helped local firms become stronger is the story of local contractors who have worked on the project and permanently increased their staff (and capabilities) as a result. As asserted in the project objective, reconciliation is a prerequisite for economic revitalization, so we can infer that the climate for reconciliation has measurably improved.

4.2 Outputs by components: RECONSTRUCTION OF THE OLD BRIDGE AND TOWERS: Satisfactory. The Bridge and Towers have been reconstructed according to international standards for historic preservation. The process started with careful research into the historical background of the old bridge, undertaken in Bosnia, was well as Istanbul, Vienna and Zagreb, in order to make the reconstruction as true to the original as possible. Where materials had to be replaced, stones were obtained from the same quarry used 500 years ago. The construction techniques were also true to those used in the original bridge. International expertise and careful monitoring ensured technically and aesthetically sound construction. Inscription in UNESCO’s list of World Heritage sites is expected this year which will further bring this accomplishment to a wider audience. The careful attention to authenticity combined with modern project management and procurement practices allowed the various contingencies which arose (such as needing to perform a major underwater strengthening of one river bank) to be addressed while bringing the entire project in under engineering cost estimates.

RESTORATION OF SELECTED MONUMENTS IN THE HISTORIC DISTRICTS; Satisfactory. The project faced difficulties in mobilizing financing for the monuments, which caused delays in starting this component. Initially only $450,000 was allocated for this component as compared to estimated costs of $2 million. However, a combination of the generous co-financing of the project by the donors and the competitive contract prices, enabled funds to be reallocated to this component. The monuments were selected prior to implementation based on an urban renewal framework discussed between the city, UNESCO, WMF, and AKTC. From this “long list”, and in consultation with the respective communities, three monuments were selected. Because the availability of funding was not clear until the last moment the restoration of these three buildings was undertaken in the fall of 2004. The results far exceeded expectations and the three buildings are now lending new vibrancy to the community while cultural and religious leaders have publicly and privately expressed their gratitude to the project for helping restore some pride and stability in their communities.

NEIGHBORHOOD UPGRADING OF INFRASTRUCTURE, OPEN SPACES, ETC. Satisfactory. Although small (about 2% of project expenditures) this component turned out to be important for the community at large. Carried out with the assistance of the Aga Khan Trust for Culture and the World Monuments Fund, the objective was to preserve the Old Town's historic character through a series of neighborhood initiatives and the adoption of architectural guidelines. An action plan, sensitive to the historic context, was developed for the historic neighborhood surrounding the old bridge. The public spaces and structures that were renovated were part of these plans. This component linked the bridge to its surrounding environment and with project as

- 6 - well as other funds led to a broad refurbishment of the old town infrastructure.

TA: PROJECT MANAGEMENT AND TECHNICAL SERVICES: Satisfactory. This component was designed to mange the implementation of the project including funding feasibility and final design studies for the investments. All was accomplished despite the highly complex nature of the tasks and the many events that perhaps are expected in a restoration of this nature. All tasks were completed successfully. On a parallel basis, France and the EU provided technical assistance funds to support this component. The final act of the PCU was to promote the establishment of the Stari Grad Agency which the Council of the newly reintegrated City of Mostar formally established and ratified on December 12, 2004. This Agency is charged with management and maintenance of the project’s investments as well as historic preservation of the old city. All of the project materials as well as plans and strategies developed under the project have been turned over to this permanent Agency and form the foundation of its work program.

4.3 Net Present Value/Economic rate of return: None at appraisal

4.4 Financial rate of return: None at appraisal

4.5 Institutional development impact: This project had an institutional development impact in several ways. Most importantly the project supported the creation of a permanent city level agency to manage and maintain project investments as well as to protect the old city which in combination with the project investments will create sustainable benefits for Mostar. Creation of this agency was a requirement of this project and IDA effectively used its leverage along with UNESCO to accomplish this goal within the project lifetime. The PCU also demonstrated how an effective multiethnic institution could be structured and operated. All physical assets and some of the staff of the PCU will be used by the agency. Indirectly, the preparation for inscription of Mostar in UNESCO’s list of World Heritage Sites will also create a lasting effect on the heritage institutions and professionals of Mostar.

5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: As previously described, the outcome for the project was fully satisfactory but the completion took about two years longer than anticipated at appraisal. The main reason for this was that less than one-third of the estimated resources were available when the project started. It took about two years to raise the additional funds from the various donors. Even the early commitments took time to deliver because there were subject to processes that had to accommodate the budget cycle of donors. The dilemma faced at the time of appraisal and approval of the IDA credit was whether to proceed, trusting that the remaining funds could be raised or to wait until other donors pledged funding. This risk was acknowledged in the PAD at the time and the generous support subsequently provided proved it a risk worth taking. More time for fund raising should however have been allowed in the project implementation schedule.

5.2 Factors generally subject to government control: In general, the government facilitated the expeditious implementation of the project. Decisions on

- 7 - implementation arrangements, staffing of the PCU and provision of counterpart funding generally proceeded smoothly. One issue which was critical to the sustainability of the project benefits, however, was not addressed until the last moment. Since the Dayton Agreement had permitted Mostar to be divided into a number of mono-ethnic municipalities, the creation of a city-level agency to manage project assets and protect the old city's historical integrity was not acted upon until 2004 when OHR forced re-integration of the city. Once elected, the newly unified council immediately acted on this issue creating the Agency on December 14, 2004.

5.3 Factors generally subject to implementing agency control: The implementing agency, the PCU, was the institution which sustained progress on the project and provided the technical and managerial oversight to carry to the project to a successful conclusion. This small unit, with five professional staff, provided continuous oversight for this complex project. They also served as an example of how multiethnic organizations could and should function in this environment. The PCU always managed the historic preservation aspects of the project well because they had the background and were familiar with the history of the Bridge and Towers complex. On systems more associated with IDA projects they were less skilled at the outset but with fairly intensive support from Bank specialists on procurement and FMS they managed to successfully implement the project.

5.4 Costs and financing: Actual contracts for all major components were less than estimates at appraisal. This was probably due to the well-defined specifications developed in the investigatory stage of the project and the competitive tendering arrangements. Local market prices also stabilized considerably compared with the time of appraisal when post-war construction and risk had kept them high. Three relatively minor items exceeded appraisal estimates. Geological Investigations incurred costs approximately double the appraisal estimate of $300,000 because more extensive investigations than originally envisaged were required. Office equipment also exceeding the appraisal estimate by $10,000 or 20%. The PCU’s operational costs were about one and a half times the estimate mostly due to the extended implementation period. The widely fluctuating exchange rate between the Euro (to which the local currency is tied) and the US dollar make exact comparisons of final contract costs with appraisal estimates somewhat imprecise.

Actual financing arrangements are almost identical to the PAD plan. Although the total cost was lower than estimated, the resources forecast from the government and from other donors were realized with little variation. The contributions of UNESCO, WMF, Aga Khan, the Government of France, the EU and the Government of Turkey (actually made before the IDA credit was approved) were all made in-kind or outside the financing arrangements for the project so no precise value can be established. However, all contributors delivered what they were asked to and what they promised. In terms of distribution of financing from a particular source for a particular component adjustments were necessary as new funding became available because some donors restricted which components they were willing to support. The portion of IDA credit proceeds used on the bridge complex contract was very small in the end.

The project was completed within the total appraisal estimates but with about two years delay. As mentioned above, the reasons for the delay were a combination of (i) optimistic appraisal estimates; (ii) incomplete financing package that took time to assemble; (iii) unexpected technical

- 8 - findings that required additional studies (ICE recommended several such as archeological studies and special research on ancient mortars which were carried out); (iv) multiple donors (cofinancing and parallel) and partners required extra time for coordination and negotiation of agreements.

6. Sustainability 6.1 Rationale for sustainability rating: The sustainability of project’s benefits is deemed likely. As the symbol of the now restored peace in the region and the improving climate of reconciliation, the restored old bridge and environs will remind all that peaceful ethnic coexistence that has returned to Bosnia and to Mostar. While the symbolism will most certainly remain, Mostar has taken concrete steps to assure that the investments themselves are properly managed and maintained, most visibly in the formation of a city-level Agency for Stari Grad. It is more difficult to know whether the indirect economic benefits of the project will continue to grow but evidence to date and the general return of tourists to this region and to Mostar auger well for such an outcome.

6.2 Transition arrangement to regular operations: As previously mentioned, Mostar has put in place transition arrangements to assure that the investments themselves are properly managed and maintained. The formation of a city-level Agency for management and protection of the project assets and more broadly Stari Grad is the centerpiece. The Agency will also be responsible for monitoring this process and has submitted to UNESCO, as part of the application for consideration as a World Heritage Site, a comprehensive plan for its activities. The partners are also continuing to support Mostar in various ways.

7. Bank and Borrower Performance Bank 7.1 Lending: Satisfactory. This project was a bold interpretation of the Bank’s and the Government’s priorities, at the time, which were to reconstruct the war damaged country, and through supporting the institutions and symbols of reconciliation, to help Bosnia and Mostar to return to sustainable positive economic and social path. The actual design of the project was pioneering in two respects. Mostar was one of the first projects to focus on cultural heritage so the partnership arrangements required to make this work were untested. Success for the project also depended on the reaction of the recently war-torn community. These risks (and others) were acknowledged and considered worth taking. The results reinforce that decision.

7.2 Supervision: Satisfactory. This was a supervision-intensive project, in part, because of the complexity of the design and because of the panoply of interests involved. Although the risk of not receiving support from other donors was recognized at appraisal, the first and most urgent supervision task was to solicit such support. The supervision team did so successfully with the full backing and support of Bank management and senior government officials. The Bank team members have not changed from the assignment of a new task manger less than six months after the IDA Credit was approved. Use of Bank staff based in the country office, as well as complete staff continuity, helped the Bank provide consistent and efficient guidance to the client. The most intensive supervision tasks were performed by Bank staff in the resident mission who had almost daily

- 9 - contacts with the client and were able to visit Mostar on a regular basis. Technical consultants were employed by the supervision team, as needed. Unlike a typical operation, this project also required extensive liaison with the partners (especially UNESCO and the ICE) as well as with the multiple donors supporting the project. Although there were differences of approach and disagreements along the way, the supervision team managed to bring the project to a successful and harmonious conclusion.

7.3 Overall Bank performance: Satisfactory. The Bank was able to coordinate the interests of the international community and several cultural heritage foundations in support of the project. It provided a forum for combined unified action while at the same time involving local counterparts in all decision-making in order to assure ownership. The result was a distinctly felt pride in the outcome by the PCU, local government, the local community, the national government as well as the international community in the accomplishments of the project.

Borrower 7.4 Preparation: Satisfactory. The City of Mostar also took a calculated risk to undertake this project. It used the opportunity of the international support for Bosnia and the attention of cultural institutions such as UNESCO, AKTC and WMF, to undertake this project at a time when local community commitment to the project was not assured, as was clear from the social assessment. Despite the news at the time about the divisions in the City of Mostar, the decision to take on the project was indeed bold and forward looking. On the technical and institutional side, the Project Coordination Unit was put together from professionals dedicated to cultural heritage. It included all the necessary staff that were able to handle managerial, operational, technical, procurement and financial matters. The PCU was capable of working with and learning from institutions with ideas and procedures new to them. They worked with partners to put together an ambitious program for the revitalization of the historic city of Mostar according to internationally accepted conservation principles. This was a difficult task for a region coming out of conflict and required persistent dedication.

7.5 Government implementation performance: Satisfactory. Implementation was largely the responsibility of the local government - i.e. the City of Mostar. The city provided the required counterpart funding and all the support for the PCU to operate and for the work to be undertaken on schedule.The City was also active with other donors in terms of providing information and soliciting additional grants. Its efforts were necessary and complementary to the Bank.

7.6 Implementing Agency: Satisfactory. The Project Coordination Unit deserves much credit for the successful implementation of the project. It had to deal with several donors and partners who had strict technical and fiduciary requirements that were largely new to the PCU. The technical and procurement staff were diligent in their monitoring of the work of consultants and contractors to ensure good overall progress of the project. They were also an integral part in the discussions with the international experts, learning and contributing to the discussions. The financial management staff were able to develop and maintain a flexible financial management system that accommodated changes in the financing arrangements and reported accurately on the financial

- 10 - situation and prospects for future, providing needed reports for the City to plan its contributions. Audit reports were unqualified throughout project implementation.

7.7 Overall Borrower performance: Satisfactory. The borrower and all its agencies presented all possible assistance, and took advantage of all opportunities to enhance the implementation of the project.

8. Lessons Learned Cultural Heritage preservation can be a viable theme for urban physical revitalization and more importantly for promoting reconciliation. Had the Bridge and Towers not been rehabilitated, they would have remained a constant reminder of war and divisions among communities. As it is now, the re-constructed Bridge is a symbol of re-establishing ties and a reminder of better times and a shared history hopefully leading to a better future.

Projects in cultural heritage require patience and involvement of many stakeholders. Particularly where the structure to be renovated is internationally renowned, UNESCO participation is essential to ensure technical and aesthetic qualities. Given the Bank’s limited experience in participating in such partnerships and the partner's unfamiliarity with Bank procedures, more explicit attention to creating this understanding might have expedited the process.

While the impact of the Bridge and Towers on the lives and attitudes of the population is undisputable, having included the smaller components, especially public restorations that impact local neighborhoods, adds a particularly important dimension to the project in reaching the communities and providing the citizens with opportunities for benefiting immediately from restorations - such as those in the neighborhood and monuments components, through renovation of specific smaller community structures and public spaces.

9. Partner Comments (a) Borrower/implementing agency: See comments from implementing agency in Annex 7. (b) Cofinanciers:

(c) Other partners (NGOs/private sector): Input from UNESCO

The Old Bridge of Mostar is much more than an old bridge: it’s the real focus of a complex history of a central European community and facilitates contact between the Balkan hinterland and the sea. Stari Most is the symbol of these endeavors, and because it is a bridge, it symbolizes the meeting of men, and their capacity to live and to work together. That was a main imperative to rebuild it.

The reconstruction of the Old Bridge of Mostar, which enjoyed the support of both communities and their authorities in Mostar, not to mention the assistance of UNESCO and the World Bank, was the perfect example on possibility of using the reconstruction of the Cultural Heritage as a vehicle for reconciliation.

- 11 - That was the main reason that on 13th July 1998, UNESCO, World Bank and the City of Mostar issued a joint statement and launched an appeal for the restoration of the Old Bridge in Mostar that is successfully completed on 23 July 2004.

UNESCO’s actions in Bosnia and Herzegovina have always been directed at “rebuilding bridges between peoples” and its active and fruitful cooperation with the World Bank on the international project of the restoration of the Old Bridge of Mostar was its major activity for the nearly last 10 years in this domain in Bosnia and Herzegovina.

Within the Old Bridge project the role of UNESCO was advisory, and not as a donor, and this action is considered as an important demonstration of UNESCO’s strategic role in organizing high level expertise to back multi-million dollar initiatives which the Organization cannot itself fund. Therefore the cooperation with the World Bank was the only possible way to ensure a proper and most efficient implementation.

The successful completion of this project, with its neighborhood components, contributed significantly to the return of tourism and stimulate the national authorities to develop a coherent approach to the restoration of war-damaged cultural heritage.

We strongly believe that this model of cooperation, between the UN system organizations and agencies, as the cooperation between UNESCO and the World Bank could be applied in the case of other cultural heritage sites and monuments all over the world, as it ensured uninterrupted cooperation, between all partners and communities, that was crowned by the reconstructed Old Bridge of Mostar.

10. Additional Information

- 12 - Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Perceived improvements among Mostar Good Evidence of improvement from surveys and inhabitants in working relationships and activities related to opening event social cohesion Development of knowledge about ways of Good UNESCO and PCU have developed and restoring cultural heritage in a post conflict documented knowledge gained during the society. project implementation Involvement of UNESCO, ICE, AKTC, WMF, Good Good participation from all partners. and donors with the city Acknowledged at opening ceremony. Recovery of some tourism in Mostar TBD Information on rising arrivals in ICR Continued confidence of donors and partners Good Reaffirmed during discussions at opening in project objectives event

Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Completed reconstruction of Mostar Bridge 100% Bridge complex was completed before July complex 23, 2004 Completed rehabilitation of at least three 100% All three monuments were completed before additional historic monuments that are closing date important to each of the three major peoples. Completion of significant improvements in 100% 100% complete infrastructure, facades, and landscaping in at least one historic neighborhoods. Project Governance structure continuously Good Has been fully maintained throughout life of includes both major ethnic groups. project Amount of participation by different ethnic Good Both officially and has contractors and groups in project implementation. suppliers all ethnic groups participated in the project implementation International Stari Mostar Foundation Local institution established. Mostar City Council established an Agency to established with ecumenical membership, manage and maintain project assets and to financial plane, and long term program. protect the old town on December 14, 2004. Increase in number of tourist days for visits to TBD Increase has been significant. See ICR Mostar. text).

1 End of project

- 13 - Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Investment (bridge, monuments, neighborhoods) 10.50 8.64 0.82 Geological Investigations 0.32 0.63 1.97 Office Equipment (computer, vehicle, furniture, etc.) 0.05 0.06 1.2 Technical Assistance 2.37 1.36 0.57 PCU salaries and operations 0.87 1.27 146 Total Baseline Cost 14.11 11.96 Physical Contingencies 1.03 Price Contingencies 0.36 Total Project Costs 15.50 11.96 Total Financing Required 15.50 11.96 Since contracts were variously issued in USD, Euros and KM during the project, exchange rate movements may cause totals to be slightly different from reported values in this summary table.

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 7.22 0.18 0.57 3.65 11.62 (2.42) (0.17) (0.54) (0.00) (3.13) 2. Goods 0.00 0.00 0.06 0.38 0.44 (0.00) (0.00) (0.05) (0.00) (0.05) 3. Services 0.00 0.00 0.32 2.10 2.42 (0.00) (0.00) (0.32) (0.00) (0.32) 4. Miscellaneous 0.00 0.00 1.02 0.00 1.02 (0.00) (0.00) (0.50) (0.00) (0.50) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 7.22 0.18 1.97 6.13 15.50 (2.42) (0.17) (1.41) (0.00) (4.00)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 7.94 0.34 0.15 0.73 9.16 (1.94) (0.13) (0.63) (0.69) (3.39) 2. Goods 0.00 0.36 0.00 0.00 0.36 (0.00) (0.07) (0.04) (0.00) (0.10)

- 14 - 3. Services 0.00 0.00 0.63 0.71 1.34 (0.00) (0.00) (0.28) (0.69) (0.97) 4. Miscellaneous 0.00 0.00 1.28 0.00 1.28 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 1.27 0.00 1.27 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 7.94 0.70 3.33 1.44 13.41 (1.94) (0.20) (0.96) (1.38) (4.47)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. Investments 2.75 2.23 0.99 5.41 81.1 Project Management and 1.25 1.87 0.55 0.93 149.6 Technical Services

Total 4.00 2.00 5.16 4.10 1.54 6.34 102.5 77.0 122.9 Exchange rate variations make the Project Financing total costs $20,000 higher (16 hundredths of 1%) than the Project Cost table.

- 15 - Annex 3. Economic Costs and Benefits N.A

- 16 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 04/22/1988 2 TASK LEADER (1); OPERATIONS OFFICER (1) 08/10/1988 6 TASK LEADER (1); PROGRAM TEAM LEADER (1); OPERATIONS OFFICERS (3) CONSULTANT (1)

Appraisal/Negotiation 11/16/1998 2 TASK LEADER (1); OPERATIONS OFFICER (1) 02/16/1999 3 PROGRAM TEAM LEADER (1); CONSULTANTS (2) 04/28/1999 2 TASK LEADER (1); OPERATIONS OFFICER (1) Supervision 12/17/1999 4 TASK LEADER (1); OPERATIONS OFFICER (1); PROCUREMENT SPECIALIST (1); FINANCIAL MANAGEMENT SPECIALIST (1) 06/22/2000 3 TASK LEADER (1); S S OPERATIONS (1); PROCUREMENT (1) 10/14/2000 4 TASK TEAM LEADER (1); S S OPERATIONS OFFICER (1); OPERATIONS ANALYST (1); PROCUREMENT SPECIALIST (1) 06/25/2001 2 TASK LEADER (1); S S OPERATIONS OFFICER (1) 11/09/2001 2 TEAM LEADER (1); S S OPERATIONS OFFICER (1) 04/14/2002 2 TEAM LEADER (1); S S OPERATIONS OFFICER (1) 09/19/2002 2 TEAM LEADER (1); S S OPERATIONS OFFICER (1) 03/06/2003 3 TEAM LEADER (1); S S OPERATIONS OFFICER (1); CONSULTANT (1) 09/16/2003 2 TEAM LEADER (1); S S OPERATIONS OFFICER (1) 02/04/2004 3 TEAM LEADER (1); S S

- 17 - OPERATIONS OFFICER (2) 07/23/2004 2 TEAM LEADER (1); S S OPERATIONS OFFICER (1) 12/14/2004 2 TEAM LEADER (1); S S OPERATIONS OFFICER (1) ICR

Field Definition: The statistical data in ICRs should provide background on the issues. They should match the information and indicators presented in the PAD/SAR or President’s Report (for adjustment loans) and should draw on the results of monitoring and evaluation systems established under the project or program, in order to allow reasonable comparisons between expectations and achievements.

(b) Staff:

Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 0.18 5.62 Appraisal/Negotiation 22.41 71.22 Supervision 188.45 551.38 ICR 20 50.00 Total 678.22

- 18 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA

Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA

- 19 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU

6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU

- 20 - Annex 7. List of Supporting Documents Project Status Report from Federation of Bosnia and Herzegovina PCU:

- 21 - - 22 -