I want to speak to you today about where we've come on the road to a durable peace in Bosnia and where we are headed - the progress we've made and the challenges we face.

After a conflict as profound and bitter as the one in Bosnia, it is easy to write that nation off as cursed by history, held in the thrall of age-old hatreds. The columns of refugees, the emaciated prisoners, the bloody market places... those memories remain vivid and they are a powerful invitation to doubt and fear.

Some say that Bosnia can never escape the conflicts of its past. But while we must be informed by the past, we must not be imprisoned by it - we can not allow it to obscure the present or pre-ordain the future. As we assess the prospects for Bosnia, we must adopt a realism that is self-correcting, not a pessimism that is self-defeating.

The United States today has a deep and abiding interest in peace and stability in Bosnia, just as it did two years ago - when America's leadership, militarily through NATO and diplomatically through the Dayton negotiations, ended the fighting.

When we discuss where we are in Bosnia, we must start with where we began. Less than two years ago, when the talks opened in Dayton, Bosnia was a nation torn and shattered by the worst conflict in Europe since World War II. Opposing armies faced one another in a country scarred by trenches and sown with landmines. Bosnia had been literally decimated: More than one in ten of its people - 560,000 - had been killed or wounded. Half of those who survived - 2.1 million people - had been driven from their homes. Eight out of ten Bosnians relied on the UN for food. Nine in ten were unemployed. Under American leadership, a fragile cease-fire had been put in place, but the flames of extreme nationalism and ethnic hatred still burned white hot.

In conditions so desperate, no nation could revive by itself and move toward a peaceful reconciliation. At the time of Dayton, there was a compelling case for American engagement in Bosnia on humanitarian grounds alone. Without support from the United States and the international community, Bosnia almost certainly would have sunk back into violence and despair.

But our interest was not just humanitarian. Under these conditions, Bosnia also would have remained a source of dangerous instability in Europe. We have learned from hard experience in this bloody century that America's security and Europe's stability are intimately linked. With no firewalls against ethnic hatred, the Bosnian war could easily have spread to such flashpoints as Kosovo, Albania and Macedonia... and endangered several of Europe's new democracies. A broader conflict would have threatened the vital interests of Greece and Turkey - two of our closest allies and core members of NATO.

Indeed, a larger conflict would have cast doubt on the viability of the Alliance itself. Allowing nationalist aggressors to dismember Bosnia in the middle of Europe would have undermined the prospects for building a new Europe that is democratic, undivided and at peace - a Europe that can strengthen America's own security in the 21st century. If peace had not taken hold, the United States could not have stood aside as the UN's humanitarian peacekeeping effort collapsed... and Southeastern Europe once again slid toward war.

That's why we and our partners, under President Clinton's leadership, committed ourselves not just to contain the conflict but to help the people of Bosnia build a real peace. We and the international community joined together with the parties at Dayton to achieve three goals: To secure the cease-fire and reduce the chance of renewed fighting to help the parties form a single nation balancing overarching unity with autonomy for the two entities... and to help provide them with an opportunity to build a lasting peace.

Dayton put in motion a military and political effort of extraordinary scope and complexity. The NATO-led IFOR took responsibility for separating the opposing forces, supervising the exchange of territory, enforcing the cease-fire, demobilizing armies, overseeing placement of heavy weapons in storage sites and creating the secure environment essential for beginning political and economic recovery. It carried out its mandate with great skill and determination. The successor force, SFOR maintains that standard today, preserving the stability necessary for the Dayton process to move forward day by day. In these missions, NATO has successfully taken on the greatest challenge it has faced since the end of the Cold War - and working with soldiers from Russia, Ukraine and most of our other European partners - has demonstrated NATO's indispensable role in assuring Europe's future security.

Alongside the military effort, the international community also launched a mission of civilian implementation - to help former enemies take the needed steps to make peace self-sustaining. We knew that the Bosnian people needed help to repair and rebuild - not just their houses and factories but their confidence and tolerance. We believed this was possible because this century, for all its bloodshed, has shown that hatred is not transmitted from one generation to another through iron laws of genetics or culture. Hatreds can be aroused by cynical leaders, but people can lift themselves out of hatred with hope of a better future.

To that end, the goals we and the international community set out to achieve, and to which the parties committed themselves, include the following, all part of Dayton:

Establishing a stable military balance that can help prevent renewed fighting Reforming police forces Strengthening democratic institutions and the rule of law Enabling refugees to return in safety Re-establishing freedom of movement in the country Strengthening economic reconstruction Helping bring war criminals to justice.

From the beginning, this was an ambitious agenda, and it was clear that it would require an unprecedented civilian effort extending over several years. Last week, that terrible helicopter crash in Bosnia, which claimed the lives of five American civilians and seven others involved in these efforts, reminded us of the dedication of those who have undertaken this work - and of the costs, the risks and the sacrifice they bear.

Less than two years after Dayton - and after so much devastation - the job is far from done. We are not as far along as we would like to be. But given the complexity of the challenge, that is hardly surprising. Bosnia still stands on a tightrope, inching toward a better future but still not past the point of danger. The large majority of refugees remain unable to return home. The Republika Srpska is in the grip of an intense struggle not only for power but for its future and its relationship to the whole. Prominent indicted war criminals - most notably Radovan Karadzic and Ratko Mladic - remain at large. Much of the media is not yet independent, and some of it spews the ultra-nationalist invective that helped light the fuse of war seven years ago. Progress is painfully slow on many fronts, including economic reconstruction.

So is it worth the effort? Is it worth spending scarce resources, putting our troops at risk and losing some of our most dedicated diplomats and civil servants to achieve a unified, peaceful Bosnia... restore basic freedoms... put a broken economy back on its feet? Some argue that the record shows that we set our sights too high at Dayton - that only an ethnic partition will produce the stability we want and extricate us from Bosnia.

I believe the partitionists are wrong because accepting partition means ratifying the worst ethnic cleansing in Europe in more than half a century. We should not give up on justice and reward aggression.

Partition also would be wrong because it would send the message to ethnic fanatics everywhere that the international community will allow the redrawing of borders by force. By creating the kind of ethnically pure states that often harbor a dangerous sense of grievance - entities that would be inherently unstable... ultimately, not viable... and inclined to expansionist aggression, partition would lead not to peace but toward war. In short, to advocate partition is to accept defeat.

Just as importantly, there is mounting evidence that these critics are wrong on the facts... and that the choices made at Dayton are producing real, positive change in Bosnia. Dayton has kept the guns silent and Bosnia intact, and the work of rebuilding - uneven as it is - is moving forward.

USIA polling shows that substantial majorities of Bosnian Muslims, Croats and Serbs believe that conditions are being created for a lasting peace. And for most of the people of Bosnia - especially those in the Federation - life is genuinely, if slowly, improving. This isn't the story we usually hear and read, but peace is beginning to take root. The gains are not irreversible - and locking them in will require that the international community stay engaged in Bosnia in some fashion for a good while to come. But by almost any measure, life is better for the people of Bosnia today than it was two years ago.

Look through the eyes of a Bosnian child and see why. Imagine for a moment what it is like to be a 15-year old girl in one of Bosnia's cities or towns. She lived nearly half of her life in the deadly grip of war. Today, instead of huddling in a cold, muddy basement to escape the incessant shelling, she attends school.

Hundreds of schools that were damaged or destroyed by war have been rebuilt with the help of international donors, who have spent more than $1 billion of the $3.2 billion that has been pledged for civilian reconstruction, including $524 million from the United States. After class, she spends her time with friends instead of lugging home jugs of water - as she did during the war - because in most places the reconstruction effort has restored water.

Perhaps she lives in one of the 24,000 housing units repaired last year alone with the help of the international community. Undoubtedly, for the first time in seven years, she won't be afraid of freezing this winter because heating has been restored in most of the country. She eats fruit and vegetables, not boxed military rations dropped from NATO aircraft. She has decent clothes because her family is earning more: Since the fighting ended, average wages in Bosnia have quadrupled, unemployment has fallen from 90% to 50% and, from a still low level, the economy is expected to grow 30% this year.

Above all, she has a new sense of safety: She can walk the streets knowing that the hills no longer conceal snipers... that she won't be kidnapped or raped because of her ethnic identity ...that mortars no longer target the playgrounds.

This teenager is not alone in her newfound sense of security. Because of the work of the IFOR and SFOR, the warring forces have been disengaged; more than 370,000 troops actually have returned to civilian life and further bloodshed has been prevented. Heavy weapons have been put under international supervision, and more than 2000 of them have been destroyed.

At the same time, our Train and Equip program for the Federation's armed forces is helping create a more stable military balance, making it less likely that anyone will gamble on renewed fighting. And let's not forget: We made it a condition of Train and Equip that Bosnia sever all military and intelligence ties with Iran - so a nation that exports radicalism and sponsors terrorism has lost the important foothold in Europe that it gained when the war began in 1992.

The international community also is helping the Bosnian people restructure and reform local police forces so they protect citizens instead of intimidate them. This job is far from finished. But the newly integrated forces in Sarajevo for the first time since the war are beginning to stand up to local thugs and bigots and protecting the rights and safety of citizens of all ethnic groups. These strides set the pattern for police reform in other regions.

One of Dayton's most daunting challenges was establishing freedom of movement. At that time, any citizen traveling between cities in Bosnia would have to brave a dozen or more police checkpoints, risking everything from harassment and extortion to kidnapping and violence. Today, the checkpoints are gone, the roads are clear. Vehicles of all origins move freely on the main arteries. Where just two years ago it would have been inconceivable, now it's no longer a surprise to see Srpska license plates in Sarajevo or Federation plates on the streets of Banja Luka. And farmers, traders and families cross the Entity Boundary easily and regularly by foot, car or even public bus that run daily.

The people of Bosnia are not only more free to move about the country - generally, they simply are more free. To a greater extent than ever, Bosnians are being governed by people of their own choosing. Last year's national and regional elections, which were said by the doomsayers to be too dangerous, started Bosnia on the difficult path to democracy. Bosnia took another important step last week, when over 2 million voters, or more than 80% of those eligible - chose mayors, city councils and other municipal leaders from the more than 20,000 candidates who ran for office. And next month we expect an important assembly election to be held in Republika Srpska under international supervision.

Habits of self-government are beginning to be formed in Bosnia, and the state's national institutions have been created. The Joint Presidency, the Council of Ministers, the Supreme Court and the joint Military Commission have been established. They are not yet self-sustaining, and international pressure often is required to keep all parties cooperating. But this month, the Serb, Croat and Muslim members of the Joint Presidency overcame their differences to establish a integrated telecommunications system to help stitch the country together and speed reconstruction. And the Muslim and Serb co-chairs of the Council of Ministers - Bosnia's cabinet - who could barely be persuaded in the spring to meet jointly with U.S. officials in Washington - arranged their own trip to Malaysia to lobby together for investment just last month.

But the promise of peace will only be fully realized when the benefits of peace are spread among all of Bosnia's people. Today, most of the economic growth in Bosnia has occurred in the Federation. By contrast, the recalcitrance of many Serb leaders has caused Srpska to languish. They have failed to fulfill their responsibilities under Dayton, prompting international donors to withhold almost all reconstruction funds for Srpska. It does not have to be that way. But the Serb leaders in Pale have insisted on holding fast to the hatreds of the past instead of turning to the promise of the future. They have chosen a path of self-isolation. Srpska's persistent poverty will end only when its leaders fulfill their obligations and reconstruction funds can begin to flow.

The struggle now underway in Srpska is both hopeful and uncertain. It pits the diehard secessionists and ethnic cleansers in Pale - those who led the Serb people into war - against a growing movement of Bosnian Serbs who are fed up with a government of profiteers. These Srpska residents are opposing the rampant corruption that is making paupers out of all but a few. They have seen the improvements across the border in the Federation; they want to share in the benefits of peace.

President Plavsic and many of her followers continue to espouse Serb nationalism. But unlike the old regime, they recognize that the only road forward runs through Dayton... that Srpska cannot prosper in isolation... and that there is room within the Dayton framework to fulfill their legitimate aspirations. They want to close a bloody chapter in their history and open a new one of hope and recovery.

We have not "chosen sides" in Srpska. The United States, SFOR and the international community continue to be evenhanded - evenhanded in support of Dayton.

This means supporting those who uphold Dayton... and firmly opposing those who don't. We reject the false choice of compromising between those who obstruct Dayton and those who want to cooperate. Let me be clear about what this means: It means treating Pale's paramilitary police, which are used to threaten and punish dissidents, like the non-compliant military units they are... acting swiftly and robustly if the media are used to threaten and incite... responding decisively to attempts to provoke or intimidate SFOR or to compromise the secure environment SFOR is committed to support. As General Clark, the Supreme Allied Commander in Europe, recently said: "We will not be intimidated. We will not be deterred by mobs... .We will use all the means at our disposal, including lethal means, to protect our forces and continue our mission."

We are equally determined that those who support Dayton, wherever they live, enjoy the benefits of their choice. That is why, despite the efforts of Pale's hardliners, we provide aid to communities in the Srpska that accept the return of refugees. We are providing Srpska police that have agreed to reform with technical support and equipment just as we have to police forces in the Federation - and in just the last two months, almost a quarter of the civil police in Srpska have joined this program. We welcome and support the growth of independent media in the Srpska, and we provide them with technical assistance and equipment so that their message can be widely heard.

There is an important struggle going today in Srpska, and it matters how it turns out - because this is turmoil for the right reasons, for change without corruption or ethnic warfare.

We must be realistic: The international community and the Bosnian people face many real challenges that will require patience and sustained effort. For example, we are not satisfied with the rate of refugee returns. So far, only about 150,000 or 15% of those who left Bosnia during the war, have come home. That rate will only increase when stability and safety have been reestablished.

We must help the Bosnians learn about market economics. While the rest of the former communist world in Central Europe was getting a crash course in the subject in the early 90s, Bosnia was simply crashing. Many of the habits of a command economy persist, and with a corruption that too often has undermined the reconstruction effort.

We must also redouble our efforts to defuse the powderkegs of violence in Bosnia that endanger our success. In Brcko, the slender corridor that links the two halves of Srpska and connects the Federation to Europe, tensions remains high and progress is glacial at best. The arbitration that will decide the future of this area is to occur in six months. We are making clear to both parties that failure to fulfill their obligations is unacceptable, and they will pay the price for their behavior in the final decision.

So what verdict can we draw from our experience in Bosnia thus far? After two years, the picture is mixed. We see continued difficulties and recalcitrance. But we also see progress that is making a real difference in the lives of the Bosnian people and in the stability of this critical region. It's been said that the mark of genius is the ability to hold seeming opposites in one's mind at the same time. As we look at Bosnia today, some genius is called for. We must keep our eyes on both sides of the picture - and we must not forget the important interests that led us, not merely to look at, but to work for a more stable, more peaceful Bosnia.

In June, 1998, SFOR's mission will end as President Clinton has said. But the international community's engagement will continue. Whether an international security presence is part of that engagement, and what role the United States might play remains to be decided. In part, that decision will depend on where things stand as we approach the time of SFOR's departure.

But one thing is clear: Just as we did when NATO acted to end the slaughter in 1995 and, with our partners, convened the negotiations in Dayton, the United States has an important interest in the establishment of a lasting peace in Bosnia. The best way to advance that interest is through the framework agreed upon in those negotiations. That's why America has a significant and continuing stake in Dayton's success.

If Dayton fails, Bosnia will almost certainly slide back into conflict... potentially leading to a wider war in Southeastern Europe. It would undermine NATO's credibility at a critical moment when the Alliance is preparing for new members and new missions. This would throw into question America's leadership in Europe - with grave consequences for our people and other freedom-loving people around the world.

Dayton can succeed. And it will - if Bosnia's leaders take responsibility for their country's future and lead their people to build the peace they deserve... if the international community does not lose patience or determination... and if we all look at Bosnia clearly - not through a rose-colored glasses but also not through a glass darkly.

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