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  BOSNIA
HERZEGOVINA


REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,835,777

Capital
Sarajevo

Currency
Dinar

President
Mr Alija
Izetbegovic

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Background:
Bosnia and Herzegovina's declaration of sovereignty in October 1991, was followed by a referendum for independence from the former Yugoslavia in February 1992. The Bosnian Serbs - supported by neighboring Serbia - responded with armed resistance aimed at partitioning the republic along ethnic lines and joining Serb-held areas to form a "greater Serbia." In March 1994, Bosniaks and Croats reduced the number of warring factions from three to two by signing an agreement creating a joint Bosniak/Croat Federation of Bosnia and Herzegovina. On 21 November 1995, in Dayton, Ohio, the warring parties signed a peace agreement that brought to a halt the three years of interethnic civil strife (the final agreement was signed in Paris on 14 December 1995). The Dayton Agreement retained Bosnia and Herzegovina's international boundaries and created a joint multi-ethnic and democratic government. This national government is charged with conducting foreign, economic, and fiscal policy. Also recognized was a second tier of government comprised of two entities roughly equal in size: the Bosniak/Croat Federation of Bosnia and Herzegovina and the Bosnian Serb-led Republika Srpska (RS). The Federation and RS governments are charged with overseeing internal functions. In 1995-96, a NATO-led international peacekeeping force (IFOR) of 60,000 troops served in Bosnia to implement and monitor the military aspects of the agreement. IFOR was succeeded by a smaller, NATO-led Stabilization Force (SFOR) whose mission is to deter renewed hostilities. SFOR remains in place at a level of approximately 21,000 troops.

Update No: 057

The experience of the international community in Bosnia is now being greatly appreciated, as it comes to terms with the problems of pacifying and developing Afghanistan. "Don't expect too much too soon," warns Wolfgang Petritsch, the top international official in the Balkans.
He should know what he is talking about, having been knee-deep in Bosnian affairs for years as the International High Representative in Sarajevo. He has been implementing the civilian aspects of the 1995 Dayton Agreement. Peace can only come when people see more to be gained from cooperation than slaughtering each other, gratifying to old tribal hatreds as that may be.
Bosnia is almost as disparate an entity as Afghanistan, a mini-Yugoslavia that could implode at any time. But at least there is a common language in which to talk peace.
" In Bosnia four years of fighting led to a kind of exhaustion and realisation on all sides that war is not going to help them, " says Petritch. The Afghan developments have underscored that.
Some five years after deploying 32,000 troops in Bosnia to keep Serbians, Croatians and Bosnian Muslims from fighting each other, there are still 18,000 international troops on the ground in Bosnia-Herzegovina. Few doubt that without them the fragile peace could well crumble into discord and dissension again.
Bosnia is still a a very divided country, ethnic animosities that brought 200,000 deaths and created millions of refugees are just below the surface. The international aid workers and officials on the ground are convinced that the troops are still needed to keep a lid on things and to buy more time to create a valid civil society. That is becoming more difficult to persuade the Americans, keen to devote more attention and troops to the anti-terrorist campaign.
But Mr Petritsch warns strongly against pulling out forces too soon in Bosnia. Their continued presence is required to "ensure that the achievements of the last six years are not challenged by national extremists." There is also the outstanding problem of apprehending the indicted war criminals, particularly former Bosnian Serb leaders Radovan Karadzic and Radko Mladic.
The troops are also needed to rebuild the country, ravaged by war. Petritsch and his colleagues are trying to create an independent judiciary and a legal framework for economic development, including clear rules on the recovery of property by refugees.
There has been the carrot of vast aid and credit, extending to over $5bn in the last six years. This has not always been wisely distributed. But without it the stick would not have been likely to succeed.

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BANKING

Bosnia Federation banks operating profitably first time since war


The banking sector in the Federation of Bosnia-Herzegovina scored positive results this year, for the first time since the war, both judging by the six-monthly and nine-monthly financial reports, the Banking Agency of the Federation of Bosnia-Herzegovina has said, Bosnia-Herzegovina Federation TV has reported. 
A significant increase in capital, in deposits including savings, approved loans and bank profitability is evident. These are initial results of reforms that have been implemented in the past three years in this sector.
In the first six months of 2001 the banking sector recorded profits to the tune of 6.2m convertible marks. At the same time last year it had made losses to the tune of 63m convertible marks. Of the overall number of 35 banks, 12 made losses to the tune of 17.5m convertible marks this year and therefore the agency is to send to the management of these banks letters warning them to take urgent measures to remove the causes and radically reduce or completely eliminate the losses.
Initial analyses have shown that the organisation and management of these banks are not at a satisfactory level. The development of banks in the federation is spearheaded by a dozen larger private banks of which some have recorded a 100 per cent increase in liquid assets in the past 12 months. On the other hand, because of delays in the process of privatisation, state banks are generally stagnating, says a statement issued by the Banking Agency of the Federation of Bosnia-Herzegovina.

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FOREIGN ECONOMIC RELATIONS

Bosnia signs trade agreement with Slovenia


The free trade agreement between Slovenia and Bosnia that was signed in October came into effect on January 1st 2002, according to Slovenia Weekly.
The agreement gradually deregulates trade in industrial and agricultural products between the two countries. 
Initially, duties on Slovenian industrial and agricultural exports to Bosnia are being lowered to 70 per cent, while in 2003 they are to hit 50 per cent and then 30 per cent in 2004. On January 1st 2005, the remaining duties are to be abolished. 
Imports into Slovenia from Bosnia are to be completely deregulated next year. In case one of the two countries becomes a member of the EU, the agreement may be cancelled with six months' written notice. Slovenia has already made an agreement on economic cooperation with Bosnia and an agreement on the mutual protection of investments.

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FOREIGN INVESTMENT

Bosnian Federation's lower house adopts law on foreign investments


The Bosnia-Herzegovina Federation House of Representatives on 20th December adopted the Law on Foreign Investments in the same form as the one adopted by the
Bosnia-Herzegovina Federation House of Peoples, Onasa News Agency web site has reported. 
The law regulates the issues which the Law on Policy of Direct Foreign Investments in Bosnia-Herzegovina delegates to the entities, specifically designating the bodies in charge of passing the by-laws. 
The law regulates the rights, prerogatives and obligations of foreign investors, forms of foreign investments, registering procedure and foreign investments approval, defining the bodies responsible for registering and approving foreign investments in accordance with state-level legislation...

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