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UPDATE January 2002

Bosnia remains a conundrum. Split into two, one of its two components is split again into two, the Croat-Muslim Republic. The only glue that keeps it together is the presence of the International High Representative and his staff, plus 27,000 Western troops. They and the flow of aid and credit they help to administer or mediate are the means of keeping the show on the road, a stick of force on the one hand and endless carrots of aid on the other.
The aid has been prodigious, US$5bn since the 1995 Dayton Agreement ending the war. The whole exercise is one of nation-building of in effect an international colony. It is a tricky job soon to be taken over by Paddy Ashdown, the former Liberal Democratic Party leader in the UK, who will become High Representative.
The World Bank has suspended another donor conference until Bosnia reaches agreement to qualify on 18 issues laid down by the EU, mainly to do with privatisation. These are clearly World Bank officials who wonder where all the money has gone and how wise it is to go on extending it. The scale of corruption is for one thing likely to have been exacerbated by it. But for fear of something worse it is likely to continue to flow.

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ENERGY

EBRD invests in environmental improvements to power plants in Bosnia and Herzegovina

The European Bank for Reconstruction and Development will make a €20m Euro sovereign-backed loan to raise environmental standards at four thermal power plants in Bosnia and Herzegovina under the extensive Power III programme to reconstruct the country's war-damaged power sector.
The loan will finance upgraded facilities to reduce polluted water discharges and particulate and dust emissions at plants in Gacko, Kakanj, Tuzla and Ugljevik.
The EBRD has already invested about €90m in the Bosnian power sector, including €50m to make power distribution more efficient and reconnect Bosnia and Herzegovina to the regional power grid and to give access to international electricity markets. The investments required regulatory reforms and encouraged deeper co-operation between the country's two entities: The Federation of Bosnia and Herzegovina and Republika Srpska.
Foreign direct investments should play a more prominent role in the post-war reconstruction of Bosnia and Herzegovina, according to Jean-Marc Peterschmitt, Director for Albania, Bosnia and Herzegovina, Macedonia and Kosovo. Deepening co-operation between the country's political entities is helping to facilitate the reconstruction of infrastructure and the creation of a private sector economy. He said that political certainty, stability and co-operation were important ways to attract more investment.
To date, the EBRD has approved 18 projects in Bosnia and Herzegovina, totalling €171m. The portfolio consists of 12 investments in the private sector, totalling €29m and five in the public sector, totalling €142m.
For further information contact Ben Atkins, EBRD, tel: +44 20 7338 7236, email:atkinsb@ebrd.com.

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FOREIGN INVESTMENT

Iranian investment in Bosnia can improve, past help appreciated

Bosnian Federation Prime Minister Ali Bahman said in Iran recently that the country's investment in Bosnia's economical and production sector is limited. The premier told IRNA Media Agency that Iran's economical institutes have not indicated serious intentions regarding investment in Bosnia and called upon the country's officials to assume a more active role in the federation's economical sector.
Bahman further said that Iran had during the 1992-1995 war extended significant relief aid to Bosnia. He extended his sincere appreciation, and was quoted as saying "Under the circumstances, Iran was the only country offering relief aid to Bosnia, which will never be forgotten by our nation." Concerning investment in other countries, he noted that among Islamic countries, only companies from Kuwait known as "KIA" had made investments in Bosnia's BiH-Steel and UNIS.
Commenting on the issue of attracting foreign investment, he said that regulations regarding registration of foreign companies in Bosnia, which includes the absence of customs duties and taxes imposed on import goods, is deemed a principal step towards attracting foreign investment. 
Referring to the process of privatisation, Bahman said that the value of the share of privatisation of companies and plants had been evaluated at DEM 18 billion, out of which DEM 8 million has been contributed by the private sector. The first phase of the project has to do with small companies and plants, while the shares of the bigger plants, including 80 units, will be sold to the private sector in the next phase.
Bahman placed the foreign and domestic debt of the Bosnian government at DEM 3 billion and noted that this amount was left over from the previous government. However, provisions have been made for its repayment. In light of the fact that the federation is comprised of 10 provinces and numerous parties, the general situation in the country is rather complex.
One of the federation's serious problems is the existence of parallel organisations and system frameworks, while there are two prime ministers in the cabinet and two ministers at various ministries, he added. The idea of establishing a self-sufficient body in Croatia by the Croatian Democratic Party this year was one of the federations major crises, which failed as admitted by some party leaders, he pointed out.

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FOREIGN LOANS

BiH on the road to donor conference

According to the Bosnia-Herzegovina (BiH) Minister for Foreign Trade and Economic Relations, Azra Hadziahmetovic, conditions for a donor conference for BiH will be fulfilled within two to three months. 
Referring to the recent announcement made by the high representative official that the World Bank has suspended preparations for a donor conference until the nation meets 18 conditions set by the EU, Hadziahmetovic confirmed that the pertinent laws have entered the final parliamentary procedure and should be adopted with one month, IntelliNews reported. The minister pointed out that a number of issues fall within the competence of the two entities' governments, particularly those related to the privatisation process.

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