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  BOSNIA
HERZEGOVINA


REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,922,205

Capital
Sarajevo

Currency
Dinar

President
Mr Zivko Radisic

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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: 062 - (20/06/02)

The Bosnian federation is one of Europe's anomalies. It is has no obvious logic except that of the former Yugoslavia itself, to yoke together the peoples of quite different culture and religion, who might otherwise be at perpetual loggerheads or war with one another. Nevertheless, they are of the same Slav ethnicity. There is perhaps hope there for cooperation, although events to date belie any such optimism.

The hand-over of power
Bosnia is a sort of international protectorate, with at the moment an Austrian diplomat, Wolfgang Petritsch, as the viceroy or International High Representative. The job is an incredibly fraught one, the country always on the point of rupture into its constituent elements. Petritsch is due to hand over to Paddy Ashdown in October, the ex-leader of the Liberal Democrats in the UK and now a member of the House of Lords. He has long been a leading specialist in British politics on the Balkans.
Of considerable relevance to his job is that Ashdown has seen action as a commando and knows the ropes when it comes to fighting, as is always possible in Bosnia. Can the federation hold together?
The answer almost certainly lies in how far the international community is prepared to go to ensure its success. So far it has committed US$5bn in credit since the Dayton Agreement of 1995. Foreign investment has been deficient by contrast, the threat of a renewed outburst of ethnic tension frightening off potential investors and also alarming accounts of ministerial and other official corruption.
There are 30,000 troops on the spot, a figure about to be radically reduced. The various constituent republics have their own armed forces. The Moslem - Croat federation began reducing its 26,000 - strong army by 10,000 in early April, sending them home; the federation spends nearly a quarter of the budget on military maintenance. The Serb Republic, with 16,000 troops, spends almost 30% of its budget for the same purpose.
When one considers that the rate of unemployment in the Moslem-Croat Federation is 40% and not much less in the Serbian Republic it is clear why the military burdens on their budgets are being reduced to release funds for a more creative form of economic activity, stimulating jobs beyond the sector in question.

Volkswagen back in town
The first sign of a recovery in foreign interest is perhaps that Volkswagen is re-activating its 30-year commitment to the country. They have been resuming cooperation with Bosnian firms since early May. Production of the "Golf IV" model is slated to commence in Sarajevo on July 1st. 
It is meant to test the market, not just in Bosnia but the entire region, and explore possible interest in the follow - up model (Golf V), to be introduced in 2004. Production of earlier vehicles, such as the Beatle, was halted by the 1992 - 95 war in which much of Sarajevo was turned into rubble.

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ENERGY

Bosnian Serb Republic to have main gas pipeline in three years' time 

The Bosnian Serb Republic will finally get its own gas pipeline which will run across the whole of its territory and connect all its municipalities, SRNA News Agency has reported The building of the 300-km long main integrated pipeline from Gornji Sepak near the eastern town of Zvornik, to Novi Grad is to start this year.
At its last session, the Serb Republic People's Assembly endorsed the decision to sign a concession agreement on building the pipeline. The preparation of paperwork will start 120 days after the agreement comes into force and the agreement is to be signed over the next few days by Serb Republic Prime Minister Mladen Ivanic and the company which won the concession agreement at a public auction - Slavija-Internacional of Laktasi Serb Republic.
Slavija-Internacional from Laktasi has made the best offe rand has undertaken to finance the works and build the pipeline
Preliminary assessments have shown that US$110m will be needed to invest in the project. Slavija-Internacional will in return be granted the exclusive right to maintain and use the Serb Republic pipeline for the next 30 years...
The preliminary work is planned to take three months, while six months have been planned for the construction of the first section which should be completed by 1st September next year.
The preliminary work on the second section of the pipeline that will be193 km long - from Bijeljina to Banja Luka - will take a year with another year allocated to the construction work. This phase should start on 31st December 2003 and be completed by 1st September 2005.
The preliminary work on building the main pipeline in the Serb Republic started in 2000. In 2001, the government drafted the terms and procedure for granting concessions for the financing, design and building of the pipeline as well as its use and maintenance...
The contract envisages that domestic construction companies should be subcontracted to do the work and that the project should create employment opportunities. Around 40 per cent of the investment is for the construction works and they are to be undertaken by Serb Republic companies. This will enable the development of local distribution networks, firstly in larger towns like Banja Luka, Bijeljina, Doboj and Prijedor and later in smaller ones, also in accordance with the concession contract.
The pipeline, through its offshoot pipelines in Ugljevik, Doboj and Novi Grad, will link up with the existing main pipelines in Tuzla, Zenica and Bihac [in Bosnia-Herzegovina Federation]. This will make Bosnia-Herzegovina a country with a complete gas network. A link with the Croatian pipeline has also been planned via the offshoots in Srpski Brod and Gradiska.

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FOREIGN LOANS 

World Bank approves business loan for Bosnia 

Bosnian Serb Banja Luka Radio has reported that the World Bank approved a loan for the adjustment of the business environment on 31st May in Bosnia-Herzegovina, amounting to US$44m, which had been agreed upon earlier. 
The approved loan is earmarked for the support to the state and the entities' budgets for the implementation of reforms, improvement of the economic situation, and for attracting local and foreign investment. When the implementation of the reforms are completed, the loan will be paid back within the repayment period of 35 years, the grace period being 10 years.

EC presents 71.9m Euro support programme for Bosnia 

The European Commission has adopted an annual programme worth 71.9m Euros in support of the participation of Bosnia and Herzegovina (BiH) in the Stabilisation and Association process (SAp). The programme concentrates on five priority areas: Democratic Stabilisation (25m Euros), Administrative Capacity Building (10.5m Euros), Economic and Social Development (13.4m Euros), Environment and Natural resources (6.5m Euros) and Justice and Home Affairs (16.5m Euros), New Europe has reported
The Commission has adopted a support programme for Bosnia and Herzegovina with the CARDS 2002 budget, an EC statement noted. The programme is based on a Country Strategy that assesses BiH's political and socio-economic situation and policy agenda and identifies EU policy responses and cooperation objectives.
The programme for BiH underlines External Affairs Commissioner, Chris Patten's, recent statement that: "..the EU is getting more and more deeply involved in the region. Our policy amounts not to an exit strategy but to an entry strategy to help the Balkan countries themselves become members, one day, of the EU."
To further support the development of an impartial professional police service in BiH, five million Euros will also be given for technical assistance, training and equipment in support of the BiH police forces, while one million Euros will help establish an asylum and migration policy in line with EU standards.

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FOREIGN ECONOMIC RELATIONS

Bosnian Presidency chairman, Ukrainian president discuss economic ties

During the summit of heads of Central and Eastern European states in Slovenia, the chairman of the Bosnia-Herzegovina Presidency, Beriz Belkic, held a bilateral meeting with Ukrainian President Leonid Kuchma, SRNA News Agency reported.
They discussed a joint approach of the two countries within the framework of European integrations as well as the possibility of strengthening economic and business ties between Ukraine and Bosnia-Herzegovina, the press service of the Bosnia-Herzegovina Presidency reported.
The summit in Bled and Brdo pri Kranju ended with the adoption of a joint document. 

Croatian economy minister calls for more trade with Bosnian Serb entity 

Bosnia-Herzegovina and Croatian ministers for foreign trade and economic relations, Azra Hadziahmetovic and Hrvoje Vojkovic respectively, said in Sarajevo that economic cooperation between the two countries was developing well, BH Radio has reported. They announced that new measures would be taken to additionally improve economic cooperation, particularly in the sphere of joint ventures and joint operations in third markets. 
Amra Music, the radio's reporter said: "Bosnia-Herzegovina Minister for Foreign Trade and Economic Relations, Azra Hadziahmetovic, says that in economic relations between the two countries there are some open questions which demand special attention.
"In addition to the current level of cooperation, with inter-state trade increasing by 19 per cent last year on the year 2000 and with the trend continuing this year at a rate of 20 per cent, it is nevertheless necessary to strengthen other forms of economic ties between the two countries." 
Croatian Minister of Economy, Hrvoje Vojkovic, believes: "Although the Croatian share in foreign investment in Bosnia-Herzegovina stands at 13 per cent, we cannot be pleased with this fact, because this amounts to US$66m alone."
The Reporter continued: "The Croatian minister of economy is unhappy about the fact that the interstate treaty on the protection and encouragement of investment has been implemented only in the Federation of Bosnia-Herzegovina, not in the Serb Republic."
Vojkovic added: "The government of the Republic of Croatia has proposed that the Bosnia-Herzegovina government sign an addendum to the treaty in order to implement the treaty throughout Bosnia-Herzegovina, including the Serb Republic. It is obvious from the structure of our trade that in practice 90 per cent of trading is done with the Federation of Bosnia-Herzegovina and only 10 per cent with the Serb Republic. This is where considerable scope exists to deepen our cooperation."
Economic cooperation between Bosnia-Herzegovina and Croatia will continue in the future. The ministers agreed to initiate a meeting between businessmen; a proposal was also put forward to set up an office of the Bosnia-Herzegovina Agency for the Encouragement of Investment in Zagreb.

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TELECOMMUNICATIONS

Three telephone operators granted long-term licences

The Communications Regulatory Agency [CRA] has issued the first licences to operators of public telephone lines - to Telekom of the Bosnian Serb Republic, Telekom of Bosnia-Herzegovina as well as to the Croatian post offices and telecommunications of Mostar over a period of 15 years, SRNA News Agency has reported.
The deputy minister of civilian affairs and communications in the Bosnia-Herzegovina Council of Ministers, Milan Lovric, said at a news conference that the licence grants its users the right to install and maintain a public telecommunications network and to provide these services throughout the territory of Bosnia-Herzegovina but also commits them to improve their services technically...

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