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  BOSNIA AND
HERZEGOVINA


REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,922,205

Capital
Sarajevo

Currency
Convertible Mark

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: 065 - (26/09/02)

The Bosnians are under a new rule from the top. The International High Representative is now ex-head of the British Liberal Democratic party, Paddy Ashdown.

Model for Iraq?
The Bosnian situation is particularly interesting at the moment in the light of the crisis in the Middle East. If 'regime change' comes to Iraq the shape of the post-Saddam polity could become rather like Bosnia. 
Certainly, heavy Western, mainly US, involvement would be essential if the country was not just to break up into three constituents, an independent Kurdistan, a Shia state in the south for the marsh Arabs and others and a rump Sunni state in between. An International High Representative and officialdom and foreign troops on the Bosnian model could avoid this.
For Bosnia has only held together from splitting up into its own three constituents, the Serb Republic, the Croats and the Muslims, by reason of the all-important international presence, with 30,000 or so troops and legions of aid workers, foreign advisers and the like.
Political direction comes from the top. Ashdown is already showing a firm hand, sacking an errant vice-premier or politico in the Serb Republic or the Croat-Muslim Federation. It would be useful for his advice to be sought whether in his experience a similar 'vice-regal' set-up and hierarchy of authority could work for Iraq. These and other issues will be discussed in a forthcoming interview that New Nations.com is to have with him around Christmas.

Relations with Russia
The Serbs are traditional allies of Russia. The (Bosnian) Serb Republic is improving its ties across the board with the Russians.
An accord has been signed between the premier of the Serb Republic, Mladen Ivanic, and Moscow mayor, Yuri Luzkhov, that envisages wide-ranging cooperation between the tiny republic and Moscow.
Moscow has agreed to attract more Serb construction workers, while Moscow will deliver equipment for the development of the Serb Republic's economy as goods credit. One such category equipment will be for gas pipelines.

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BANKING

Banking in Bosnian Federation is stable 


The Bosnian Federation's banking agency said on 28th August that the entity's banking sector continued its successful business this year, and increased banking capital, HINA News Agency has reported. 
By the end of this year's first six months, the overall banking system's capital assets in the Bosnian Federation amounted to about 2.1bn euros, which is a 9 per cent increase in relation to the same period in 2001.
Credit volumes grew by 32 per cent and reached about a billion euros.
Increased loans to the public and economy resulted in a decrease of funds on banks' accounts from about one billion at the end of last year to 790m and the end of June.
The overall capital of the Federation's banks grew in the first half-year from about 28m euros to 281m. Overall deposits increased by the same percentage and reached about 157m euros. About 574m euros account for citizens' savings, making a 2.5 per cent increase over 2001. Long-term loans increased from 14.7 to 19.8 per cent.
Banks in the Bosnian Federation are mostly in foreign ownership. Foreign shareholders' capital has exceeded 70 per cent and amounts to 203m euros.
Foreign investors entirely own seven banks, eight have major shares and minor shares from two to 42 per cent in five banks.

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ENERGY

Bosnian Serb premier visits Moscow for talks on energy sector cooperation

Prime Minister of the Bosnian Serb Republic, Mladen Ivanic, had talks in Moscow on 2nd September with Russian Deputy Minister for Economic Development and Trade, Roald Piskoppel. The latter conveyed the interest of Russian firms in taking part in the tender for constructing of the Buk-Bijela hydroelectric power plant on the Drina River [eastern Bosnia].
"We provided them with the details of the tender and promised to help ensure that Russian firms take part in the realization of this project," Ivanic told SRNA News Agency.
He said that the Russian side had promised to speed up work on the construction of the Zvornik-Novi Grad gas pipe line.
Ivanic said that the concession for this important project was granted to a mixed Russian-Serb company.
The Serb Republic's Minister of Industry, Pero Bukejlovic, who was in Moscow with the prime minister, had talks with representatives of Russia's well known Likostroy company which has been asked to effect a US$10m loan agreement which Moscow has granted to the Serb Republic for equipment and construction material primarily for electricity industry, mines and individual industrial plants.
The Serb Republic prime minister was also expected to sign a number of economic cooperation agreements.

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FINANCIAL NEWS

BiH approves job creation plan

The Bosnia-Herzegovina (BiH) residency has given its full support for the implementation of a document on economic reforms agreed to between the state government and international organisations. Presidency Chairman, Beriz Belkic, made the announcement.
The World Bank (WB), International Monetary Fund (IMF) and the EU have agreed to the document, as well as international agreements signed by BiH and backed by the Peace Implementation Council, Onasa News Agency reported.
Belkic said the council of ministers were asked to coordinate and devise means of implementing the planned reforms, adding that the document will be considered by the state and entity parliaments. Foreign Trade Minister, Azra Hadziahmetovic explained that the economic reforms would secure 60,000 new jobs in the country by 2004, with implementation slated for completion within 24 months. "It is a relatively short-term programme of economic reforms," she stated.

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FOREIGN ECONOMIC RELATIONS

Bosnia and Indonesia sign trade treaty

This is the first bilateral agreement in the sphere of economic cooperation, and the main objective is to regulate and intensify trade and other economic relations between Bosnia-Herzegovina and the Republic of Indonesia in line with the principles of the WTO, Federation News Agency has reported.
After the signing, Minister Hadziahmetovic said she expected negotiations on the treaty regulating the protection and encouragement of investment to be completed soon.
She recalled that before the war, Bosnia-Herzegovina companies were present on the Indonesian market - which is quite large - but that cooperation between the two countries has been very modest recently because of war and post-war developments.
She went on to say that interest in trade existed, but that there was no appropriate legal framework. The treaty today, she went on to say, opened the door to the improvement of economic cooperation between the two countries.
She added that there were many Indonesian products on the Bosnia-Herzegovina market which were imported indirectly from third countries.
"I am hopeful that through the direct establishment of economic and trade relations we shall have that type of communication directly with Indonesia, which will make Indonesian products cheaper on our market. I would particularly wish to emphasize the opening of the Indonesian market to Bosnia-Herzegovina producers. There is particular interest in investments and cooperation in the sphere of steel industry, rubber industry and civil engineering products," Hadziahmetovic said.
The treaty envisages the establishment of a joint trade committee which will meet periodically and work on the implementation of measures for the improvement of economic cooperation.

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PRIVATISATION

Bosnian Serb government insists on privatisation of power supply system


Bosnian Serb Republic [RS] Prime Minister, Mladen Ivanic, said on 9th September that the RS government is demanding reform of the power system in order to ensure the privatisation of the power industry, so that it would start working in accordance with market principles, which would mean the elimination of the current monopoly and lower prices for final users, Onasa news agency web site has reported . 
Ivanic said he hoped the RS National Assembly would at its session on September 12th-13th adopt the agreed law on power, although there is resistance to this in the RS. 
Ivanic met with Principal Deputy High Representative. Donald Hays. and the representatives of the World Bank (WB) and USAID. Hays said they discussed the privatisation of the public community sector, particularly the power sector. 
He added that a plan of action is to be drawn up now. 
According to Hays, that would create conditions for the implementation of the Power III project, whose realization would connect the BiH entity systems into a single network in BiH. The WB is ready to help this process by the long-term credit of more than US$100m.

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