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BOSNIA AND
HERZEGOVINA


  
   

REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,922,205

Capital
Sarajevo

Currency
Convertible Mark 

President 
Zivko Radisic

  

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: 074 - (19/06/03)

Old Deal gone sour
The Bosnians are mired in a postwar nightmare. The 1992-95 civil war was a ferocious affair, far more so than is generally realised. It was certainly the bloodiest conflict in Europe since the Second World War, by far.
The casualties were utterly appalling: 240,000 or so dead and thrice that number wounded and disfigured for life. It is a running sore, with over one million of the four million population still refugees.

New Deal for the republic
When a country is in a mess, it helps if someone comes along who offers the people a New Deal, as did Roosevelt in the US in 1933. In the American case it was due to an international depression of unprecedented proportions, with GDP collapsing one third in one year (1929-30) and unemployment reaching one third of the work-force.
In Bosnia's case it was self-induced civil war. The first thing to do is clear away the debris of the conflict; who was responsible for the mayhem. This means the war criminals in the case of the Bosnian confederation. 
The Bosnian Republic is a rich candidate for a makeover when it comes to a war crimes tribunal. It has agreed to hold its own war crimes trials, not just to hand over suspected war criminals to the Hague.
The Bosnian State Court, set up by all three constituents of the confederation one year ago, Serbs, Croats and Muslims, is ready to try war criminals from the summer of 2004. The tribunal is prepared to try low-profile cases, leaving high profile-cases to be tried, as now, in the Hague.

Into the EU and NATO
The Bosnians were particularly pleased about the Greek presidency of the EU for the first half of 2003. They look to the EU as the saviour of their confederation in the long run. Talking about putting the past behind them was the theme for the South-East Europe Cooperation Process (SEECP) at its meeting in early April. Combating organised crime, encouraging telecoms and lifting trade restrictions were high on the agenda.
NATO's Secretary-General, Lord George Robertson, is keen to see Bosnia integrated into the organisation. There is no one keener on the idea than his former political rival in the UK, Paddy Ashdown, former head of the UK Liberal Democrats, now as High Representative, the West's effective viceroy.

Model for Iraq
Ashdown is learning Serb-Croat (he already knows Chinese) and is proving a successful 'hands-on' ruler, extremely concerned to travel extensively and be known to the people. Something similar would be a good idea for Iraq, another dubious geopolitical entity split three ways. Ashdown has suggested as much himself. Perhaps he should be learning Arabic for his next assignment.

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EU ACCESSION

Bosnian foreign minister analyses pace of process of accession to EU

Bosnia-Herzegovina Foreign Minister, Mladen Ivanic, believes that Bosnia-Herzegovina will become an EU member between 2009 and 2012. He said that between 5 and 10 per cent of the tasks related to membership had been completed.
"The feasibility study on Bosnia-Herzegovina's joining the EU is now being drafted, since we have only just forwarded answers to 400 questions we received from the EU," Ivanic said in an interview to SRNA News Agency.
He said that the first two sets of questions had been received and analysed, and that a European Commission team visited Bosnia-Herzegovina and discussed some of the answers. There is also the third set of questions, after which the EU will complete the feasibility study, Ivanic said.
He expects this to happen by autumn and hopes that the outcome of the feasibility study will be positive, "that it will show that Bosnia-Herzegovina is capable of starting the process of accession negotiations, which would be the next step in joining the EU."
He warned that "Bosnia-Herzegovina is facing an enormous task, because the EU legislative is really big." "We have not done much in this sphere, in fact we are only beginning the harmonization with the EU regulations," Ivanic said.
As for the main tasks for Bosnia-Herzegovina next year, he said that a list of reforms which must be carried out if Bosnia-Herzegovina is to become an EU member ought to be drawn up.
"This is something we must negotiate with the EU and we must have a strong political and expert team," the foreign minister said, expressing the hope that Bosnia-Herzegovina will have "a lot of help from its friends, the neighbouring countries which have gone through this process already."
As an example of how much Bosnia-Herzegovina lags behind, he noted the banking sector. "We completed the reform of the banking sector this year. Most of this sector in Bosnia-Herzegovina is consists of foreign banks. The countries which have signed the association agreement were in 1992 and 1993 at the stage where Bosnia-Herzegovina is now. This means that, if we speeded up our activities, we would need 10 years to catch up with them and become an EU member," Ivanic said.

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FINANCIAL NEWS

EBRD issues report on state of Bosnian economy, sets out future activities

Bosnia-Herzegovina has made significant strides towards establishing a market economy, but a great deal remains to be done if its economic progress is to become more sustainable, the European Bank for Reconstruction and Development [EBRD] declared in a paper issued on 11th June, Onasa News Agency web site has reported.
The bank's latest strategy analyses the economic climate and outlines the EBRD's priorities in the country over the next two years. 
Despite low inflation, improved fiscal discipline and annual economic growth averaging around 4 per cent, the Bosnian economy is still fragile, with GDP per capita about US$1,400 and poverty and unemployment widespread. To help address these concerns, the EBRD intends to focus more on strengthening the country's private enterprise sector - channelling finance to small and medium-sized enterprises (SMEs) and working to lure foreign strategic investors - as well as promoting new investment in infrastructure. 
The new strategy also calls on the two entities making up Bosnia-Herzegovina (BiH) - the Federation of BiH and the Republika Srpska [Serb Republic] - to deepen their common approach to economic development and improve the free flow of trade and investments in the wider region. 
Specifically, Olivier Descamps, business group director for Southern and Eastern Europe at the EBRD, said that while BiH has made some progress in small-scale banking and telecoms privatisations large-scale privatisation lags and the rule of law is weak. Corruption and organized crime remain serious problems. These factors are hampering the country's ability to attract much-needed investment, whether foreign or domestic. 
The EBRD is one of the largest investors in Bosnia and Herzegovina, having invested around 230m euros in 30 projects. Going forward, Mr Descamps said, the bank will continue to support the country's economic reforms and will work with the new governments to help create a stronger investment climate. 
A priority will be to strengthen and develop the private sector, to work with the authorities to boost large-scale privatisation and provide financial support to strong domestic and foreign enterprises. In the financial sector, the EBRD's activities will focus on bank consolidation, improving access to finance for micro-enterprises and SMEs, especially through credit lines with local banks, and on introducing new products, such as mortgages and leasing. 
The bank will also step up its focus on infrastructure projects, particularly those that create regional linkages with neighbouring countries, as well as on local projects with municipalities. For example, the bank will explore, with other international financial institutions, the possibility of financing a new road project with components both in the Federation of BiH and Republika Srpska, improving links to the region.
Another example is the bank's intention to work with local water and wastewater utilities to improve the standards of service to the population.
The strategy also reiterates the bank's plan to implement existing projects, including the Electric Power Reconstruction project, for which the bank provided 50m euros in 2000; the Thermal Power Upgrade project, a 20m euro loan to raise environmental standards at four thermal power plants; and a 30m euro pre-privatisation loan to Telecom Srpske signed late last year. 
After years of conflict and economic malaise, the citizens of Bosnia and Herzegovina have become impatient with the pace of reforms. Mr Descamps urged the authorities to urgently address issues affecting the country's economic growth, and said the EBRD is committed to providing support to help speed up reforms, tackle corruption, improve legislation and speed up privatisations all of which will benefit the local population.

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FOREIGN ECONOMIC COOPERATION

Bosnian premier urges joint ventures with Turkey with EU in mind

Bosnia-Herzegovina must nurture and deepen cooperation - especially economic cooperation - with countries like Turkey, the chairman of the Bosnia-Herzegovina Council of Minister, Adnan Terzic, has stressed.
A delegation from the country visited Turkey recently and called on Turkish businessmen to invest in Bosnia-Herzegovina and to join the privatisation process. The delegation offered Turkish businessmen and the government the prospect of creating joint projects which would help Bosnia-Herzegovina redirect production and concentrate on products which could find their way onto EU markets easily, BH Radio 1 reported 
The chairman of the Council of Ministers, Adnan Terzic, said, "in this manner, we could reduce imports into Bosnia-Herzegovina and also open up opportunities for our products to be promoted on the European markets."
During talks with Turkish businessmen gathered in one of the biggest business organizations, it was agreed to form a kind of free zone in Bosnia-Herzegovina. The zone would pave the way for a framework for cooperation and production which would enable the country to reduce its imports, Terzic believes.
The two delegations signed an agreement on welfare insurance and an agreement on administrative arrangements regarding the implementation of the welfare insurance agreement. The agreements regulate issues of mandatory health insurance and health care, as well as pension and invalidity insurance for the citizens of Turkey and Bosnia-Herzegovina.

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FOREIGN LOANS

IMF approves US$34m for Bosnia given fiscal, economic growth indicators

On the basis of indicators of fiscal and economic growth and the promise made by the authorities of Bosnia-Herzegovina that the reforms will continue, the IMF has approved US$34m for Bosnia-Herzegovina, of which US$11,330,000 will go to the Serb Republic [RS], RTRS Radio web site has reported. 
The RS Ministry of Finance has reported that the IMF supported the activity of the Currency Board and the reforms on stimulating the local economy, consolidation of the private sector and increase in exports.

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