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BOSNIA AND
HERZEGOVINA

 
  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 5,249 4,800 4,400 109
         
GNI per capita
 US $ 1,270 1,240 1,230 126
Ranking is given out of 208 nations - (data from the World Bank)

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: 078 - (27/10/03)

British viceroy
Paddy Ashdown, now known more sonorously as International High Representative Lord Ashdown, is the man that matters in Bosnia. He has powers akin to a colonial governor or viceroy. He can dismiss ministers and judges deemed incompetent or venal or both. Indeed, he has done so.
He tours the country vigorously, as in his days as leader of the UK Liberal Democrats. He tirelessly explains the operations of democracy to those little used to them, to the point of tedious repetition. He is firmly convinced this is necessary in a country which is not really a country yet, with a precarious past.
His latest initiative is to attempt to turn his office into a European Union Representative Office. He is clearly aware that the Americans are pulling out, hoping to turn Bosnia over to the Europeans. Rumsfeld said as much recently. The number of US troops is down to 1,700 in a force of around 12,000 international troops. There are calls in Congress for them all to be removed. 
The Ashdown initiative is his big mistake, Richard Holbrooke and Bernard Kouchner have said recently. Holbrooke, who negotiated the Dayton Accord for the US, and Kouchner, the founder of Medicins Sans Frontieres, really know the situation in the Balkans and more to the point in Congress. "Such an action, which he hopes to complete at the beginning of 2005, might result in the end of Congressional support for Bosnia and would certainly send the wrong signal to the people of the region that America was withdrawing." 

'Three-quarters full'
The American and the Frenchman have given a most encouraging account of the state of Bosnia in an article in the Wall Street Journal Europe. Over one million refugees have returned home; and most impressively 400,000 of them to areas where they are the minority. Where coalition forces are under attack in Iraq some 10 times a day in Iraq, in eight years of peacekeeping in Bosnia "there have been no - I repeat - no casualties or wounded in the NATO-led force."
They continue: "Bosnia's problems should not be understated. The economy is weak, unemployment high and an unacceptable percentage of the nation's GDP - over 60 per cent - is in the government sector, which is a licence to steal for the highly corrupt political parties that dominate the huge public sector. Also, the Dayton Agreement left one country with three armies, each one ethnically based, and only now has the international community, ably and vigorously led by the High Representative, Lord Paddy Ashdown, come up with a plan to tackle this issue; one country cannot have three armies. The NATO forces will not be able to leave until this issue is fixed. And Radovan Karadzic and Ratko Mladic - the Saddam Hussein and Osama bin Laden of Europe - are still at large. The failure to capture them over the last eight years has been very costly to efforts to build a new country after a terrible war. 
"Still despite a huge job ahead, Bosnia can reasonably be described as a success story. This glass is no longer half-full or half-empty, it is at least three-quarters full."

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FINANCIAL NEWS

Bosnian premier notes positive economic trends

"I am proud that such an impressive event is taking place in BiH [Bosnia-Herzegovina], proving that BiH has respectable scientific resources," BiH Council of Ministers Chairman Adnan Terzic, said in a statement in Sarajevo on 10th October, during the opening ceremony of the international economic conference named From Transition to Development - Globalization and the Political Economy of Development in Transition Economies, Onasa News Agency web site has reported. 
According to Terzic, BiH is currently at a crossroads, transiting from the economy dependent on foreign aid to the economy relying on its own strength. 
"BiH's credit solvency is not high and the country is still dependent on the World Bank (WB), International Monetary Fund (IMF) and on other banks," Terzic said, adding that progress has been achieved in BiH, though. He pointed out that progress was accomplished in the security sector and return, as well as that the process of integration into the European Union (EU) started. 
Regarding the positive economic indicators in BiH, Terzic stressed that BiH gross domestic product (GDP) had doubled in relation to the post-war period, macroeconomic stability and convertibility of the BiH currency was preserved, and BiH's foreign debt was serviced on regular basis. 
"BiH has marked the trend of economic growth in the post-war period, hence, we expect economic growth of 4 per cent in 2004, and 6 per cent in 2007. Drafting of the BiH Development Strategy (PRSP) is in the final phase, and we expect the strategy to provide for an adequate model of economic development," Terzic said. He expressed confidence that there was political consent in BiH to introduce the EU standards to the country. 
Principal Deputy High Representative Donald Hays also addressed those present at the opening ceremony. 
According to Hays, the greatest challenge the BiH authorities are facing today is not just to govern and speed up the reforms, in order to enable BiH citizens to benefit from the European integrations and globalization. 
"The real challenge lies in the need to explain this process, that is to define what has to be done to improve the reform process," Hays pointed out, adding that neither the BiH government nor its experts have succeeded to outline and disclose to the public, in an efficient way, the real truth about the period of transition. Hays underlined that competitive companies would help BiH join the EU and the global economic developments. 
"However, to become competitive, companies have to have efficient governance, which is to say board members and directors have to perform their duties accordingly, in order to set up and maintain the necessary internal control," Hays said. He pointed out that issues such as supply, contract signing, fund raising, distribution of profit and carrying out rational business plans were especially important. 
The Sarajevo Faculty of Economics organizes this conference together with the Centre for International Development in Bologna, Centre for Economic Reform and Transformation in Edinburgh, United Nations Development Programme (UNDP) in BiH and the World Bank. The conference features over 100 renowned economists from 26 countries from five continents. 
Among other things the participants will discuss the long-term lack of coordination in economic growth between countries in transition and developed countries, distribution of income, inequality and poverty, effects of the global free-trade agreement, etc. 

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FOREIGN ECONOMIC RELATIONS

Bosnia reactivates free trade agreement with Serbia-Montenegro

The government in Sarajevo have taken a decision to again start implementing the free trade agreement between Bosnia-Herzegovina and Serbia-Montenegro, after freezing the agreement at the beginning of June, FoNet News Agency has reported.
The freeze applied to goods produced in Montenegro and companies in the republic which export goods to Bosnia-Herzegovina.
The Bosnia-Herzegovina Council of Ministers annulled the decision to temporarily freeze the implementation of the free trade agreement after the government in Podgorica adopted a decision to automatically implement the free trade agreement on the territory of Montenegro.

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FOREIGN INVESTMENT

Presidency chairman says US companies prepared to invest in Bosnia

The chairman of the Bosnia-Herzegovina Presidency, Dragan Covic, has said that he is very pleased with the results of his visit to the USA and that he is encouraged by US businessmen's interest in investing in Bosnia-Herzegovina, SRNA News Agency has reported. 
During his stay in New York, Covic addressed the UN General Assembly and met UN head Kofi Annan. Covic said that Annan was pleased with the pro-reform orientation of the Bosnia-Herzegovina authorities and that he had accepted the invitation to visit Bosnia-Herzegovina next year and possibly attend the opening of the Old Bridge in Mostar. The UN is one of the sponsors of the reconstruction of the bridge.
Covic said that he had met Phillip Merill of the Export-Import Bank in Washington. Merril said that the bank was interested in investing in Bosnia-Herzegovina and that it planned to open its office there.
Merril agreed that Bosnia-Herzegovina was a great challenge for his bank and said that contacts should be immediately established with the government of Bosnia-Herzegovina and that a list should be drawn up of all potential investment projects in Bosnia-Herzegovina," Covic said.
During his three-week stay in the USA and Canada, Covic visited Chicago, Cleveland, Washington, Los Angeles, New York and Toronto. He said he had met hundreds of businessmen of Bosnian origin and dozens of US businessmen.
Covic invited them to attend the International Conference on Investments in Bosnia-Herzegovina, scheduled to take place in Mostar in late February, to get acquainted with the situation in Bosnia-Herzegovina and it potentials and to discuss concrete projects.
According to Covic, at least 50 US businessmen promised to attend the conference and Bosnian representatives should now prepare thoroughly and convince the guests that investments in Bosnia-Herzegovina will be profitable.
Before leaving the USA, Covic had a private meeting with former US diplomat, Richard Holbrooke.

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MINERALS & METALS

Bosnian steel company trade union postpones strike after reports on foreign investors

The BH Steel trade union has decided not to call a general strike on 16th October as had originally been announced. At an extraordinary session the trade union decided on a possible recommencement of the strike on 21st October after talks with the company's managing board, BHTV1 has reported. 
This conclusion was reached because of current reports on an Anglo-Indian corporation possibly becoming a strategic partner of BH Steel. However, the managing board of the company has failed to meet the deadline for making an announcement on requests for a salary increase and for the dismissal of the current company director.

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TELECOMMUNICATIONS

Bosnian Serb government passes plan to consolidate telecom operator

The Republika Srpska [Bosnian Serb Republic] government on 13t October passed an action plan to consolidate Telekom Srpske [Serb Republic telecommunications company], according to the international audit report which found that the company loses 38m KM [convertible mark] per year, the Minister for Traffic and Communications Dragan Solaja said, Onasa News Agency web site has reported. 
He told reporters after the session of the government that the action plan was brought about by recommendations of the international auditor, in order to remove the weakness and insufficient efficiency at managing the state-owned capital in the company. 
"A full control of financial operation in Telekom Srpske is required. Also, responsibility is to be set for eventual failures," Solaja said, adding the Head Auditor is also due to provide arguments on eventual failures. 
Solaja said the shareholders assembly of Telekom Srpske will take place on 30th October, which is expected to pass measures for fulfilling of the recommendations from the international audit report, as well as responsibility measures of the Steering Board and Supervising Board. 
He added the government will in the next period pass a new law or amend the present law on public procurements, as well as review the legislation on protection of minority shareholders and creditors.

Sfor launches surprise inspection of Bosnia-Herzegovina Telekom

The Stabilization Force in Bosnia-Herzegovina [Sfor] has confirmed that its members staged a surprise, routine inspection of the management office of the Bosnia-Herzegovina Telekom [state-owned telecommunications company] in Sarajevo yesterday. Sfor spokesman Dave Sullivan said that Sfor launched the inspection in order to make sure that all activities by the company were being conducted in line with the Dayton Agreement, BH Radio 1 has reported.

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