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: 081 - (01/02/04)
Ashdown's role under criticism
The Bosnian situation is always fraught with difficulties. Paddy Ashdown, the international community's high representative for Bosnia, has been criticised for his performance, but if he is erring on the side of over-strong rule, it is certainly better than letting things just slide
In a scathing critique of seven years of Western efforts to turn Bosnia into a liberal-democracy, the European Stability Initiative (ESI), based in Berlin and Sarajevo, attacks Ashdown for turning Bosnia into 'a European Raj,' deploying the methods of the British in India in the nineteenth century. They say that the sweeping powers vested in the Office of the High Representative are enfeebling the state, discouraging local political initiative and entrenching a culture of dependency.
The criticism is more of his office, than of Ashdown personally, although he is accused of making greater use of his untrammelled powers as 'a benevolent despot' than his predecessors. On average he has been imposing 11 decrees per month since taking over in May, 2002, compared with four in 1999.
Ashdown's officials concede that his sweeping powers may "stunt the political development of the country," but opinion polling undertaken by his office has shown that there is broad support for his powers to force the pace of reform.
One particularly controversial use of them has been to accelerate judicial reform. There was a large-scale purge of judges and prosecutors by his predecessors last year. Ashdown is trying to create a depoliticised, impartial and competent judicial system. Bosnia's own politicians are too venal and corrupt to be entrusted with the job themselves. The controversy is likely to go on. At least nobody is denying that there is a forceful ruler in Sarajevo, intervening in a hands-on manner in even routine economic and political decisions.
Bosnia as the biggest test of new European force
Lord Ashdown's authority and that of his powerful office is sustained by the presence of nearly 12,000 international peace-keepers, troops from many countries. Some 1,500 are from the US. He says that the European Union must allay American fears and gain the trust of Bosnians if it wants to replace the NATO peacemakers in the federation. The S-For force of NATO is due to be replaced in the second half of 2004 by the EU-For in a time-frame that the US has criticised as too soon. The number of peacekeepers would be reduced to 6,000 to 8,000.
Indeed, Richard Holbrooke, the US negotiator of the 'Dayton Accord' of 1995 that ended the 1992-95 war, and Bernard Kouchner, the French head of Medicins sans Frontieres, have doubted the wisdom of the withdrawal of all US troops from Bosnia, which the replacement involves. They note that, unlike Iraq, no US or coalition soldiers have lost their lives in the S-For operation. The removal of US forces will contribute to a slackening of interest in Bosnia by the US Congress in their view and a reduction in aid.
But Ashdown is adamantly in favour of the Europeanization of the peacekeeping operation. This chimes in with his strongly pro-EU stance, common to the Liberal Democrats in Britain. Europe's ambition to be heard in the world as on a par with the US is seriously impaired by its lack of a common defence. NATO is rightly seen as dominated by the US, whose defence budget is greater than the combined total of the next nine members, with easily the most advanced equipment. Europe's fledgling rapid reaction force has so far only taken part in small operations in Macedonia and the Congo. Bosnia is seen as the test case. If the EU cannot get its act together here, it will probably be curtains for the whole idea.
US reservations about the EU-For were linked to strong suspicions of the attempt by France and Germany to establish a European defence identity independent of NATO. But Washington seems to have warmed to the idea, particularly if it is under British command, because of its heavy engagements in Afghanistan and Iraq.
"Europe has to look serious about this," says Ashdown. "It cannot come in on the cheap. It has to come in as an effective force capable of securing the peace. It has to do it with bayonets fixed and flags flying." The EU would also need to improve its credibility with the local authorities, having stood helpless on the side-lines in the 1992-95 war, which was only ended by American intervention under President Clinton.
Death of a great peacemaker
A key part of the success of the negotiations at Dayton was due to the concessions made at the time by Alija Izetbegovic, then the leader of Bosnian Muslims. He disliked the terms, but said that his people "needed peace more than justice."
In October came news of his death. He was formerly president of the Bosnia-Herzegovina Federation. He withdrew from political life in October, 2001.
Among many tributes from international figures, who knew him and worked with him to create the peace, was one by Clinton, who had just visited Potocari to join in the commemoration of the Srebrenica massacre of Bosnian Moslems in 1995, in which 8,000 people were killed by Bosnian Serb militia. The Bosnian Serb leader at the time, Radovan Karadzic, who ordered it, and General Ratko Mladic, who implemented it, are still at large. Until they are arrested and sent to The Hague, there will be a running sore in the body politic of the federation.
Ashdown said recently that the failure of S-For to find Karadzic was regrettable, but understandable. "This guy is probably up on the wildest mountain fastness in Europe where Tito hid 16,000 Partisans against six German divisions." He and Mladic are being protected by old security hands in the Serb Republic in Bosnia, as well as in Serbia itself.
FOREIGN ECONOMIC RELATIONS
Bosnia and Saudi Arabia sign agreement on economic cooperation
Adnan Terzic, chairman of the Council of Ministers of Bosnia-Herzegovina, and Prince Sa'ud al-Faysal, foreign minister of Saudi Arabia, recently signed an agreement on economic, trade, investment, technical, cultural, youth and sports cooperation, BHTV1 reported.
The agreement, signed in Riyadh, creates a legal framework allowing Bosnian companies to export their products to Saudi Arabia and enabling Saudi investors to move into The Bosnian market.
Bosnian bank receives first syndicated loan from EBRD
BiH [Bosnia-Herzegovina] on 16th December received its first syndicated loan, which will introduce international commercial banks to the country's banking sector, an area they have previously been reluctant to consider for investment, the EBRD said in a press release, Onasa news agency web site has reported.
The EBRD-led syndication, which was oversubscribed, will lend 45m Euros to Raiffeisen Bank d.d. Bosna i Herzegovina (RB) Sarajevo, the largest bank in the country, which will enable it to provide private-sector clients - including small and medium-sized businesses - with medium- to long-term financing that is otherwise scarce.
Rogers LeBaron, Director of Bank Lending at the EBRD, said the project is important because it will introduce new lenders to the Bosnian banking sector and will open a new avenue of opportunities for clients looking for longer-term loans. By attracting commercial financing, RB will be in a position to expand its current lending opportunities that will benefit its many clients, added Mr LeBaron.
The EBRD will directly lend 15m Euros, and the remaining 30m Euros will be syndicated to nine banks from five countries. Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden is taking 10m Euros and Portugal's Caixa Geral de Depositos, Germany's Bayerische Hypo-und Vereinsbank and Austria's Osterreichische Volksbanken are each taking 3.5m Euros as co-arrangers.
Acting as lead managers, State Bank of India is taking 2.5m Euros, while American Express Bank, Raiffeisen Zentralbank (RZB-Austria) and WGZ-Bank are taking 2m Euros each. Austria's Adria Bank AG is taking 1m Euros as a manager.
Established in 1992 as Market Banka d.d., the bank was renamed in 2000 when it was acquired by RZB-Austria, which currently holds a 99.97 per cent stake in the bank.
The EBRD has supported RB's operations since 1997 through various facilities, including credit lines - to support the bank's small business lending and consumer loans, through the trade facilitation programme - under which the EBRD can fully guarantee the political and commercial risk of trade-finance instruments, and until recently through an equity investment in the bank.
Edin Muftic, Chief Executive Officer at RB, said that for Raiffeisen Bank, the syndication of this loan represents the continuing successful cooperation with the EBRD.
Mr Muftic added that the facility will further improve RB's product range for large corporate customers and small and medium-sized enterprises.
The EBRD is the largest investor in Bosnia and Herzegovina with 241m Euros invested in 32 projects. Raiffeisen Bank Bosna i Herzegovina provides its services through 56 branches in all parts of the country.
As of 30 June 2003 the bank´s total assets amounted to 582.9m Euros .
Bosnian government puts cost of GSM licence at 420KM
The Bosnia-Herzegovina Council of Ministers have decided to set the cost of a GSM licence in Bosnia-Herzegovina at 420m convertible marks (KM), stipulating that the three operators in Bosnia-Herzegovina would be obliged to pay 140m KM each in the next eight years, Bosnia-Herzegovina Transport and Communication Minister, Branko Dokic, said.
After the Council of Minister's session, he explained that the operators would have to pay 15 per cent of the amount in the first two years, and 10 per cent over the remaining six years, SRNA News Agency reported.
Djokic said that a licence for a third GSM operator would be granted in the first half of 2004.
Our analysts and
editorial staff have many years experience in analysing and reporting
events in these nations. This knowledge is available in the form of
geopolitical and/or economic country reports on any individual or grouping
of countries. Such reports may be bespoke to the specification of clients
or by access to one of our existing specialised reports.
For further information email: