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BOSNIA AND
HERZEGOVINA

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REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,989,018

Capital
Sarajevo

Currency
Convertible Mark 

President 
Zivko Radisic

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Update No: 088 - (27/08/04)

The omens are good
Three items of good news have come out of Bosnia of late. Firstly, on 22 June 2004, under intense international pressure, the Serb president finally acknowledged in a televised public statement that 'the nine July days of the Srebrenica tragedy are a black page in the history of the Serb people'. 
A few days later, in the second round of presidential elections in Serbia, the candidate of Šešelj's Radicals lost to a rival widely regarded as a 'pro-Westerner' and as reform-minded. Just three days after this, following Bosnia's failure to gain entry to the Partnership for Peace at NATO's Istanbul summit, the International High Representative, Lord Paddy Ashdown, punished with political and financial sanctions over 70 prominent Serb Republic officials accused of aiding Radovan Karadžic and other fugitives from the Hague tribunal. 
The first of these events is unquestionably the most important. Confronting the truth about the war waged in their name between 1992 and 1995 is vital, if Bosnian citizens are to play their part in making of their country a viable and democratic state. Yet the Srebrenica massacre, however horrific, was in reality nothing but a last chapter in a series of horrors, committed in order to establish an ethnically pure Serb entity. 
The election of Boris Tadic to the Serbian presidency is a key event for Bosnia as well as Serbia. The fear is that the outcome may prove more symbolic than substantive, especially since the Radicals remain the strongest party in Serbia's parliament, with 80 of the 232 seats, while their defeated presidential candidate won 45% of the votes defending an unalloyed Greater Serbian programme.
The coalition government headed by Koštunica remains a nationalist admixture or cocktail, its planned 'solution' for Kosovo smacking more of war than peace. Tadic himself may mouth soothing words for Western consumption, but his record as defence minister gives little hope of a break with the unreconstructed nationalism that still holds Serbia's political life in thrall.
As for Ashdown's sanctions, welcome as these are, it is difficult to believe that personnel changes can make much difference, when the problem is fundamentally structural. Huge amounts of public funds go to sustain the vast, parasitic hierarchy of bureaucratic apparatuses created by Dayton, which work not for the public good but for their own interest.
These bodies are clearly not accountable to the people of the country, but only to the Office of the International High Representative, which may periodically dismiss individual wrongdoers. But the OHR remains unwilling to admit that qualitative progress in a democratic direction is difficult, so long as Bosnia remains the prisoner of ethnic based structures created during the war with the intention precisely of preventing it from becoming a viable nation-state, but retained because of the need for peace.

Ashdown optimistic
Ashdown sees things differently. Peace in Bosnia and Herzegovina is becoming increasingly entrenched thanks to the courage of Bosnian citizens and the firm and continuing engagement of the international community, in which the U.S. is a key partner, Ashdown said during a meeting in Sarajevo with the U.S. Secretary of State, Colin Powell, on August 1st. 
The High Representative welcomed the US's continuing role in helping to drive forward core reforms in the financial, defence and intelligence sectors -- reforms that are necessary to make Bosnia a stable, viable, peaceful, multiethnic state. These reforms have already made BiH a serious candidate for the start of Stabilisation and Association Agreement negotiations with the European Union and an invitation from NATO to join the Partnership for Peace program was announced by OHR. 
The High Representative also briefed Secretary Powell on recent political developments, and the Secretary of State welcomed the start of the process to modernise Bosnia's police forces through the Police Reform Commission. 
"Building up the recently reformed Intelligence Service (OSA), the State Information and Protection Service (SIPA) and the Security and Justice Ministries must be our focus now," the High Representative said. "The laws are in place, but these must now be implemented. Agencies and ministries must be staffed and fully functioning, if BiH is to show it is capable of tackling organised crime and resisting the global threat of terrorism." 
The Secretary of State and the High Representative agreed that implementing these core reforms must not be allowed to fall behind schedule. 

Mostar bridge and town rehabilitated
Until the Bosnian war of 1992-95, Mostar was probably the most ethnically integrated city in all of former Yugoslavia.
But the city became a laboratory for experiments in extreme ethnic cleansing. The result is that Mostar changed into the most divided town in Bosnia, a triumph for the Croatian nationalists who, with their Serbian counterparts, sought to destroy the city and to erase Bosnia-Herzegovina from the map of Europe.
The most vivid symbol of that Croatian triumph came just over 10 years ago, when a couple of well-aimed Croatian artillery shells brought the city's world-famous Old Bridge, the gravity-defying masterpiece of Ottoman Turk architecture erected in 1566, tumbling into the fast green waters of the Neretva. The bridge defined Mostar. Its destruction seemed to augur the city's death.
But today, after years of painstaking work and at a cost of Ł5m, the Old Bridge stands again, a perfect replica built of the same creamy local limestone, a single graceful span stretching 90ft (27 metres) across the ravine and suspended 60ft (18 metres) above the river.
In searing heat of more than 40C, princes, presidents and prime ministers from all over Europe and the Middle East attended the opening of the "new Old Bridge, whose restoration is being hailed as the start of a happier new era for Mostar.
Perhaps. But the challenges are daunting. Ever since the war, the Croatian extremists of west Mostar and the ruling Bosnian Muslim party on the east bank have connived in the partition of the city, dividing the spoils between them and confounding all international attempts to reunite the city.
"The life of ordinary people on this artificially divided space has become absurd," said a report by the international authority running Bosnia last December. "The situation is unacceptable and unsustainable."

Ashdown intervenes
Then earlier this year, Ashdown moved to reverse a process that has left Mostar in recent years as a Balkan Beirut or Nicosia. In March he ordered the dissolution of the ethnically divided municipalities and, over the heads of the local politicians, imposed a new statute defining Mostar as a single unified city.
A symbolic ambulance crossing the divide was a first fruit of the Ashdown diktat. In late July, the Muslim and Croat emergency medical services were merged. That was preceded by a merger of the city's twin fire-fighting services. And more substantially, the rival city authorities three weeks ago agreed a single city budget for the first time since the war.
Lord Ashdown's move is one of the most radical and ambitious projects by the former British Liberal Democrat leader since he took on the running of Bosnia two years ago. It comes after the failure of several previous international attempts to undo the division of Mostar.
"This time it's different," said Sanela Tunovic from Lord Ashdown's Mostar office. "It's imposed. The political parties were not able to agree, but now it's being implemented."
A Western official who has been in Bosnia for more than five years warns, however, that the main rival Croat and Muslim parties are manipulating Lord Ashdown's plan to their own ends. "They've pushed out the moderates and entrenched the divisions within the city administration. Things are clearly getting better, but it's very hard with these nationalist parties in power."
Lord Ashdown's staff talk of reunifying and restructuring 70 city institutions - everything from rubbish collection to sewerage works to the make-up of the city council in a town of just over 100,000, whose demographic composition was thoroughly altered by the war and ethnic cleansing. The pre-war fabric of Mostar has been systematically unstitched.
The Croats who partitioned and destroyed the city comprised a third of the population before the war. They drove almost all the Muslims across the river and then laid siege to the east bank for 10 months in 1993-94. Now they make up more than 60% of city voters, which helps to explain why their leadership is more open to the Ashdown scheme.
"The Croats have got a majority now and they think they can control the councils," said the Western official.
In Bosnia, Lord Ashdown enjoys the kind of absolute powers once exercised over Christendom by medieval popes. But Mostar's political bosses, a byword in Bosnia for cronyism and scheming corruption, will still be here long after Lord Ashdown has retired and the international nation-building teams have moved on.
"Total division is best," said Damir, 34, a Croat betting shop assistant. "Ashdown's plan will never work. Only on paper, and only through force. It's better that we have our side and the Muslims have theirs."
In the old Muslim quarter last night, by contrast Lord Ashdown held forth on Mostar's status as the "keystone" of Bosnia, and Bosnia's potential as "a bridge" between Europe and the Islamic world. Time will tell who is right.

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ENERGY

Bosnia's leading oil co to get ISO 9001:2000 certificate

Sustained work and planned development of Tesanj's importer and distributor of oil and oil derivatives Hifa have contributed a lot to the granting of the ISO 9001:2000 quality certificate, seeurope reported recently. 
Two group members, made up of importer Hifa Oil and distributor Hifa, are the first oil companies in BiH to have been presented with the certificate. They rank among the 100 most successful companies in BiH. Hifa Oil currently supplies some 400 gas stations in BiH. This year alone, the oil importer will pay over €32.5m taxes to the state budget.

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FOOD & DRINK

Fruit-freezing factory opens in BiH

A fruit-freezing factory opening in Potocari shortly is the result of the first Foreign Direct Investment in this part of Bosnia-Herzegovina (BiH) since the 1990s conflict, also marking a shift from the region's former reliance on industry, and benefiting dozens of people in a region known mostly for horrid wartime massacres, Southern European Times reported recently.
Swedish company Olle Svensson has invested €500,000 in the Bos Agro Food factory, which will freeze organic raspberries bought from local farmers. The decommissioned factory is actually the place where thousands of Muslim men were executed by Bosnian Serbian forces in July 1995. Still, the new, gleaming white building in the middle of all of this can be seen as a sign that the municipality may stand a chance for future flourishing times.
"After everything we have been through, we have the right to better times," said Srebrenica mayor Abdurahman Malkic. "This opens the door to agricultural production, especially the production of healthy food."
The municipality, in an attempt to attract investment to one of BiH's poorest post-war areas, donated the land to the factory, which employs about 30 people. The amount of raspberries and blackberries growing here has increased since the war destroyed the region's industrial economy. Bos Agro Food intends to buy and freeze about 1,000 tonnes of berries from some 500 small farmers this year. They'll export the frozen fruit to Scandinavian countries and central Europe.
"We want to help farmers get started. How better can you do that than by capitalising on what they can grow and on their know-how," Olle Svensson marketing and sales director Bo Ahlstedt said.
The farmers Olle Svensson is helping to get started include Muslim returnees to the area. As of last year, 3,200 Muslims returned to the three area municipalities, and scores are involved in such small-scale farming. Olle Svensson General Manager, Armin Glamoc, said the goal was to make it materially possible for more people who want to return to do so.
They also hope this first investment will get others to follow. Officials have mentioned that a foreign chocolate producer is interested in the adjacent plot of land, and said they nourished the hope that Bosnian companies would also open branch factories in the area.
Head of the Office of the High Representative's economic department said he believed this business model could work out and wished them "fruitful" results. "It is an outstanding idea, as the Swedish investor has identified a niche market, that of organic berries, and has worked its way back from consumer to producer," said Patrice Dreiski. "The economic situation will not change overnight. It's a start, but this modest success will set the pre-requisites for more."

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FOREIGN LOANS & AID

EBRD offers financial support to private sector in Bosnia

The European Bank for Reconstruction and Development (EBRD) said recently it wants to help Bosnia shift from post-war reconstruction to investment to develop its neglected private sector and revive privatisation, the Pakistan-based The News International reported recently.
"Now the time has come to boost the economy, to invest in the private sector, and this is a challenge we have to face," the paper quoted EBRD President Jean Lemierre as telling Reuters in Visoko. The bank's total investment in Bosnia will reach €300m (US$367.9m) by year-end, accounting mostly for public sector infrastructure projects so far. Lemierre said investment in private enterprise was needed. "We see the situation today as certainly better, and we see also a need for change," he said. Lemierre also warned that the authorities would have to improve the business environment and simplify a complex administrative system to attract foreign and local investors.
"Investors need a system they understand and which is not too complicated, which does not create too many difficulties when they want to create jobs and new activities," he said, adding the EBRD's priority was to support small-sized companies. EBRD, the development bank for Eastern Europe and the former Soviet Union, has extended via local banks over 25,000 loans to micro businesses and 300 loans to medium-sized companies in Bosnia.

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