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BOSNIA AND
HERZEGOVINA

 
  
  

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 6,963 5,249 4,800 104
         
GNI per capita
 US $ 1,540 1,270 1,240 123
Ranking is given out of 208 nations - (data from the World Bank)

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Area (sq.km)
51,129

Population
4,007,608

Capital
Sarajevo

Currency
Convertible Mark 

President 
Borislav Paravac



Update No: 104 - (01/01/06)

German Ex-Minister appointed new Bosnia Envoy 
Former German cabinet minister Christian Schwarz-Schilling has been appointed as the international community's new high representative in Bosnia. Following a meeting in Paris of the international council overseeing the peace process in Bosnia, the French Foreign Ministry said Schwarz-Schilling is to take up his new functions "in a few weeks."
He will succeed Britain's Paddy Ashdown, who now retires and who will be a hard act to follow. Schwarz-Schilling has been acting as an international mediator in the Balkans since 1995, so is aware of the extreme complexities of this role in Bosnia, one of the more difficult jobs on the planet.

Arrest of Gotovina stirs old memories
Bosnia-Herzegovina and Croatia are intimately linked. An important event has occurred. A prime obstacle to Croatia's accession to the European Union (EU) has been removed. Croatian war-crimes fugitive Gen. Ante Gotovina has been arrested after a four-year manhunt, boosting Croatia's bid to join the EU and increasing pressure to track down other former Balkan War leaders still on the run. There is no doubt that his capture is a major event, and a positive one for Croatia. It can now come in from the cold. It has huge repercussions for Bosnia too.
The arrest by Spanish authorities, as Mr. Gotovina dined at a hotel in the Canary Islands, underscores how the EU's policy of "soft power" -- holding out the carrot of membership in the world's largest trading bloc -- can prompt countries into moving towards more democratic systems. Gotovina was arrested on the Canary island of Tenerife on December 7th and flown to The Netherlands aboard a Spanish military aircraft. From Rotterdam airport he was taken to the detention unit of the U.N. court in The Hague. Gotovina had been a fugitive since he was indicted by the U.N. International Criminal Tribunal for the Former Yugoslavia (ICTY) in 2001. 
One of three top fugitive suspects from the 1990s Balkan wars, Gotovina, 50, faces charges relating to the death of about 150 ethnic Serb civilians during a Croatian offensive in the Serb-held Krajina region in 1995. The indictment said Croatian forces under Gotovina went on a rampage of persecution, murder, plunder of property, destruction of towns, deportation and inhumane acts. He faces three counts of crimes against humanity and three of war crimes.

Wider repercussions
North Atlantic Treaty Organization Secretary-General Jaap de Hoop Scheffer hailed the arrest as "good news for Croatia and for the world." Olli Rehn, the EU commissioner in charge of enlarging the 25-nation bloc, said he hoped it would "urge other countries in the region to track down their suspects" and allow Croatia to "focus on reforms and establishing the rules of law." Bosnia take note.
Carla del Ponte, the chief United Nations war-crimes prosecutor who thanked Croatian and Spanish authorities while announcing the arrest, immediately turned up the heat on Serbia and Montenegro to help track down Bosnian Serb wartime leader Radovan Karadzic and his military chief, Ratko Mladic, the court's top two remaining fugitives. "I'm still angry because Karadzic and Mladic are still at large, and that is a real scandal," Ms. del Ponte said before meeting with Serbian Prime Minister Vojislav Kostunica. 
Bosnia is also closely implicated of course. Karadzic is probably lurking there, while Mladic is likely to be hiding in Serbia, protected by its security forces. Neither is going to be sunning himself in the Canary isles any time soon!
Serbian President, Boris Tadic, congratulated Croatia and said his government is doing "everything possible" to bring in the six Serb war criminals still at large. He also admitted that his government's policy of "voluntary surrender" -- trying to lure war criminals through negotiation instead of aggressively hunting them down -- might have to change. "Something has to happen," he said after meeting with Mr. Rehn in Brussels. "Otherwise, we can't join the EU." The same is true for the Bosnians.
Indeed, the EU, like NATO, has said it will deny membership to any country that still has Balkan war criminals at large. The EU agreed in October to start membership talks with Croatia after a U.N. ruling that the country was doing all it could to find Mr. Gotovina. EU officials continued to say the missing war criminal would be a stumbling block.
Now Croatia, with its strong economy and stabilizing political situation, looks likely to join the EU in 2009, following the planned memberships of Bulgaria in 2007 and Romania in 2007 or 2008. Bosnia aspires to be next in line.

Progress at last 
The Dayton peace agreement, whose 10th anniversary is marked on 14 December, ended the war in Bosnia. But it divided the country in a way that protected, for years, the perpetrators of war crimes. Those who had burned and murdered and ethnically cleansed were safe inside their own ethnic enclaves. 
It has taken 10 years, but something remarkable has started to happen. The guilty men are no longer safe. It is not just The Hague that is indicting now. It is the Bosnian courts. 
Bosnians of all three nationalities have begun arresting their own suspected war criminals. Eleven hundred are currently under investigation. This year a pan-Bosnian state tribunal was set up under the auspices of the International High Representative, Paddy Ashdown. But it is not internationally administered. 
Suspects appear before Bosnian prosecutors and Bosnian judges - Serbs, Croats and Muslims sitting together in pursuit of a justice that, for the first time, is not distorted by ethnic loyalties. This is good news all round for a country that still has plenty of problems.

Bosnian economy blues
A decade after the Dayton peace accords brought an end to almost four years of bloody conflict, Bosnia is still struggling to shore up its economy. A staggering 40% of the Balkan state's workforce is unemployed - one of the highest rates in the world. But analysts insist the situation is not so bleak, pointing out that Bosnia has the strongest currency and the lowest inflation rate in south eastern Europe.
In addition, after a growth rate of 5% last year, forecasters expect the economy to expand by about 5.5% this year before accelerating to 6% in 2006, powered by engineering sector and a pickup in foreign investment. But with about 18% of the population living below the poverty line, the positive economic indicators have so far failed to trickle down to the daily lives of many people.
Moreover, authorities are battling to overcome a burgeoning grey economy and a massive current account deficit as well as restrictive bureaucratic structures imposed on economic life as a result of the Dayton agreement. Estimates show the grey economy is worth more than 40% of GDP. But next year's launch of a round of tax reform, including the introduction of a value-added tax, might help to rein in the grey economy.
While economists say the size of the grey economy means real unemployment is likely to be about half the official rate, the sheer size of the bureaucracy needed to run post-Dayton Bosnia is seen as acting as a brake on growth.
Bosnia's constitution - a product of the Dayton peace negotiations brokered by the US to stop the 1992-1995 war in Bosnia - created one of the most complicated government structures in the world.
More to the point, dividing up the country into two ethnic entities resulted in double the number of administrative authorities, with another separate administration also functioning at state-level. This means that about 50% of public spending in Bosnia is eaten up by the country's administration.
Such a system, according to Milan Lovric, vice president of Bosnia-Herzegovina's Chamber of Foreign Trade, has significantly slowed a recovery of the economy, which was completely destroyed in the war. "Due to the system created in Dayton, the transition processes in Bosnia were too slow, leaving the country far behind its neighbours," said Lovric.
Ten years after Dayton, he said, a climate for economic integration has not been created, meaning the country still does not function as what he described as "a single economic space." Therefore, he said, Bosnia is unable to compete with the stronger economics of neighbouring countries.
Despite such problems, Bosnia-Herzegovina's energy resources and its steel sector present great potential. "There is so much unexploited energy here, which could draw the attention of the foreign investors," said Lovric. Analysts believe that measures adopted last year aimed at reducing poverty by 2007 should help economic prospects.
Strong industrial growth of 9% in the Srpska Republic and 14% in the Moslem-Croat Federation, coupled with an increase in foreign investment to 137m Euro (US$160m) in the first four months of this year, have raised hopes.
With the World Bank having officially declared Bosnia's changed from a post-conflict nation to a regular transition country, Bosnia hopes to make up for lost time by competing for new international funds that this change of status brings.

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RETAIL

Slovenian largest retailer Mercator invests in Serbia 


Mercator opened a shopping mall, its fourth in Bosnia and Herzegovina, in the capital Sarajevo. Mercator said it expects its 2005 sales in Bosnia to rise by 31% on the year to 48.4 million Euro. It has a 2% share of the Bosnian retail market, New Europe reported.
Mercator will open a mall in western Serbia, and another one in Central Serbia. Currently, the Slovenian retailer has only one mall in Serbia, in the capital Belgrade. Mercator's competitors in the Serbian market are German Metro, French Cora, Greek Veropoulos and Serbia's three largest retail chains: Maxi, C-Market and Pekabeta. Mercator's consolidated 9-month net profit went up 135.3 per cent.

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