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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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)

Books on Bosnia & Herzegovina

Update No: 168 - (26/01/12)

One major development has occurred in Bosnia in the past three months. After more than a year of political deadlock, the country, which is divided into two entities, Republika Srpska and the Muslim Croat federation, has managed to form a central government on December 28. In a nation riddled with inter-ethnic disputes, the agreement has been seen as a major breakthrough. But will it last? Many would argue that the problems are deeper than just the formation of the government. Having two entities with their own sets of responsibilities in, for example, the medical and educational system is - some argue - impractical and illogical for its citizens in an everyday sense. The six parties all have differing views of what the future should hold for Bosnia; finding common ground is extremely difficult. Discussion becomes mired rapidly in nationalist rhetoric and the President of Republika Srpska, Milorad Dodik, waves the flag of secession on a regular basis.

On December 28, in a sudden and unexpected flutter of activity, leaders from the Bosniak, Serb and Croat parties formed a government. This was followed, on January 12, by the country's parliament voting 36-2, with 3 abstentions, to approve economist Vjekoslav Bevanda, a member of the main Croat HDZ party, as Prime Minister. It seems that the leaders were united in a sense of compromise. “We did not get what we thought we should, but no one got everything they wanted,” said Milorad Dodik, the inflammatory president of Republika Srpska, the Serbian-dominated part of the country. In a sign that a tabula rasa was the order of the day, a corruption investigation into Mr Dodik was dropped on the same day the deal was struck. "None of us are totally happy but it is a good agreement made in the interest of Bosnia, its communities and its citizens,” said Sulejman Tihic, the leader of the Party of Democratic Action, the Bosniak political party. Dragan Covic of the largest ethnic Croat party, the Croatian Democratic Union, also lauded the agreement as a chance to 'start moving forward.' Indeed the toll political stalemate has taken on the state has been heavy, eroding numerous aspects of life in Bosnia. The country has been unable to pass a budget and its services and infrastructure have suffered as a result. Without a central government, the EU announced, integration would be off the agenda. The stymieing of the integration process has meant a loss of funds from Brussels and has been a deterrent to foreign investors.

Despite this new period of cooperation, it is too late to make up for some of the opportunities lost due to stasis. For example, there is no agreement with Croatia on how exports of meat and dairy will function once the Balkan state enters the EU in 2013. This will have a serious impact upon the livelihood of many small-scale farmers. Since agriculture represents around 10% of GDP in Bosnia, compared to an EU average of only 2%, Bosnia's farmers represent a core part of the state's economy. Sixteen percent of Bosnia's total food exports and more than half of its milk and dairy exports go to its Western neighbour, representing £84 million pounds of revenue. With no central government, there has been no Ministry of Agriculture, let alone the agencies which could certify exports and ensure harmonization with the EU's standards. As a result the fate of this revenue and the lives of small scale farmers hang in the balance. The farmers can attempt to find other markets such as Turkey, but with increased distances costs too will increase.

The farmers are not the only demographic with grievances against an inert government. Engine drivers in Bosnia's regional railways also took action between November and December, leading a 44-day strike which seriously affected the country's metal industry. Republika Srpska's Railways Company is heavily indebted and has repeatedly refused a pay increase for workers. The strike apparently cost steel major Arcelor Mittal several million euros. Metal exporting is a large part of Bosnia's total industrial output at 80%, so prolonged industrial action has weighed heavily upon the economy. Prospects for the country's economy on the whole are worrying. The IMF has slashed Bosnia's growth forecast to a worryingly paltry 0.7%, from 3% previously. The change in forecast is apparently in part the result of the economic crisis sweeping across Europe, which imperils all of the continent's states. Low demand from European markets is a problem for the economy, as is the fact that Greek and Italian banks, whose coffers are rapidly emptying, operate extensively in the Balkans. A lack of lucidity among the two entities’ economists has led to unrealistic expectations. The head of the IMF's mission to Bosnia, Costas Christou, told Reuters that Bosnia's two regions have drafted 2012 budgets based on "overly optimistic revenue projections."

Another victim of the country's political problems is its cultural sector. The row over the fate of the National Museum of Bosnia and Herzegovina in Sarajevo has proved an apt metaphor for the interethnic disputes eroding the nation's common heritage. The absence of a Ministry of Culture means that the 124-year-old institution, which showcases a history that offered greater ethnic tolerance than evinced today is facing closure as it hovers on the edge of insolvency. Without state level funding, the museum has had to apply for annual grants from the Civil Affairs Ministry, which is then shared among some 20 museums, galleries and other institutions. Employees of the Historical Museum have not received their salaries since last July. Apparently 70 state agencies from all domains might grind to a halt because of the lack of a state budget and despite the new government formation, for some, it is too late to make a difference. The border police, for example, will be wearing last year's uniforms and going without necessary winter equipment for mountain patrols as a result of insufficient funding.

A particularly choice example is the plight of army veterans. The lack of budget meant that no clear policy on pensions for those who fought in the wars of the 1990s has been established. Many are now living in penury. In a heartening sign of interethnic cooperation, however, Muslim and Croat ex-soldiers from the Muslim-Croat Federation, who were granted an emergency pension, have vowed to contribute to the pensions of their former adversaries in Republika Srpska, who have been left entirely without provisions. The fact that soldiers who battled against one another in the 1992-1995 war are now finding common ground - namely frustration at their treatment at the hands of the state authorities - is an indictment of the disjunction between the citizens of Bosnia and its ruling elite, who continually exploit potential ethnic tensions. Another example of this trend is the way in which football fans have, via boycotts and demonstrations against the Bosnian FA, ensured that the national team itself is a depoliticized entity. The launch of Al-Jazeera's Balkan service on November 11 has also been seen as inflected by a desire to unify the states of the former Yugoslavia by offering general news broadcasts as opposed to the politically-tainted reports of local stations.

Whether any of this will work remains to be seen, and the past months have not been empty of flares of violence. On October 28, it was reported that a man had opened fire outside the US Embassy in Bosnia. One policeman was injured in the attack by Wahabi follower and Serb national Mevlid Jasarevic. The incident, whilst relatively minor, put a spotlight on the way in which the authorities respond to the threat of terrorism as whole. Their attitude to the matter is designed to stoke interethnic divisions, says Sarajevo-based NGO Atlantic Initiative. A report by the group argues that Serb and Croat leaders have grossly overemphasized the risk of jihadism in Bosnia as a way of 'pigeonholing Bosniaks as terrorists and delegitimizing their political aims tarring the Bosniak community'. The Bosniak response, that of 'default denial of any security threat', is equally damaging to state of security in the nation. The end result is the politicization of a concrete security matter, which has left the implementation of any clear strategy firmly on the backburner.

Whilst the formation of the new government is certainly a positive start to 2012, many would argue that a fundamental problem in Bosnia is the constitutional settlement. The reluctant rhetoric surrounding the government agreement may be a sign of things to come. It was reported on January 20 that Dodik is considering a boycott of the central government over an investigation into war crimes. It seems that the era of political peace remains a long way off.


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