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BOSNIA AND
HERZEGOVINA

NEWS REPORT 
  
  

 

In-depth Business Intelligence

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)

Books on Bosnia & Herzegovina

REPUBLICAN REFERENCE

Area (sq.km)
51,129

Population
3,989,018

Capital
Sarajevo

Currency
Convertible Mark 

President 
Zivko Radisic

  

Update No: 091 - (26/11/04)

Apology from the Serbs for Srebrenica
'The past is a foreign country,' said LP Hartley, the British novelist. The war of 1992-95, however, is an ever-present reality in Bosnia, accounting for innumerable refugees and a still dilapidated infrastructure. It is of considerable moment, therefore, that the Bosnian Serb government saw fit to issue an apology on November 10th for the 1995 massacre of 7,800 Muslim civilians in Srebrenica, saying it 'shares the pain' of the victims' families. The apology came after the government reviewed a Bosnian Serb commission's final report on the worst massacre of civilians in Europe since World War II, reported the Boston Globe, quoting the Associated Press, on November 11th. 
'The report makes it clear that enormous crimes were committed in the area of Srebrenica in July 1995,' the Bosnian Serb government said. 'The Bosnian Serb Government shares the pain of the families of the Srebrenica victims, is truly sorry and apologizes for the tragedy.'
Although Bosnian Serbs have long been blamed for the massacre, it was not until this past June - following the Srebrenica commission's preliminary report - that Serb officials acknowledged that their security forces carried out the slaughter. The commission's final report has not yet been made public, although the government has revealed some of its conclusions. Officials have said the report acknowledges that the mass murder of 7,800 Muslim men and boys by Bosnian Serb forces was planned.
The Bosnian Serb government said it was determined to 'face the truth about the recent tragic conflict in Bosnia-Herzegovina' and 'take decisive steps to force all persons who committed war crimes to face justice.'
Several Bosnian Serbs have been indicted by the UN war crimes tribunal in The Hague, Netherlands, for their roles in the Srebrenica killings. Those who were tried at the tribunal either surrendered or were arrested by NATO peacekeepers. None were apprehended by the Bosnian Serb government. Most of the 20 fugitives still sought on war crimes charges are presumed to be hiding in the Bosnian Serb territory. They include the former Serb president Radovan Karadzic and his leading general, Ratco Mladic. Until these two in particular are apprehended the wartime chapter of Bosnia cannot be closed.

'Territorial Defence' of Bosnia
There is, indeed, a need to understand Bosnia's contemporary development in the light of its recent history. This means taking into account the trends in its power structures, above all its defence forces, since the Second World War.
The Partisans were a guerrilla movement in that conflict. The Communists formed Partisan bands at the local level, according to local conditions, and gradually bound them together into a unified army. The Partisans had a federal organization. So there were separate Partisan staffs for Bosnia, for Croatia, for Serbia, for Slovenia and so forth. At the end of the war, the federal Partisan army was turned into a centralized JNA (JNA). 
But, after Yugoslavia broke with the Soviet Union in 1948, an urgent threat arose that the Communists might have to wage another guerrilla struggle, this time against the Soviets. This danger seemed particularly acute after the Warsaw Pact invaded Czechoslovakia in 1968. So Tito and the Communist regime responded by organizing a system of 'Territorial Defence,' which was to mobilize the entire Yugoslav population against an invader on the model of the Partisans. Each republic had its own 'Territorial Defence' staff, and beneath that were the staffs for the different districts, and beneath that were the staffs for the municipalities and localities.
The decentralized system of defence was bound together by the Party. Once the Communist regime fell, however, and the nationalists came to power, different parts of the 'Territorial Defence' in different areas fell into the hands of the different nationalist parties. So in Sarajevo, the 'Territorial Defence' fell into the hands of the Muslim Party of Democratic Action (SDA); in Banja Luka, the 'Territorial Defence' fell into the hands of the Serb Democratic Party (SDS), and so forth. Yet they were all still formally part of the same military structure. Initially, the three nationalist parties - the SDA, the SDS and the Croat Democratic Union (HDZ) - ruled as a coalition. This meant that they shared out state offices, and exercised joint control over the organs of Bosnian defence. Thus the Staff of the 'Bosnian Territorial Defence' was headed by a Serb; the Bosnian Defence Ministry was headed by a Croat; and the Interior Ministry, controlling the Bosnian police, was headed by a Muslim. Thus, there was a situation in which the defence of the Socialist Republic of Bosnia-Herzegovina was divided between three political parties with very different aims.

Patriotic League
After free elections in 1990 Izetbegovic and the Muslims were faced with the problem of how to organize the defence of Bosnia, when there was a Serb in command of the 'Territorial Defence' who was loyal to Radovan Karadžic and to Belgrade, a Croat in command of the Defence Ministry who was loyal to Franjo Tudjman, and so forth? How could the Republic be defended, when large parts of the defence institutions were in the hands of hostile, anti-Bosnian forces? So Izetbegovic and his followers did what their Serb and Croat nationalist counterparts were also doing: on the one hand they took control of their share of the official defence institutions; and on the other they organized their own, covert paramilitary force that operated independently of the state institutions. 
This Muslim paramilitary force was called the Patriotic League. Thus, there were two institutions which the Muslim politicians were relying on to defend Bosnia: on one hand the Territorial Defence, which was an official state institution, and which was partially controlled by the Serb and Croat nationalists; and on the other the Patriotic League, which was a purely Muslim paramilitary force, operating outside the state. It was these two forces, the Territorial Defence and the Patriotic League, which combined to form the Bosnian Army. This process was not a straightforward one.
Bosnia-Herzegovina was a state, and a state is made up of bureaucrats, policemen, army officers and other officials. These officials in principle stay the same, regardless of which group of elected politicians is at the top of the state at a given time. In the case of Bosnia, which had been a Communist state for forty-five years, the state suddenly fell into the hands of a group of anti-Communist nationalist politicians, many of whom had been dissidents in the Communist period. Izetbegovic and other leaders of the SDA had been persecuted by the Communists and spent years in prison. Yet suddenly they were at the helm of a state made up of the very same policemen and bureaucrats who had been persecuting them. At the top of the state, therefore, was Izetbegovic, who was President of the Presidency; and various other members of the presidency and government ministers who belonged to the SDA. At the bottom of the state there was the Patriotic League, which was preparing resistance covertly, at the grass-roots level. And in between, there was a bureaucratic state structure, which Izetbegovic and the SDA had inherited from the Communists, which was largely composed of Serb, Croat and Muslim former Communists.

Squaring the circle
Izetbegovic and the SDA therefore had to square this circle: They had to ensure the military and political survival of their regime and the defence of their territory and their constituents. The SDA were conservative Muslim nationalists, and they took the line of least resistance. They concentrated power in their own hands, on a purely Muslim basis, by co-opting bureaucrats, policemen and army officers whom they considered loyal. This meant, increasingly, abandoning any attempt to maintain Bosnian unity, abandoning the Serb and Croat populations to the leadership of Belgrade and Zagreb, and to all intents and purposes accepting the division of Bosnia. This made Izetbegovic and the SDA the accomplices of Slobodan Miloševic's project to partition Bosnia.
Miloševic, for his part, built a Bosnian Serb army, and a Bosnian Serb 'state', by using parts of the Bosnian state that were under Serb control. Thus, in Serb-majority areas of Bosnia, local organs of government fell into the hands of the SDS and the Territorial Defence forces fell into the hands of Serb officers loyal to the SDS. Miloševic divided up the JNA, concentrating units of the army made up of Bosnian Serbs on Bosnian territory. When the JNA formally withdrew from Bosnia in May 1992, what this really meant was that the Serbian and Montenegrin part of the army withdrew, but the Bosnian Serb part remained behind and formed the basis of the Army of the Serb Republic. The Bosnian Serb part of the JNA merged with the Territorial Defence in Serb-majority areas to become the Army of the Serb Republic (VRS). So when we consider whether the Bosnian war was a war of aggression or a civil war, it is important to remember that these are not mutually exclusive terms. It was both a war of aggression and a civil war. It was a war of aggression because Miloševic and Belgrade created the VRS, using the existing JNA. But they were able to do so only because Bosnian Serb nationalists had automatic control of state authorities and Territorial Defence forces in areas of Bosnia with a Serb majority. When we talk about 70% of Bosnia being under Serb occupation, this did not mean that Serb forces conquered all 70% of the country. Rather, the SDS established political leadership over Serb-majority areas, then teamed up with the JNA.
What applies for Miloševic and the Bosnian Serbs also applies for Tudjman and the Bosnian Croats. The HDZ established political leadership over the local authorities and Territorial Defence forces in Croat-majority areas, and used them to establish the Bosnian Croat army, the Croat Defence Council (HVO). The situation was slightly different where the Croats were concerned, because the Croatian leadership formally recognized the Bosnian state and started out formally as its ally. The HVO was recognized as a legitimate wing of the Bosnian armed forces. Even when full-scale war broke out between Bosnian and Croatian forces in 1993, there remained parts of the HVO that continued to cooperate with the Bosnian Army. Nevertheless, very quickly, as the war got under way, the three nationalist parties were working to partition Bosnia between themselves, in collusion with Miloševic and Tudjman. The international community, for its part, was also working with them to partition Bosnia. This led to the federal structure consecrated by the Dayton Agreement of 1995, by which Bosnia's politics and defence arrangements still abide.

Present stagnation
Given the many successes of the peace process since then and the constant reform of laws and institutions over the past few years, the urgent question is: why is Bosnia-Herzegovina stagnating, and what can be done to change this dynamic?
The most striking feature of governance in Bosnia-Herzegovina right now is its passivity in the face of a growing social and economic crisis. It is suffering from a combination of severe industrial decline and widespread rural underdevelopment. These deep structural problems are legacies of fifty years of authoritarian development, and are not dissimilar to those found in other parts of post-communist Europe. What sets Bosnia apart is a vacuum of credible policies in the most critical development areas: industrial policy, agriculture, natural resource management, spatial planning, education and social welfare. Though Bosnian governments are aware, in general terms, of the scale of the crisis facing their country, their policies are often little more than broad statements of good intentions. They are not based upon hard information, or any real analysis of the problems. They are not developed in consultation with the groups they are supposed to help. They do not affect what public institutions actually do. Nor do they affect the way public money is actually spent.
This passivity is in itself a legacy of authoritarian development. Bosnia's political elites have a tradition of looking to outsiders to provide the policies and resources for development. There is widespread distrust of participatory policy-making - the intense process of debate, compromise and constituency-building among different interest groups that characterises the democratic process. Political elites seem to prefer a style of politics where the public interest is determined by experts, outside the political process. This attitude is reinforced by weak mobilisation of interest groups and low expectations of government on the part of ordinary citizens. As a result, Bosnian governments at all levels are not under strong pressure to improve their performance. This dynamic produces governments that are unresponsive, unaccountable and often strikingly out of touch with the society they are supposed to serve.
This deep distrust of policy making through bargaining and compromise among different interest groups constitutes Bosnia's authoritarian temptation. It has been reinforced by the intrusive nature of international engagement in Bosnia, and by the peculiar political economy of the post-war period. The traditional dependence on external funding has shifted to the reconstruction programme, while the international mission now takes the role of the external policy-maker.
To move towards Europe, Bosnia-Herzegovina needs to overcome its authoritarian temptation and embrace a genuinely democratic political process. For the international community, this means leaving responsibility in the hands of elected governments, rather than feeding old habits of dependency. For the European Union, it means offering Bosnia the kind of support offered to candidate countries like Bulgaria, Romania and Turkey. The sooner this happens, the sooner Bosnia-Herzegovina will truly set out on the path towards Europe.

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BANKING

Central Profit Banka eyes 3rd place


HVB Central Profit Banka wants to reach the third position in the banking sector in Bosnia, the bank's CEO, Alexander Zsolnai, said recently, Banka magazine reported.
The bank, which emerged after the fusion of HVB and Central Profit Bank, enjoys a 9 per cent market share, its assets being worth 380m Euro. Zsolnai said that by the end of the year the bank's market share would climb to 10 per cent, while its assets are projected to grow by 30 per cent in 2005 and by 20 per cent in 2006. The bank would double its assets by 2007, Zsolnai added. 

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