Polona Mal, Tine Rus and Anže Voh Boštic

There is no doubt that Bosnia and Herzegovina (BH) has had a violent history. For the last 500 years, arms have been the most popular mean for solving problems. The struggle for independence in BH was especially cruel, not least because other countries, namely Serbia and Croatia, were heavily involved in the war. Fighting ended with the negotiated peace settlement known as the Dayton agreement. The agreement also includes new constitution written by American lawyers, which is in nominal dimension one of the most liberal and modern constitutions of the world. Besides that, the agreement set the dividing lines among Serbian Republic and the Federation of Bosnia and Herzegovina (plus Brčko District); first controls 49% of the territory and the last 51%.
It was a great achievement in itself that the hostilities ended, although the Agreement is subdued to critics for many things, especially for being contradictory, thus representing only letters on paper but not working in reality. After the war the state stepped on the thorny road of post-war reconstruction with the assistance from different international organisations, such as NATO, UN, EU and OSCE. This reconstruction is still not over. Many analytics think that the new war could start again if the international organisations left BH. The state is facing many problems, similar to other from war devastated territories, such as broken economy, great numbers of displaced people, a need for a new political order and institutions and so on.
As such, Dayton agreement is a peace treaty and nothing more. However, it is the only document that is accepted by all sides, and that is why it is still in use, even though it is inappropriate and obsolete. Even more; it is an agreement that because of the Dayton, Bosnia is not a sovereign country even though international community treats it as such and even though Bosnia is a member of the United Nations with a voting right in the General Assembly. Dayton peace agreement is not suitable for a sovereign country and it gives too much power to the with the agreement established High Commissioner in Bosnia, while Bosnian parliament in reality has to accept everything the Office of High Commissioner decrees. Because of that, Bosnia does not have a democracy, but a quasi-dictatorship as a form of government. And besides, Bosnian people do not have the opportunity to make their own decisions at the top political level. They simply have to accept everything that the Office of High Representative orders them. Anton Bebler stresses that “the dictatorship powers of the High Commissioner (he is not even mentioned in the constitution of BH) did enable him to bring through a lot of urgent reforms and other positive changes of the situation in Bosnia and Herzegovina, however, at the same time, his position and the activities of his office became the single biggest obstacle that hinders the process of establishing democratic institutions and strengthening the abilities of Bosnian people for governing their county well”. Taking this into account, it somehow makes sense why have people in Bosnia developed such a strong nationalist thinking – it is simply because they do not have any other means for expressing their opinions and wishes, and on the other hand, they do not know other ways of doing it. Since the national parliament does not have any substantial power, they are losing faith in federation and instead they are vesting their efforts in strengthening their nationalistic pretensions in regional political institutions. The result is a vast fragmentation of political institutions at regional levels – Bosnia has a record number of parliaments and ministers: thirteen and approximately one hundred and eighty respectively. The reason for virtually unlimited powers of international community (as it regards the decision-making process) is the before mentioned reason that the whole Bosnian political system (at least at the top level) is based on the Dayton peace agreement.
However, it is clear that the international community is not doing its job well, also because it adheres to its old doctrine that goes something like “do not mess with something while it works, even though it is not perfect”. Obviously, this kind of thinking is wrong, especially in a process of peace building, since the name itself suggests that one tries to build, in other words improve the different aspect in the problematic area in order to establish a lasting peace. Also, the experiences from all around the world show that by leaving the situation as it is (that means no interference from the international community except in the case of an armed strife), the situation will not improve by itself, at least not in a reasonable time.
There is also a lack of interest among the majority of the states that are members of the EU, now the biggest international actor as regards Bosnia. Most EU states have a lot of own problems to solve, and besides, some say that the Union itself is in some sort of crisis because of the so called enlargement fatigue, problems with constitution and further integration etc. Because of that, European states and the EU itself do not devote enough resources for solving the problem of Bosnia and the whole region of the Western Balkans. Besides that, there is also some open reluctance to solve the problem of Bosnia and the whole region of Western Balkans, because of fear of failure.
But the international community is not a sole culprit for the present situation. Also the Bosnian ethnic groups do not use institutions that are already available and democratic praxis for policy-making and solving the problems among each other. The three ethnic groups are not effective in joint policy-making also because they themselves still do not agree about the pre-war ethnic composition of BH. While Muslims believe that before the war between 1992-95, there was only one nation (namely the Bosnian Muslims) in the country with other minorities, Bosnian Serbs are of course reluctant to give up the rights that were given to them with the creation of the Republika Srpska. On top of all this, Bosnian Croats complain that they are not equal to Muslims and Serbs, and claim that they should have the same position as the other two groups. Because of that, Muslims (wrongly) believe that federalism is the culprit for the troubles in Bosnia and that a more centralised country would work better, while Croats and Serbs support further fragmentation of the country and strengthening the power of regional institutions.
Of course, no effective advancement can be made without successful economic progress. Besides, the successful development of a country’s economy is crucial for the establishment of peace. However, Bosnia is facing many problems also in this field. It is ranked next to Former Yugoslav Republic of Macedonia as the poorest country of the former Yugoslavia. Most of the country’s pre-war industry consisted of Yugoslavian military factories, which suffered a huge downfall in the eighties and the overall production suffered an 80% decrease from 1992 to 1995, combined with a huge rise in unemployment. The country’s agriculture consists of small and inefficient private farms and the BH has traditionally been a net importer of food. Since the Dayton peace was established the private sector is growing and foreign investment is slowly increasing, but government spending, at nearly 40% of adjusted GDP, remains unreasonably high.
The most important aspect of economic security is unemployment, which is also Bosnia’s main problem; official rate was 41% in 2006, although the grey economy may reduce the actual unemployment by 25-30%. 25% of the population lives below the poverty line and another 30% are estimate to be just above it. One of the main problems of Bosnia and Herzegovina is furthermore the grey and black economy and the considerably high level of political corruption, combined with inefficient government.
Besides that, Bosnia is unevenly developing because the relatively high autonomy of both entities allows them to form different economic policies and foreign relations. This may lead to endangering economic security in the country. The economic growth in Republika Srpska and in Federation of Bosnia and Herzegovina has had some rapid swings, and other economic indicators also show the problem of relatively high autonomy of both regions. Although foreign investment and privatization have risen substantially in both regions, the increase has been much greater in Republika Srpska. In 2001, the government of RS initiated significant reforms in the fiscal system, lowering the rate of capital gains tax to 10%, the lowest in Europe and of course highly stimulating for foreign investment. When the value added tax was introduced in 2006, the income tax still remained much lower in RS (46%) than in FBH (nearly 70%), similarly to the corporate tax (10% in RS and 30% in FBH). This has not only highly stimulated foreign investment and entrepreneurship, but also led some companies into moving their business from the Federation to RS. This is an important issue concerning ‘soft’ as well as ‘hard’ security in the country, since such uneven development might lead to increasing the tensions between all three ethnicities, on ‘micro’ (people feeling ‘better off’ or ‘worse off’ than the other ethnicity, being ‘richer’ or ‘poorer’) or on ‘macro’ level (one region thinking the other is slowing it down, for instance in the process of achieving EU accession, etc.). Uneven development, as has not so far ago in former Yugoslavia, might once again prove to be an important factor of backing-up nationalistic tendencies and threaten the already not very stable peace. It might lead to lesser and lesser integration of both entities, also causing them to form different foreign policies. Republika Srpska is naturally still maintaining close ties with Serbia and its allies. However, the highest goal for both entities remains reaching the European Union; an objective, which might prove to be the strongest integration factor, not just in Bosnia and Herzegovina, but in the whole region of South-Eastern Europe.
So what should be done in order to improve the situation? As regards economy, economic security has to be improved by improving the country’s economic performance and strengthening its economic interdependence. There are three main solutions for Bosnia and Herzegovina’s economy: opening outward, meaning encouraging exports; creating strategic connections between domestic and foreign companies; and signing international agreements, such as an agreement on free trade, intellectual property, acceleration of foreign direct investment etc. As regards economic cooperation, Bosnia has to increase the trade volume with the neighbouring countries, especially Croatia and Serbia. As the matter of fact, it is important for the whole region of South-Eastern Europe to become more and more economically integrated and thus raise the costs of system collapsing to too high levels. The international community is aware of this issue and there have been many initiatives to create several organizations or programmes in order to strengthen the economical and also political, etc. ties in the region. Such examples are Southeast European Cooperative Initiative (SECI) and Stability Pact for South Eastern Europe (SPSEE), although both initiatives have been strongly criticized. Bilateral agreements are also important – here the first steps have already been made example of this is an agreement between Bosnia and Herzegovina and Slovenia: Agreement on Reciprocal Protection and Promotion of Investments, Agreement on Customs Cooperation (2002) and Agreement on Free Trade (2001). However, Bosnia’s imports from Slovenia are substantially higher than its exports; Slovenia tries to compensate that with large amounts of foreign direct and also portfolio investment. It is believed that FDI is one of the best options for Bosnia and Herzegovina’s economy. It incorporates all three aforementioned possibilities, and besides, with the arrival of new investors there are several new employment possibilities opening.
Bosnia and Herzegovina is of course aware of such advantages that FDI would bring. However, foreign investors still have to deal with many problems when starting a business, such as the amount of black and grey economy, high levels of political corruption, slow implementation of laws and regulations, etc.
As regards the other two levels of economic interdependence, strengthening bonds with both entities is because of the before mentioned reasons a must. And, speaking of international interdependence, especially with the EU, presidency of Slovenia in EU is good news for Bosnia, since Slovenia already stated that its primary focus will be the Western Balkans. Hopefully, this could also contribute to some, at least minor political changes in the area.
At the end, it has to be mentioned that situation is not as bleak as some could imagine. As regards political matters, even though Bosnians should get more used to democratic policy-making, they are already proving that they are indeed willing to learn and that the possible efforts from international community to encourage them to adhere to democratic principles will not be made in vain. The facts that the last elections were, by the opinion of OSCE, regular and that virtually, Bosnia for the last five years functions in accordance with EU standards support this statement.
Besides, the level of living is also improving. Human development index shows that the country in the last few years advanced from the group of countries with medium development to the group of states with high development. However, GDP index is not following the trend of HDI index, which means that GDP is not equally distributed.
To conclude, one has to stress that the situation in Bosnia and Herzegovina is without a doubt very complex; however, it is not hopeless. The question remains how the problem will be dealt with. The role of international community remains critical in almost every field that is subject to a reconstruction; however, it should be exercised in the right way. No one knows for sure whether international community is capable enough, or to put it even better, has enough interest in this area in order to put enough effort into reconstruction of the country.
It is also important to stress that wrong actions of international community that are often based on misperceptions that arise because a lot of internationally important actors are not devoted enough to learn the true facts can do more harm than good. That is why we believe that it is of extreme importance to start looking at the problem in a comprehensive manner, with all relevant fields included in the analysis, because there simply is no other way of reaching feasible solutions that would be acceptable for the international community and order as well as for Bosnian people. However unpleasant the fact may be, there is no short cut for solving this problem.


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