Bosnia Budget Demos Turn Ugly

Government of the Bosniak (Bosnian Muslim)-Croat Federation and the International Monetary Fund (IMF) gave in to tense the protests of thousands of war veterans, angry at announced reductions of social benefits.

Over 5,000 war veterans and invalids blocked and then tried to enter the Federation government building earlier today. Their attempt was stopped by special police forces. The brief clash left one demonstrator and one policeman slightly injured. Several windows were shattered. 

The crowd dispersed in early afternoon after Federation officials announced that a deal has been reached with the IMF where benefits for war veterans and invalids would not have to be reduced.

The Federation government will make appropriate changes and submit a new version of an interventionist bill that aims for drastic reduction of most other public expenditures, including administration, salaries, and pensions.

The Sarajevo protests were only a part of demonstrations which rocked Bosnia on Thursday.

Farmers' associations have also staged protests in several locations across the country demanding better protection against the growing economic and social crisis.

Trade Unions have also held a cross-country five-minute strike in protest against the bill.

Influential war veterans associations as well as trade unions have warned they will bring down the Federation government over this law.

"This will not be a crisis but a complete chaos and catastrophe," one of the syndicate leaders, Josip Milic, told journalists in Mostar. He warned that if their requests were not met, trade unionists would block all towns and roads across the country.

The Federation Parliament and government postponed their Thursday sessions due to the announced protests.

According to the agreement with the IMF, all administrative levels in Bosnia will have to make drastic budget cuts by the end of the month, so that the country can qualify for a new €1.2 billion Stand-by arrangement. The deal was sealed in early May. Bosnia could get the first slice from the IMF by early August if the agreed budget cuts are made.

Of the two entities, the Federation will have to make the biggest reductions. It will have to cut €207 million -- which is around 10% of its entity, cantonal and municipal budgets. The Serb-dominated entity of Republika Srpska will have to reduce spending by €73 million. The budgets of the state and of the Brcko District will be shaved by €20 and €5 million, respectively.

Bosnian officials have warned that without the IMF’s support, the country and the Federation face almost imminent bankruptcy.

The Federation is in a difficult situation. For the past three years, Bosniak politicians have given out high social payments for war veterans and invalids, who were one of the influential lobbying groups ahead of the 2006 general and 2008 local elections.

For the past few months, local and international officials and experts argued that the funds have been exhausted and that the Federation is facing €250 million budget deficit. Yet war veterans, invalids and trade unions have been so far refusing to accept any reductions to their payments.