Bosnians Fear Instability Will Peak in Election Year

General elections planned for next autumn are likely to accentuate the political and ethnic divide while deepening economic crisis strains social cohesion.

When the clock ticks past midnight on December 31, Bosnians will leave behind a year in which political and economic stability eluded them.

They have little to look forward to in 2010 either, as the New Year is likely to bring challenges more onerous than any their country has faced since the end of the 1992-95 war.

A long-standing breakdown in communication between Bosnia’s rival ethnic leaders and their nationalist rhetoric are likely to worsen ahead of general elections in October while the economic crisis in the country continues to deepen.  

“2010 will be the most difficult year in post-war Bosnia, both politically and economically,” analyst Zoran Zuza told Balkan Insight.

“I expect a wave of social protests to hit the country in the first months of 2010,” he added, “but the ruling political elites will remain ignorant of the real needs of the people.”

In 2009, over 70,000 Bosnian workers lost their jobs due to direct or indirect effects of the global economic crisis. At the same time, remittances sent from abroad dropped by 20 per cent and generous lending policies came to an abrupt end as the country’s banking sector registered a 42 per cent fall in profits.

Falls of 22 and 16 per cent in Bosnia’s exports and revenues respectively prompted the authorities to turn to the IMF for support. But meeting the requirements of a three-year standby worth 1.2 billion euros, agreed in May 2009, among other things, will mean cutting the benefits granted to war veterans several years ago.

Some veteran groups have already warned that they will not easily give up their privileges, saying they are ready to “wage a bloody war” with the authorities, if necessary.

"Next year will be quite complex, quite difficult...especially since it is an election year, likely to be characterized by specific political dynamics,” the governor of Bosnia's central bank, Kemal Kozaric, said.

On a more optimistic note, Kozaric said that after a 3-per-cent economic contraction this year, Bosnia could expect moderate growth of 0.5 per cent in 2010. The central bank will maintain monetary stability and prevent inflation from growing significantly above the current 1.4 per cent, he added.

“Big export oriented companies such as [the aluminum smelter] Aluminij Mostar will register positive trends in 2010 as foreign demand for their products increases … leading to an improved macroeconomic situation,” an advisor to Bosnia’s foreign trade chamber, Igor Gavran, told Balkan Insight.

However, Gavran warned that this would not have a significant impact on the quality of life of most ordinary Bosnians, who will struggle to make ends meet while officials continue to receive salaries up to ten times higher than the average salary of 400 euros a month.

Most companies in the country are working to supply the domestic market, which is falling owing to lower government transfers, job losses and rising prices.  

“Global recession was a somewhat acceptable excuse used by our authorities in 2009… but external [economic] influences are no longer negative,” Gavran noted.

Describing Bosnia as one of the most over-governed countries in the world, with 13 different layers of government and more than 160 ministries, eating up about 50 per cent of GDP, Gavran accused the political elites of being “as disconnected from citizens as the aristocracy was in France ahead of the (1789) Revolution”.

Since the end of the war in 1995, Bosnia has consisted of two semi-independent entities, the Serb dominated Republika Srpska and the Croat-Bosniak (Bosnian Muslim) Federation. Each entity has its own government and parliament, while the two are linked by weak central institutions. The Federation is further divided into ten self-governing cantons. “It would be more useful for this country if flower pots were put in place of some of our officials,” Gavran said.

To illustrate his point, Gavran noted that the authorities have failed to disburse about half a billion euros’ worth of loans that the country has received for infrastructure projects from multilateral agencies such as the European Investment Bank, EIB, and European Bank for Reconstruction and Development, EBRD.

“In many cases, the condition for the use of these funds is establishment of [state-level] agencies, which has been obstructed for political reasons, and even when the politicians agree, they waste time arguing if these agencies should be seated in Banja Luka, Mostar or in Sarajevo,” he said.

As a result, this year alone, the government has had to pay about 10 million euros in commitment charges to keep the credit lines open.

 “Their [the politicians’] interest is in maintaining the status quo because the system as it is currently structured rewards them ... so they will find ways to stay in power, such as through chauvinism and fear,” US diplomat Raffi Gregorian, second in command at the Office of the High Representative, OHR, told Balkan Insight.

Gregorian said Bosnia’s political leaders had shown “what their agendas really are” when they rejected a package of proposed constitutional changes in October.  The changes formed part of a high-level EU and US initiative aimed at breaking the political logjam in the country. Had they been accepted, the reward would have been accelerated EU and NATO membership.

The success of the reform talks, co-chaired by Swedish Foreign Minister Carl Bildt, whose country holds the EU rotating presidency, and the US Deputy Secretary of State, Jim Steinberg, would have also created conditions for the closure of the OHR – a long-standing desire of the Bosnian Serbs.

Instead, the international community decided in November to delay discussion on the future of the OHR until February 2010 while NATO put on hold the country’s accession to the Membership Action Plan, MAP, which paves the way towards full membership of the alliance.

The failure of the reform initiative appears to have had a negative impact on the political climate in the country. Bosnian Serbs have since heightened their rhetoric, challenging the far-reaching powers of the High Representative, which include the right to impose laws and to sack obstructive local officials.  

The Bosnian Serb Prime Minister, Milorad Dodik, now threatens to organize a referendum in Republika Srpska in which people would vote on whether or not to accept Inzko’s authority. On several occasions in the past, Dodik has hinted that he might call a referendum on Republika Srpska’s secession from Bosnia.

“Expectations for the country’s future are unfortunately very grim…[and] if the referendum is organized it might have unpredictable consequences,” Srecko Latal, a Sarajevo-based analyst with the International Crisis Group, ICG, a think tank, told Balkan Insight. “It would open a Pandora’s Box, awakening the spirits of [1992-95] war,” he added.

Latal said the international community was failing to devise a clear strategy for its continued engagement in Bosnia, adding that the OHR was no longer part of the solution but part of the problem.  

While agreeing that the international community had to confront hard questions about “the right mechanisms for what the problems [in Bosnia] are today,” Gregorian insisted that it still retained “the instruments and the will…to deal with any threats to peace and stability.”

However, he stressed that real power remained in the hands of the Bosnian people who should react to “the manifestly bad behaviour of the governing parties over the last years.”

Gregorian maintained that outcome of the general election in 2010 could, in fact, “bring significant relief to Bosnia in terms of possible new alignments of parties in a way that removes obstructionism from the political scene. “We are close to hitting bottom here in Bosnia, but that means there is no place to go but up,” he added.