 START OF STOCK MARKET |
The privatization process was significantly slowed down because of the lack of stock market in the country. One recently opened in Banja Luka, which might be a sign of a new era in the country after the fall of communism. Companies from Republika Srpska, which previously had only nominal value, will now be valued according to market criteria. Around 200 privatized companies are in the process of registering in the stock market. They will have their shares offered on the market for sale. A stock in the Federation is expected to open in April 2002.
After a horrible war in Bosnia, the international community, led by the World Bank has organized five donation conferences during which an impressive sum of 5.1 billion dollars was pledged to Bosnia. One of the projects left to be implemented is the program Power III, whose aim is to integrate the energy sector of Bosnia into the European energy distribution network.
The aim of the international community is to have in 2003 a country reaching the level of self-sustainability, capable of returning earlier credits while securing a minimum of economic stability. That goal has not and won't be reached in that period. Bosnia will need several more years to get to that point.
There are two key reasons why Bosnia has not accomplished these goals yet and why the international assistance failed in stabilizing the Bosnian economy. Firstly, more than 90% of the international donations were spent into the reconstruction of the infrastructure, which was destroyed during the war. This included rebuilding bridges, schools, apartments, water-supplying systems and the electric energy network. Only a low percentage of this foreign assistance was invested into the economy and its reconstruction. Only a few infrastructure reconstruction works were given to Bosnian enterprises. Most of it was attributed to big international construction businesses. The second reason is that Bosnia did not have institutions of the free trade economy, which could have reacted to such influx of capital in an emerging market. Indeed, simultaneously with reconstruction of the infrastructure the new state institutions were being built, such as the Central Bank in Bosnia, (which Bosnia never had in its current form), but also the Customs service, Council of Ministers, State Border Service, Privatization agencies, and other more typical government structures, which usually follow and service these jobs. Such structures were non-existing.
Mr. Ranko Atijas, General Manager of Siemens in Bosnia-Herzegovina
As Mr. Ranko Atijas, General Manager of Siemens in Bosnia-Herzegovina points out, "We started working here in 1995, the year when the Dayton Peace Agreement was signed. At that time, Sarajevo was still under siege from the Serbs, so my first visit to Sarajevo was under the tunnel that was dug under the airport and that was the only mean of communication with the outside world. It was a very interesting trip; we went over the mountain Igman and then through the tunnel to Sarajevo. Actually, this was already a kind of a business trip. Siemens was delivering a high voltage electric cable of 110 KV to supply Sarajevo with electricity. What is interesting is that this cable was also brought through the tunnel and through the mountain Igman under the grenades and shells. But we did it: the first time electricity had been brought to Sarajevo after three years of war - and all this only because we believed in the future of this country. We still believe in it but we know that the country first has to go down to go up".
|  Political obstacles |
One of the reasons for this delay in meeting the said targets was also a lack of political consensus surrounding the most important questions, even about those of general interest. Bosnia remains a highly complicated state structure. Because of complicated and unresolved interethnic relations within Bosnia, at the peace negotiations a very atypical and strange state structure was created. For almost every issue the consensus needs to be reached. A part of Bosnia, populated mostly with citizens of Serb nationality is organized as a united republic, while the other part, populated mostly with Croats and Bosnians, is organized as a highly decentralized Federation.
In the Federation, one of the worst examples of all obstacles that political division can impose upon the perspectives of economic recovery is the city of Mostar, where all public institutions are divided along ethnic lines between Bosnian Croats and Bosnians. The whole city administration is still, seven years after the war, highly divided.
"It is not necessary the political issues that make the difference between us but only some diverging points of views. It is normal for two persons living together to make compromises so it is the same when you have to harmonize two communities and find a common solution. It is the same for the municipal workers: they have to harmonize their opinions and points of view," says Neven Tomic, the alternating Mayor of the City of Mostar.
Neven TOMIC, Mayor of Mostar
Two entities at the state level have their common structure with insignificant and sometimes symbolic authorities, power and influence. This complexity partly explains why Bosnia is relatively slowly resolving its political and economic problems, and why it is dragging at its path toward European integration.
| Donation mentality |
The international grants have for a while created a "donation mentality", which paralyzed local business initiatives. Most domestic businessmen were counting on international donations as some sort of obligation coming from the international community. As time passed by and as resources started drying up, the situation with regard to this mentality started to change and business people got back to normal practices, asking for credit lines or looking for joint ventures rather than seeking donations.
Yet, Bosnia remains heavily dependent on donations and international help. The worst situation is in Republika Srpska whose hard nationalistic leadership has caused much hardship for its population. This portion of the country has received less international donations because the foreign aid was for a long time conditioned with the compliances with the Dayton peace agreement, which the leadership of RS opted to frequently disregard. That is now being paid in poor living standard of the people in this part of Bosnia.
Finally, it should be mentioned that the energy and telecommunication sectors, as two of the most lucrative businesses, are still in state ownership. These companies are highly capitalized and are frequently used by different governments to cover up numerous budget deficits. Bosnia has a surplus in energy production and at the top of it, has significant unused hydro-energetic potential. The energy and telecommunication sectors are going through reforms as to adjust them to European standards and to prepare them for privatization through open tenders. With the revenue that would generate the selling of some of the electro-energetic and telecommunication sector, the government of Bosnia intends to build a highway North-South, which would be part of a bigger highway linking Budapest to the Adriatic Sea.
After presenting all major advantages and disadvantages of the Bosnian economy it seems that post-war Bosnia is heading towards positive trends. There are shortcomings of course, but this country seems to be on the right tracks. |
