Can you comment on the role of the OHR regarding vital reforms underway in BiH, the privatization process and the legal framework of the constitution?
We are basically the leading agency of the international community responsible for the implementation of the Dayton Peace Agreement in BiH. Since I came here I have been putting the emphasis on economic reform. I think that in the first four years it was important to concentrate on the reconstruction process of this country so that people can again have a chance to return to a normal life. In addition, this country, like the other countries in the region, is engaged in a transformation process: the transitional phase from a communist society and planned economy to democracy and to a market economy.
BiH must realize that with the massive support of the international community, it now has and is able to do what needs to be done. So, the reconstruction has been used as a tool to reform and help the transition process. I will give you one example: BiH is the first country that got rid of the old communist payment system with the so-called payments' bureaus. Now the commercial banking system is becoming very reliable here, and this happened much faster than anybody would have imagined. That is an example of the fact that reforms, combined with a clear vision of what this country should become, can make things move forward. This, of course, has to be very carefully calibrated and planned.
This, for example, is what we are now doing with the regulatory system of agencies that we are establishing at the state level. The state level needs to be strengthened, as BiH is a highly decentralized country with a weak state structure. At the same time, we are modernizing structures. This is what happened in the communications and telecommunications areas where we have now fused the agendas. We are doing the same with the electricity sector. You actually have a situation where every potential investor should be very interested and should take a closer look at the situation. The image of Bosnia is still very much influenced by the war but at the same time you have a potential that gives great perspectives to the foreign investor.
When considering this potential, what is, in your opinion, the key investment potential in BiH?
I think that it would be useful to take a brief look back to the past. In former Yugoslavia, BiH was the center of heavy industry. That was in the past but what still apply are a highly skilled workforce, the tradition of a disciplined workforce and a very strong industrial tradition as a basis for the next generations. That is, I believe, the key factor for BiH: human resources.
Thanks to the reconstruction of the infrastructure, BiH is now ready to accept foreign investment and it is able to accept state-of-the-art industry. Another advantage is that the constituent peoples of BiH have good regional connections. For example, Serbs are well connected to Serbia and Montenegro and further to Bulgaria. Croats are well connected to Croatia. So, it is an advantage for reaching out to the region. These are two important factors and a third one is the presence of the international community in terms of security. This country is now going through a very thorough reform of its judiciary. This will produce within one and a half years a highly professional judicial system. This is being carried out in combination with the establishment of basic economic and business laws, which I have been pushing very hard. I have imposed many laws in order to prepare the ground for economic reforms. I believe this is the time to take a closer look at investment possibilities.
It is important to point out that the current government is the first postwar government that has lived up to the expectations of the international community: it is aware of the necessity to improve overall conditions in order to establish a business-friendly environment, to follow European trends in terms of regulating the business environment and to provide a consumer-friendly public service in contrast to the old communist bureaucracy.
What is the level of assistance in terms of subsidies being allocated to the country, and what is the impact of such policy?
One of my main tasks here was and still is, to get the country to accept that it has to move from an aid economy to an investment economy. Financial aid is basically tapering off in the course of the next two years, yet in spite of the dramatic downturn in aid over the years that I have been here there is still economic growth. That clearly indicates that the local economy is kicking in and starting to become self-sustainable. It is still far from being fully sustainable but you can now see the contours of a sustainable economy. So, this country will still need support over the next two years but the financial institutions such as the World Bank and the IMF are taking over the task in a more normal way, compared to the first five-year period when 5 billions $ were put up for the country. That was a time to guarantee the survival of the people and to deal with the reconstruction of the infrastructure.
And what is your policy as far as attracting foreign investment to the country?
That is really up to the local authorities to take on this challenge. |
We have contact with the investment agencies here. We are supporting them, they can learn a lot by looking at other models throughout Europe. It is very important to learn from neighboring countries, particularly those from Eastern Europe. Those are the recent arrivals in the European family of democratic nations. They have experienced transition in the recent past and they can help this country avoid mistakes and move more quickly into the group of European countries. What is important to point out is that more and more now, what I call the Europeanization process is kicking in. I was the one who coined the phrase "this country has to move from Dayton to Europe". The Dayton Peace Accords provided peace in this country and ended the war, but this country needs to become more European in the sense that it adopts and applies the same regulations, laws, and rules in order to become a player in the European integration processes. That is the most important policy decision that this country has taken and which the current government also embraces.
What about the legal framework of the constitution of Mostar? This is a good example of the situation you are dealing with, so can you comment on it?
Mostar is one of the cities that have really been destroyed by the war, and where a part of the physical structure, of the social fabric of this beautiful town, the center of Herzegovina, has been destroyed. My aim is really to empower those local politicians who are doing the right thing in reuniting the city, in normalizing the situation there. And I think that they have a realistic chance of success. In the medium term, when thinking of the overall set-up of BiH, Mostar needs to realize its potential to become one of the centers of this country. We have the Sarajevo region, Banja Luka as the capital of the RS, and in my opinion Mostar has to regain an important position in this south-western part of BiH. There are four cities that create the core of this country including the ethnic balance and regional and economic balance. Therefore I'm pushing very hard for necessary legal and constitutional reforms but they have to be taken by themselves because in a way Mostar could and should be the capital of the Federation, which is the larger entity. So, in this way we would have a clear political structure with Sarajevo as the capital (almost like the District of Columbia) of the state of BiH fully concentrating on state business, having Banja Luka as the capital of the RS and Mostar as the capital of the Federation. Mostar is still far from this but what it can do now is to continue this unification process, which was stalled by the nationalistic forces that were very strong. They are now very diminished and people like Mr. Tomic and Mr. Jahic in my opinion have the potential of pulling Mostar out of this black hole existence. Mostar is well placed to become a major regional hub for BiH as well as the necessary connection to Croatia, Dalmatia, the coast that is just a one-hour drive away. That provides Mostar with a unique position.
In your opinion what are the opportunities for the private sector with regard to the privatization process?
It would be too long for me to go into detail but in general, I believe that there are enough opportunities out there. We have created the necessary legal framework so that the necessary development can happen. Particularly when it comes to the international community, we are speaking about establishing the basis and trying to use the massive international assistance and presence to move faster than the country would do if it were left on its own after such a terrible war. In this way, we are establishing the rule of law, helping to overcome the ethnic definition of state and society and adopting more decisiveness towards civic definitions in order to foster civil society in this country. This is what I believe we should pay attention to, to the general development of the country. Once the framework is there, then we can deal with more concrete issues.
Could you tell us a little bit more about personal background?
I have spent five years in the Balkans; first as Austrian Ambassador to Belgrade then I was EU special envoy for Kosovo, then I was the European chief negotiator for peace in Kosovo. Finally, I was appointed here. I think it is now time for me to move on; my next job will be in Geneva as Austrian Ambassador to the UN and the World Trade Organization. Geographically it is away from the Balkans but I will still be engaged here, this is a fascinating part of the world. With all the tragedies that happened here, I believe that historically speaking it was the last victim but now the Balkans are more and more integrating into Europe in terms of society: the people who live here are very European. There are a lot of emigrants who are successful businessmen all over Europe and all over the world. Now it should be the main focus of European policy to find job opportunities in the country, to keep young people here, which will bring faster development. Foreign investors are convinced that there is potential here but what this country needs are the necessary institutional prerequisites. Take the example of Afghanistan, which had become a base for international terrorism, this danger also existed in the Balkans; this was the reason that the international community had to intervene so robustly. And establishing the rule of law is establishing the necessary democratic institutions and it is the best insurance for preventing conflicts in the future.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
