Bosnia’s Uncertain Economic Ground and the Need for Broad Reform

by Mike Walker

A week ago, political scientist Valery Perry published an editorial in Balkan Insight entitled “Elite-Driven Reform Will Not Save Bosnia”. In this essay, Dr. Perry makes her case that outside “expert” efforts to aid governmental reform in Bosnia should include the views and active contributions of ordinary Bosnians as well as politicians and outside professionals. I share her concerns but also see some pragmatics beyond the question of on-the-ground input from the “common person” versus the efforts of “elites” to bring reform to Bosnia.

What many protestors and even some journalists are overlooking here is that however inept the government may be in some regards—and I will admit there are probably certain officials who need to resign—we are in a very different set of circumstances than those that lead to the Arab Spring and hopes for a “Balkan Spring” may be in grave error. Here is why: For one, the Arab Spring uprisings were supported by the United States in varying degrees with at least tacit endorsement and such was done for political reasons. The United States has more or less washed its hands of Bosnia though: I cannot speak for what the US government thinks now of the current protests, but I doubt it finds any great catalyst to get very involved, beyond offering some simple words of encouragement. Nor will most anyone else in the international community, beyond providing exactly the types of concepts being talked about now—the type of ideas Dr. Perry mentions in her article, just your typical cast of fiscal and political power-sharing and anti-corruption safeguards.

A protester calling for resignations at the top (AMEL EMRIC — AP Photo)

Even more crucial is the approach international business and banking interests will take. In the case of Egypt, one of the key Arab Spring sites of revolt against a corrupt, aging, governmental power, we see large, wealthy, international companies with a high acuity of desire to remain in the game in Egypt despite the turmoil. Why? Because they’ve already invested too much over decades to pull out and leave now. Cairo has been the regional and mega-regional seat of many corporations’ operations for all of the Near East and much of Africa. It cannot be tossed away easily—you cannot just pack up the office and hop a plane out for the territory ahead. This is why even though matters of polity remain pretty poor in Egypt, most companies are resigned to stay in place. Not so with Bosnia. The scant foreign investment that has been attracted to Bosnia—and much of that to the Republika Srpska—can be divided into two general groups: companies that provide local retail, wholesale, or service provisions (such as communications) and, in contrast, those that have located necessary facilities (factories, call centers, offices) there. Unrest and a very poor economy will make the need for the former group of businesses less promising while the lack of stable infrastructure may make the ability to maintain the latter grouping increasingly difficult. Who wants to operate an office in a city where the streets are blocked and the government buildings are on fire?

Unlike Egypt, where foreign companies are pretty much stuck with a longstanding base of regional operations, many corporations that have invested in or placed operative units in Bosnia have done so in the past decade, or at least since the Dayton Accords. Consider that for a moment: If these operations are truly regional, and not just the provision of local services, they can be moved—to Belgrade, Zagreb, where-ever. Somewhere in the region where people are not setting offices on fire. That is to say, the more violent protests we see come of this movement, the less foreign investment and cooperation we’ll probably see. And where else are we most likely to find sources of investment funding and jobs? Native businesses also are going to stagnate due to the unrest. Yes, there are aspects in the government that need modification, there are people who need to resign. But a wholesale do-over of the current government would cost at least a year in time to rebuild in a trustworthy manner core institutions to the point businesses will have confidence. There is no other nation-state I can think of that has as complex an executive branch as Bosnia has—or rather, as Bosnia, Herzegovina, and the Republika Srpska have. I understand the underlying socio-ethnic reasons for this, but on a practical level, this is a top-heavy government that works slowly under the best of conditions. When its mere ability to work at all is blocked by protests that have devolved into chaos—or, when it is being “reformed” by external plans and well-meaning foreign governments —then it is an institution that no outside corporate parties will trust. In effect, the protests—the violent ones—are blockading any real ability for anyone to create jobs or further the economy. How the “reform” of native government is brought about will be the fulcrum of whether reform continues this state of bedlam or actually resolves the troubles at hand.

The government, alas, will blame the protestors. The protestors, of course, are blaming the government. The “common people” are as Dr. Perry rightly suggests deserving of a voice in any efforts at reform. Still, this is all a silly cycle, this is a distraction from the very issues that caused the acute outcry for public protest. We cannot see Bosnia devolve into this type of mess; we cannot have the stand-still of government functionality we saw in the wake of the war. If “elites” offer plans for reform, aside from the very useful and fair condition of including input from citizens, there needs to be an approach of comprehensive outreach to business interests on the international level, too. There needs to be a plan to rebuild Bosnia and Herzegovina in a rapid manner to make the nation attractive to investment. My concern here is that the ring of the words “Balkan Spring” can sound very romantic yet will, without further discourse and quick, sincere, efforts, fall very short of leading to the better economic conditions the protestors—and many others—desire. Indeed, without that imperative reform efforts may make things only worse as the government grinds to a halt, outsiders become involved, and the all-too-common picture of NGOs and men from foreign countries in suits trotting about becomes painted instead of a picture of necessary change. What we need in Bosnia right now from the international community is advice on how to promote a stable and growing economy and encouragement to corporations able to foster such, because these changes won’t come from any mechanism of government alone. That’s why in part Bosnia is in the state it is in today: the post-war approach has been too centric on making sure every diverse group in the country is happy and feels as if they have a voice in politics and society and not enough attention to economic issues that affect everyone.