Below, an article from a journal called Balkan Insight considering Bosnia’s next year. Because it is ‘premium content’, I post it here for my readers (http://www.balkaninsight.com/en/article/year-of-mixed-fortunes-awaits-bosnia). Things in this country remain grim in most people’s minds. Corruption and unemployment are too high, investment too low, political stalemate too common. I am not a pessimist, but I can see all of these things at work. It is in this setting that our peace work finds its needs. We will not make it possible for a budget to be adopted or corruption to end. We do not even employ anyone (yet). However, hope that change can occur is equally if not more important in these grim circumstances and our peace work is a one-by-one endeavor to help each person find ways in her setting to bring transformation. I believe this is a message of solid hope for the future.
A Year of Mixed Fortunes Awaits BiH
From hopes of economic growth to re-booting stalled EU integration processes, it all depends on whether the country can at last form a state government.
by Elvira Jukic, BIRN
Sarajevo Forming a state government, adopting a state budget, implementing fiscal and public administration reforms and restarting the stalled EU accession process are at the top of Bosnia’s must-do agenda for 2012.
Other factors are the question of its continued international supervision, its economic stability and its security prospects.
Without progress on these issues, expected economic turbulence and a continued political stalemate could make 2012 a year of decidedly mixed fortunes.
The regional context is of several neighboring countries, including Croatia, Serbia and Slovenia, either being part of or moving towards the European Union.
Bosnia and Herzegovina risks lagging behind, and it could find itself marginalized in trade and export arrangements with these countries as a result.
If a budget for 2012 is not adopted, which remained a distinct possibility at the end of 2011, the capacity of state-level institutions to function next year will be jeopardized.
Lack of a state government remains the biggest political impediment. Since October 2010 general elections the country’s six main political parties have failed to agree on the appointment of a state government, known as the Council of Ministers.
Spending cuts needed:
With a population expected to remain stable at around 4,600,000, the country’s GDP is expected to rise only slightly in 2012.
A real GDP growth rate of 5.7 per cent in 2008 dropped sharply in 2009 to -3.1 per cent and then rose to just above zero in 2010, at 0.8 per cent. Per capita GDP remained around $6,600 in 2011.
Formation of a state government, adoption of a budget and cuts in spending on civil service salaries and welfare benefits could allow Bosnia to access further interim IMF funds. The last IMF standby arrangement was reached in 2009.
With around 50 per cent of GDP going on public spending and 47 per cent of the employed population in the service industry and the public sector, a budget deficit in 2010 of -4.4 per cent can only be corrected if spending on benefits and salaries is curtailed.
A marked shrinkage of the government workforce will be necessary, through cutting staff in entity and cantonal ministries that duplicate state government personnel posts. But this will only be feasible if the country has a central government.
Foreign Direct Investment in the manufacturing and tourism and the potential development of oil deposits, as well as access to pre-accession EU funding, also depend on the adoption of a state government.
External investment from Turkey, the Middle East, Austria and other EU countries in 2012 will provide some limited employment prospects, in retail, marketing and construction.
Outsourcing of manufacturing by EU-registered companies to Bosnia could also lead to growth in such areas as the forestry industry [for furniture] and food processing.
The media saw a world player arrive in its midst with the establishment in Sarajevo in 2011 of Al Jazeera TV Balkans.
Doomsayers predict a hard year ahead. Duljko Hasic, economic analyst of the State Foreign Trade Chamber, said 2011 was a lost year for the Bosnian economy and the consequences would continue to be felt in 2012.
“As Bosnia’s foreign debt grows, no new investments are coming. The key problem is that the state budget is not yet adopted,” Hasic told Balkan Insight.
He said 2012 could be a year of deeper recession if the country’s credit rating fell again. It was lowered once already on December 1, 2011, by Standard and Poor’s from B+ to B.
If that happens, “banks will have less capital to loan to citizens, and loans will become more expensive,” Hasic predicted.
Security and crime:
Security will continue to remain stable in 2012 if economic and political factors contribute to economic growth, if there is no further rise in unemployment, and if there is some foreign investment.
Organized crime will continue to be the main security issue, the country’s intelligence agency chief and state security minister warned in December 2011.
Alarmist international warnings of a return to armed conflict have yet to be born out by any physical and material evidence that such a danger exists.
Instead, the fight against corruption will remain key, particularly in Bosnia’s dealings with Brussels.
Corruption remains a constant factor in Bosnia ranking the country on 91-94th place in the Global Corruption Perception Index issued by the Transparency International.
Srdjan Blagovcanin, Bosnian director of Transparency International, said that since the implementation of anti-corruption reforms remains deadlocked, Bosnia’s progress in this area in 2012 is highly questionable. “First it is necessary to make the Anti-Corruption Agency functional,” he said.
The State Anti-corruption Agency was founded in 2009, following adoption of a new law pressed by the EU. But so far only a few directors and administrative stuff have been appointed.
Meanwhile continued affiliation with NATO’s Partnership for Peace program, PfP, will guarantee Bosnia’s broader international security.
The continued fall in the number of people under arms, from 419,000 in 1995 to about 10,000 today, is another positive trend.
Bosnia’s armed forces, now engaging successfully in several small-scale deployments abroad, continues to be an under-reported success story, international military officials say.
Another question remaining in 2012 is the continued presence in the country of Bosnia’s international overseer, the Office of the High Representative, OHR.
Valentin Inzko’s daily wars of words with the president of the Republika Srpska, Milorad Dodik, will remain a predictable mainstay in Bosnian politics.
The appointment in September 2011 of Peter Sorensen, a Danish diplomat with extensive regional experience, as the new EU delegation head in Sarajevo could push forward the EU accession process.
Bosnia’s politicians remain an overall liability, Tanja Topic, a political analyst from Banja Luka, said.
She did not expect anything new in 2012 on this front, as the same political players had been in power for the past two decades and had yet to show signs of withdrawing from the stage.