Tuesday, May 15, 2007

Divides and Reforms

As we no longer get a home subscription, I haven't read the Chicago Tribune in a long time. What would you know, there just happened to be extra copies of yesterday's Tribune in the lobby, and there was a front page article on Bosnia, titled "Old Divides Plauge Bosnia." The article focused on the "dangerous backsliding" as nationalist politicians and leaders have "allowed ethnic and bureaucratic divisions to again undercut the nation's prospects."
Meanwhile, the WSJ recently published this article about some Bosniak entrepreneurs moving to the RS part of Bosnia for better business opportunities. And while I don't agree with Dodik on political matters, or with his lack of cooperation with the international community and the Federation when it comes to unifying the Bosnian police force; this isn't the first article I've read about how his economic reforms are leading to more investments and business opportunities in the RS.

Both of these articles (particularly the WSJ article) made mention of what they portrayed as being a major issue when it came to the lack of economic and other reforms: the large amount of bureaucracies, particularly in the Federation.
According the Chicago Tribune article, there are 170 different ministries in the Federation. There seems to be almost just as many problems with having too many bureaucracies and organizations as with having to few. Case in point, according to the Tribune article two years ago, travel was very difficult in Sarajevo due to heavy snow. The problem wasn't a lack of road crews to plow the streets; but rather so many road crews no one really knew who should plow. The WSJ article also made mention of the issues of a large number of bureaucracies in the Federation; according to Hazim Stikovac, who moved to Zepa along with his father to set up a plant, "is too complicated. All the different governments --canton, Federation, municipalities. It's too much." Of course, it wouldn't be fair when discussing the high number of bureacratic organizations in the Federation without also making mention of how the Federation's struction that was created at the Washington Agreement lends itself by its very nature to more levels of government; as opposed to a more centralized structure.


Daniel said...

I read that Sarajevo Canton alone has more imports than Republika Srpska entity. I am not sure about economic opportunities in this Serb entity as they are the poorest and most heavily undeveloped part of Bosnia; thus far, they are the most responsible for high unemployment rate in Bosnia-Herzegovina. It is possible that RS offers laxed regulations, but seriously - who would want to live and do business there, anyways?

Owen said...

Excuse me if I'm a little suspicious about the attractiveness of RS to investors. How sustainable is the sort of investment being attracted?

Unfortunately my nasty suspicious mind associates the promotion of inward investment in a "business-friendly" environment not known for its transparency with a dismantling of environmental and employment security controls and a less than equitable redistribution of the gains.

There's also a particular problem as far as RS is concerned with regard to the issue of property rights. Did the Chicago Tribune check out the legitimacy and the extent of RS deregulation?

Shaina said...

It was the WSJ article that focused on the RS in terms of investment. The Chicago Tribune article was the entire country doom & gloom article.

The WSJ doesn't say that everything is good in the RS; or that the standard of living is better than in the Federation (it is not) it also points out that in the Federation wages are higher as well as pension payments.
The main theme of the article, at least as I understood it, was that the RS econonmic situation is better than it was in the past, which is perhaps not saying much. And, the sort of "human interest story" of at least a few people (again, they have no stats to say how many or anything) from the Federation setting up plants in the RS.
Of course, with any business story like this, enviromental concerns and employee right concerns are indeed a very important factor; and I don't think it would be too cynical to believe that perhaps those concerns are not the top reasons why investors who are putting their companies into the RS are doing so.
From what I gathered from teh WSJ article, the main insentive seems to be the lower taxes and the fact that it seems easier (at least from the quotes in the article) to set up a company there.

Owen said...

BBC Radio 4 Today programme has been carrying some pretty grim reports from Mike Thomson about the situation in Eastern DRC, including a horrific interview with a woman who had suffred terribly at the hands of the Interahamwe and was calling for Rwanda to take them back.


They also had Romeo Dallaire on this morning talking about impotence in the face of violence against a civil population and the situation in Sudan. He was calling for more willingness by the international community to act in situations where they have no interest but more specifically for pressure on China through divestment and the Olympics. Interestingly he was also calling for the Chinese to contribute to an enhanced UN peace-keeping effort, though he thought Chinese involvement might need to be subject to some scrutiny.

Owen said...

Sorry, the link to all Mike Thomson's reports from DRC is http://www.bbc.co.uk/radio4/today/reports/international/congo2_20070504.shtml

Shaina said...

The book The Fate Of Africa does a pretty good job of giving a good summary of the situation in the refugee camps in the DRC in the immediate aftermath of the genocide in Rwanda. The DRC is still very much feeling the ripple effects of the 1994 genocide. And as one of the BBC articles stated, one of the problems is that the DRC is no longer (if it ever was in the first place) on anyone's concern list.
Darfur at least, even if people don't understand everything hat is going on; at least they have a gist that something horrible is indeed happening there.
Yet, it seems from the article that even the International aid organizations might not be fully aware of the extent of the humanitarian catastrophe that is occuring in DRC as well.
The crisis in the DRC is painful evidence of why atrocities, human rights abuses, mass killings must be dealt with head on, and early as possible; as well as the painful reminders of innaction.

oskar said...

Clearly RS started out with the worst economic situation. Not only did the Federation get Sarajevo, it also got the lions share of foreign aid.

However, there are lots of examples where the economic underdog has become the favorite. Take the Czech and Slovak republics as an example. After the dissolution, everyone thought Slovakia was doomed. However, thanks to low taxes and a business friendly environment, Slovakia is now the favorite among foreign investors. An older example would be that of Hungary and Poland. In the 1990s, Hungary was in the better position and Poland was a mess. However, in the past couple of years the roles have become reversed.

I work for a packaging company that has invested in RS. For us, the fact was that RS was much better situated and closer to the main European roads than Sarajevo/Federation, which is cut off by mountains.

As for Daniels comment about "who would to live and do business there, anyways" aren't really relevant for investors. People don't invest in China because it's a nice place to do business and live.

Regarding Owen's suspicion that a business friendly environment must necessarily mean lax environmental and employment standards, I certainly haven't heard anything about it.

Finally, considering the very bad starting position of RS it certainly seems to have made very good progress. You would think people would applaud it. Instead, it's sad to see that some contributors seem to have an almost knee-jerk reaction against the RS.

Bob said...

I visited Banja Luka last year. I was surprised to find such a prosperous city. (Of course it would be even more thriving if there had not be the ethnic cleansing of the 90s.)

I have also heard that the civil service of the RS is surprisingly efficient and competent despite the statelet's conception as a corrupt and criminal ethno-state.