HOW TO ATTAIN INTEGRAL MARKET OF B&H

Conference on Economy of B&H?

Entrepreneurs of B&H Federation launched an initiative for organization of a conference on the economy, the destiny of which depends on the decision of the High Representative of the international community

AIM Sarajevo, 5 February, 1998

Will Bosnia & Herzegovina (soon) become a united economic territory? According to certain developments, and certain announcements, this could happen perhaps even in the first half of the year. In November 1997, thanks to the Sarajevo and Banja Luka chambers, but also to two independent newspapers in both cities - the economy of the capital city of B&H was presented in Banja Luka at a specific fair, which is assessed by many entrepreneurs as one of the most important events after Dayton. This was, of course, the first step. The second followed at the fair itself when direct contact between Sarajevo and Banja Luka enterprises was established, which resulted in signing of tens of contracts on business cooperation. But, in order to continue these and other forms of cooperation, it is necessary that the politicians establish (much better) free flow of people, capital and goods. Because, not even two years after signing of the Dayton accords on B&H, the economic sitiation is not satisfactory.

The last year's achieved results of economic trends, reconstruction, revival and recovery in B&H Federation (but primarily in the sphere of industrial production, usability of production facilities, employment, height of average salaries etc.) are more favourable than the achievements in 1996, but still far from the expected ones. Detailed analyses show that there is a series of problems which have put the economy into a critical situation. The economy in Republica Srpska is in a much worse position, started from the volume of production and usability of facilities to the height of the average salary.

The thing that concerns entrepreneurs the most is the fact that not even after two years of peace were there significant indicators that assumptions had been created for operation of the unified economic territory in B&H and that integral market existed. It is true that in the Federation, the integral market is more or less operational, but there is no cooperation of this part of the state with Republica Srpska. To put it simply, territories of the two entities in B&H are shut to each other. Although the international community is trying, by a series of measures, to open them via political relations and to establish unified state administration, there is still no full freedom of movement of people, goods and capital. This means that in such circumstances it is diifficult or almost impossible to establish industrial or any other cooperation between business partners.

If railroad and road transportation started, and if the unified PTT system began to operate, if customs existed on the borders of the state, the entrepreneurs would quickly establish contacts.

Instead of developing efficacious mechanisms and institutions, nowadays unpermissbile transactions, smuggling and foul play rule between the entities. As the economy goes ahead of politics, it can be expected that the entrepreneurs will establish firm relations and integration of the economy on the whole territory of the state faster than politicians. The mentioned example of the fair in Banja Luka is the best illustration for that.

The moves made in the past few days in the chamber of the economy of B&H foretell a brighter future in integration (at least of the economies) of the two entities. Chairman of the chamber, Mensur Smajlovic, and president of the management board of this association, Mijo Misic, in the name of a large number of entrepreneurs, scientific workers and bodies of the chamber of the economy of B&H launched the initiative for organizing a conferennce on the economy of B&H. How serious they are in their approach is confirmed by the title of the proposed topic: platform of economic policy of B&H and its entities in 1998 in the light of revival, reconstruction and economic recovery, but also development and operation of the economic system and institutions. It is proposed that about one hundred experts (members of the Council of Ministers, representatives of the Central Bank of B&H, the World and the European Bank, USAID, the European Commission) take part in the conference. In a letter addressed on the occasion to Carlos Westendorp, High Representative of the international community, it is said that "the subject is very topical and of priority for further successful implementation of the civilian part of the peace agreement in B&H, especially due to serious problems in the economy and social status of the majority of the citizens in B&H, including the issue of return of refugees and banished persons to their homes". Along with the initiative, several questions were also presented which should also be discussed at the conference and solution of which would enable operation of the unified economic territory in the state. Therefore, entrepreneurs from the Federation express readiness to participate in creation of a favourable domestic environment for recovery of the economy.

When this week, at the session of the management board of the Chamber of the Economy of B&H, the initiative of entrepreneurs from the Federation was made public, Seadeta Ceric, assistant minister of foreign trade, immediately expressed support for this proposal, but at the same time pointed out that it is very difficult to overcome strong tendencies of both entities which wish to maintain maximum power in their competence, stressing that there are apirations (especially in RS) to transform the entities into states. Certain previous circumstances work in favour of the politicians such as, for instance, signing of an agreement on commercial cooperation between the entities.

It is clear that the beginning of establishing contacts between the two economies is the germ of a new process in B&H which marks the beginning (even if step by step) of economic integration of the state. In this sense, one should observe great political changes in RS where the new prime minister, Milorad Dodik, announces support to economic cooperation with the Federation. That is why it should be expected that the existing barriers to establishment of political and economic connections in RS belong in the past, as well as the fact that trade of RS with the Federation was treated as export in the Serb entity.

Nevertheless, formation of the integral economic territory of B&H - even with good will of both parties - will not be very easy. Why? Simply because, among other, there are the sanctions introduced by the international community against RS. To what extent that will burden the future relations and at the same time prevent economic reintegration, it is hard to tell for the moment, without a more detailed analysis. It is obvious that the High Representative should make the next move. And since it is the beginning of the year, it can be expected that Carlos Westendorp will react promptly.

In this case, majority of tasks in this year (like defining and realization of the process of transition and privatization, revival, reconstruction and accelerated recovery of the economy, resolution of unemployment and other burning problems) could be fulfilled faster on the integrated territory. Undoubtedly, the foreign investors would in that case have more motivation to invest their capital in B&H.

Raif CEHAJIC

(AIM, Sarajevo)