Poverty, joblessness underpin Bosnia’s bloody riots

Agence France-Presse

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(UPDATED) A shadow economy, endemic corruption and a complex post-war political structure that enables squabbling politicians to block reforms are seen as key impediments to improving the economy

UNREST IN SARAJEVO. People watch police vehicles set ablaze during a demonstration in Sarajevo, Bosnia-Herzegovina, 07 February 2014. Dzenan Krijestorac/EPA

SARAJEVO, Bosnia and Herzegovina (UPDATED) – The failure of Bosnia’s political leaders to address grinding poverty and growing unemployment has prompted the first violent protests since the 1992-95 war, with dire warnings of worse to come.

Starting in the northeastern industrial hub of Tuzla last week, the protests spread across the country, turning into riots that left hundreds injured and government buildings in flames.

The international High Representative for Bosnia and Herzegovina, Valentin Inzko, even raised the prospect of sending in European Union soldiers if the unrest intensified.

“If the situation escalates, we will possibly have to think about EU troops. But not right now,” he told the Austrian Kurier newspaper on Sunday, February 9.

With unemployment ranging from the central bank estimate of 27.5% to the statistical agency’s 44%, the Balkan country’s unemployment rate is easily among the highest in Europe.

Joblessness of more than 25% among Bosnia’s young adults is a “stunning and problematic” figure, the World Bank’s director for southeastern Europe Ellen Goldstein said last month.

“High unemployment and low labour force participation continue to pose a threat and need to be addressed to ensure a peaceful and prosperous future for Bosnia,” Goldstein told a World Bank conference.

One in five Bosnians live below the poverty line, and at least one in five workers are thought to be engaged in the so-called grey economy.

Although macroeconomic data showed the economy made a fragile recovery of 1.0% in 2013 after shrinking 0.5% in 2012, Bosnia’s 3.8 million people have felt scant improvement in their everyday lives.

“More and more people live in misery and poverty. They are hungry,” said political analyst Vahid Sehic.

Bosnia’s citizens are among the poorest in Europe, with an average monthly salary of 420 euros ($570).

A shadow economy, endemic corruption and a complex post-war political structure that enables squabbling politicians to block reforms are seen as key impediments to improving the economy.

Moreover, hasty privatizations that enabled tycoons to shut down dozens of companies and make quick profits by selling their assets before declaring bankruptcy have left hundreds of people jobless and in despair.

Local media have widely reported that new owners often failed to comply with privatization contracts and failed to pay workers for up to two years.

‘People are hungry’

“People protest because they are hungry, because they don’t have jobs. We demand the government resign,” said Nihad Karac, a construction worker in his 40s who was among the protesters in Tuzla.

Social scientist Miodrag Zivanovic said the public dissatisfaction is not surprising.

“These are protests of hungry people with years of accumulated anger against all the decision-makers who have brought us here,” Zivanovic told the FENA news agency on Saturday, February 8.

Foreign investors are reluctant to come to Bosnia because of its poor infrastructure and cumbersome administrative procedures, as well as a complex political system that requires businesses to deal with authorities at three or four levels.

After the war, power was shared among Bosnia’s three ethnic communities – Serbs, Croats and Muslims – and persistent inter-ethnic disputes have undermined reform efforts.

Foreign investment in 2013 totaled just 252 million euros ($343 million), Central Bank governor Kemal Kozaric said.

Reforms unlikely

The IMF, which in September 2012 awarded Bosnia a two-year standby arrangement worth 384 million euros, approved its fifth installment last week.

But it warned that despite progress “more remains to be done to improve the business environment and the functioning of the labour market”.

“In this regard, it will be particularly critical to put in place new labour market legislation that will contribute to a lasting reduction in unemployment.”

Economic analyst Svetlana Cenic said political consistency and discipline would be required to resolve the crisis.

But she warned against expecting significant reforms ahead of elections in October.

“The authorities will be occupied with electoral engineering and power-sharing issues and not with the economy,” Cenic said in a recent interview.

Bosnia started accession talks with the European Union in 2012, trailing behind other Balkan countries. – Rappler.com

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