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A Balkan Spring?

February 14, 2014
Bosnia and Herzegovina

A joke often retold in Bosnia and Herzegovina says: “Why is there no sex in any state firms or government buildings? Because everyone is related to each other”.

A joke often retold in Bosnia and Herzegovina says: “Why is there no sex in any state firms or government buildings? Because everyone is related to each other”. Thanks to prevailing nepotism in the public sector, that is. This joke perfectly portrays the self-ironic attitude of the Balkan mentality that develops as one quickly learns that succeeding in life evolves more around building “a network” than spending time in the library. Yet, in February of 2014, “that joke isn’t funny anymore”[1]. 30 years after the Sarajevo Winter Olympic Games, 20 years after the War ended, 10 years after SFOR (NATO) peacekeepers left Bosnia, 2014 might be a contender to being another historical moment in Bosnia and Herzegovina. The people have had enough of their everyday life being joke material. And we have been witnesses to this in the last days as thousands of people have taken on the streets of several cities around the country. Could this pave the way for a Balkan Spring?

In the beginning of 2011, a revolutionary wave of demonstrations and protests spurred across the Middle East and North Africa that will become known as the Arab Spring. The common denominator had been the demand for democracy and political reforms. Yet, demands for redistribution, lower youth unemployment and the fighting of corruption had also been a huge drive in this political uprising. Economic dissatisfaction can act as a catalyst for political change and that is once more what we are noticing.

What the confiscation of his wares and the latter self-immolation of Mohamed Bouazizi in Tunisia had been for the Arab Spring, the closure of a number of factories in Tuzla has become for Bosnia and Herzegovina. This became the decisive moment that led to protests on the 4th of February in Tuzla and spread to Bosnia’s biggest cities: Sarajevo, Zenica and Mostar. These quickly turned violent; leading to fires being set in government buildings. It is no accident that protests started in Tuzla which used to be an industrial center. As capitalism tightened its grip, employment went dwindling. Back in Yugoslavia, the local chemical factory SODASO used to produce 80% of the table salt consumed. By 1999 its production has plummeted to 10% of its original production and employed 2500 people. By 2013, after its privatization, it was only employing 400 people.

The catalysts of Bosnian protests have been no different than those of the Arab Spring: high concentration of wealth in the hands of politicians, insufficient transparency, corruption and too little redistribution.  And this does not come as a surprise since government officials belong to some of the most well off occupations in Bosnia and Herzegovina. Representatives in the parliament earn about 9 times the average pay (in the EU the ratio is 2.3:1). In addition to the generous salaries they award themselves, officeholders are able to further supplement their earnings by receiving pay for membership in boards and consultative bodies in the private sector (anybody noticing a conflict of interest?). Moreover, as the country transitioned from Yugoslavian socialism to capitalism, privatization led to dubious redistribution of past “social property”.

The protesters’ core demands is the investigation of the discrepancy between the registered income and the accumulated wealth of the political elites, the elimination of special privileges for the political class, and the formation of a new government that excludes participants in the existing one (which has since resigned in four of ten cantons of Bosnia’s Federation[2]). They have also been demanding early parliamentary elections (though the Constitution does not allow the possibility of calling early elections), otherwise due in October. The protesters are in favor of non-partisan technocrat governments that would allow the necessary structural reforms, and a departure from the power-sharing system set up under the 1995 Dayton agreement.

Complexity could easily stand as a synonym of the society in Bosnia and Herzegovina and its historical evolution. Without digging into a 500 year old history going back to the Ottoman Empire that has defined today’s Bosnia, in context of the most recent history one cannot go without saying how the structure set up in Dayton had led to a ferociously dysfunctional and ethnically divided state. The highly decentralized political system has paralyzed decision making and allowed for the prevalence of private interest in governments to pass almost unnoticed.

Federation of Bosnia and Herzegovina

Republika Srpska

Population

2.800.000

1.400.000

GDP per capita, KM

5.300KM or 2.700e

6.200KM or 3.200e

Average monthly earnings, KM

820KM or 420e

800KM or 410e

Source: “Bosnia and Herzegovina in numbers”, www.bhas.ba, (2009)

An unbiased look into the economic trends of the recent years clearly shows where dissatisfaction stems from. In 2011, 17.9% of the population already lived in relative poverty and the number has been increasing recently. Every sixth household in the country was poor, where the relative poverty threshold stands at 420KM per month (220e) per equivalent adult. After a mild recovery with 1% real growth in 2010 and 2011, the economy has retracted as of 2012 due to the deterioration of the external environment as well as severe climatic conditions. The European Commission reported that “Tight lending conditions, EU sovereign debt crisis causing falling exports, decreasing employment and the implementation of fiscal consolidation measures had negative repercussions on domestic demand”. The trade balance could deteriorate even more due to structural problems related to weak private sector productivity which limits export growth potential, as the exchange rate is fixed to the euro. Budgetary imbalance also increased recently and the country had to resort to the IMF with whom a new Stand-By Arrangement was agreed. The authorities’ fiscal strategy over the medium term aims at an expenditure-led fiscal consolidation of 2.5 percentage points of GDP by 2015, but given the country’s track record, this cannot be taken for granted as spending pressures may increase in the run-up to the general elections scheduled in 2014.

The main fiscal challenge comes from the composition of expenditure as the public sector wage bill consists of 13% of GDP exceeding by a wide margin the region average, partly due to the complex constitutional set-up of the country and as a result of unsustainable wage hikes in the pre-crisis period. Decisive actions are needed to reduce the large government size and to improve the expenditure composition.

On the other hand, a dysfunctional labour market is an impediment to growth. Unemployment, which already reached 40% in the pre-crisis period, has further deteriorated with the officially registered unemployment rate climbing up to 44.5% in 2012, while participation in the labour market is extremely low, with an activity rate of 44%. Such a low activity rate implies a large grey economy which impedes fiscal consolidation, while at the same time, a significant proportion of the population has largely given up the prospect of finding employment and exited the labor force. The crisis has had a particularly strong effect on low-skilled workers that constitute most of the unemployed and has raised youth unemployment to over 60%. In addition, (corrupt) privatization and an unfavorable business environment as perceived by potential investors has not been beneficial to job creation.

It is certain that these very necessary structural reforms in government expenditure and the labor market cannot be undertaken without political support that has been missing in the self-concerned governing elites. The country’s political elites had no incentive to change a system from which they benefit enormously, controlling political patronage through state-owned or influenced companies and manipulating the public through populist appeals to the narrow ethnic interest. While several hundred protesters carried banners reading “You have been stealing from us for 20 years and now it is over”, it is not (just) the case that the governing elite has been stealing from them, but depriving them of needed structural reforms.

Leading back to the question in the title. A Balkan spring? But what would an ideal Balkan Spring entail? Even if the demonstrations do not lead to immediate change, from my perspective they represent a wakening call in the region to put the tangible issues in the public discussion whereas they have so far been hidden under a pile of unimportant but heavily politicized topics (such as the constitutional ban on same sex marriage in Croatia).

And one thing that should be (proudly) emphasized is that for a country long divided between three nationalities, it largely seems that the current protests have nothing to do with nationalism or religion, and are here to fight the stubborn stereotype the international community has of Bosnia and Herzegovina. The ethnic groups stand united in their rebellion against the governing nationalist elites. It would be slightly naive to predict the persistence of these demonstrations, but they are a sign that the society’s patience is running out. Even if it takes some time, another year, another surge of protests around the country, it is a step towards Bosnia’s citizens departing ethnic-motivated politics to hold their leaders fully accountable. And can this awareness and insistence on change spread from Bosnia and Herzegovina to other countries in the region? Let’s hope so since it is definitely not the only country that is impoverished, stagnating with increasing unemployment and in high debt. Quoting Zhou Enlai on 1968 French protests: “It is too soon to say.” But fingers crossed.

Links and Sources:

http://www.index.hr/vijesti/clanak/manifest-nova-bosna-i-hercegovina-procitajte-zahtjeve-grupe-udar-i-revolt/726493.aspx

http://www.bhas.ba/tematskibilteni/BH_u_brojkama_bh.pdf

http://etrafika.net/vijesti/bih/16075-bh-parlamentarci-ubjedljivo-najplaceniji-u-regionu

2013 Economic and Fiscal Programmes of Albania and Bosnia and Herzegovina: EU Commission’s overview and country assessments, European Commission, 2013

http://www.bhas.ba/saopstenja/2013/HBS_2011_Hr.pdf

http://eastethnia.wordpress.com

http://www.fzs.ba


[1] Yes, the Smiths said so in the 1980s.

[2] Following the Dayton agreement in 1995, Bosnia and Herzegovina developed its political structure:  a bicameral legislature and a three-member Presidency composed of a member of each major ethnic group (Bosniaks, Serbs and Croatians). The central government’s power is highly limited, as the country is largely decentralized and comprises two autonomous entities: the Federation of Bosnia and Herzegovina and Republika Srpska, with a third region, the Brčko District, governed under local government. The Federation of Bosnia and Herzegovina itself consists of 10 federal units (cantons).

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