Bosnia and Herzegovina

Developments in Bosnia and Herzegovina

Updated: 22 December 2017

The Dayton Peace Treaty in 1995 ended the war in Bosnia-Herzegovina. It also gave Bosnia a very complicated constitution with a weak state, delaying necessary reforms.

Today's Bosnia-Herzegovina emerged in 1991 from the rubble of the disintegrated Yugoslavia and almost immediately fell apart in the devastating civil war. When the war ended Bosnia became an internationally supervised nation divided into two parts. Still, many years after the Dayton Agreement in 1995, the internal divisions remain large and the ethnic tensions continue to affect the country.

The war in Bosnia killed an estimated 100 000 people, a majority of them were Bosniaks and around half civilians. About 10 000 people are still reported missing more than 20 years after the outbreak of the war.

The war led to half of the population - two million people - fled to other countries, or became Internally Displaced Persons (IDP’s) in Bosnia. In 2017 there were still about 100,000 internally displaced persons in the country.

Complicated structure

One of the major problems in Bosnia-Herzegovina is the complex administrative structure, which is a result of the Dayton Agreement. The central administration is weak with many administrative levels and there is great confusion as to who is responsible for what. This is further complicated by the fact that the country is a state with two autonomous parts: the Serb-dominated Republika Srpska and the Bosniak-Croat Federation of Bosnia-Herzegovina.

At the national level The Chair of the Presidency of the country rotates amongst three members (a Bosniak, a Serb and a Croat). The seats in one of the two parliamentary chambers are in the same manner equally divided between the three constituent ethnicities.

Bosnia’s governing is officially overseen by the "High Representative" that was set up under the Dayton Agreement to coordinate the reconstruction. The High Representative is the highest political authority in the country and the representative has extensive powers to issue and withdraw laws as well as to remove officials and politicians considered to hinder the peace process.

Bosnia-Herzegovina is an ethnically segregated country. Most Serbs live in Republika Srpska, while Croats and Bosniaks dominate separate parts of the Federation. But there are people who want to change the current situation. In 2015, a nine-month old boy in Sarajevo became the first citizen of the independent Bosnia-Herzegovina to be registered as "Bosnian". In a protest against the ethnic division, his parents refused to have him registered as either "Bosniak", "Serb", "Croat" or "other".

Business and economy

Before the war, Bosnia-Herzegovina had a relatively developed industry based on mining, manufacturing industry and forestry. Fifty per cent of Bosnia's industrial capacity was destroyed during the war (1992-1995) and it has not been fully redeveloped since then. However, the economy is growing and between 2000 and 2008 the growth was on an average five to six per cent. Since then growth rates have fallen and have for the last few years been around 2-3 per cent per year. The country's GDP is still below pre-war level and represent a third of the average for EU countries (per capita).

The unemployment rate is extremely high. The official figure is above 25 per cent, for young people about 60 per cent. However, the grey economy is large and the actual unemployment is estimated to be lower than the official statistics show.

Bosnia is one of Europe's poorest countries and about one Bosnian out of six and 30 per cent of children are estimated to live below the poverty line. The average income is about half of the cost of an average family of four’s expenses which makes single income households very vulnerable.

For many Bosnians remittances from family members living abroad constitutes an important part of the household income. Personal remittances are estimated to represent about a tenth of the country's GDP.

The private sector is underdeveloped and investments are relatively low. The complicated political and judicial system and complex bureaucracy constitute large barriers for investments and the establishment of new enterprises.

In 2014, large demonstrations were held in the country. The protests, which had no ethnic undertones, were focused on unpaid wages and pensions, expressing anger on the politicians' inability to solve the economic situation and reduce the unemployment rate. Many hoped for a "Bosnian spring" but the protest movement did not result in any major political changes.

EU membership status

In 2003, EU identified Bosnia-Herzegovina as a potential membership candidate. Since then, a number of agreements between the EU and Bosnia and Herzegovina have entered into force. The Stabilisation and Association Agreement (SAA) was signed in 2008 and entered into force on 1 June 2015 and in 2016 a formal membership application was submitted. Since then the process towards a membership has been taking few and small steps. In 2015 a national reform agenda was adopted, aimed at reforming the country’s institutions in accordance with EU demands. The implementation of these reforms is however very slow.

Bosnia-Herzegovina is also pursuing a NATO membership. In 2010 NATO decided on an action plan outlining the conditions for future membership of Bosnia-Herzegovina. Just as in the EU membership process, progress towards a NATO membership is slow and many necessary reforms require that political authorities are transferred from local to state level and are therefore blocked by the entity governments. 

Page owner: Department for Europe and Latin America

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