Almost like one country

Date: 27/09/03

But poverty may block progress towards reconciliation

A MEMORIAL service this month for some 7,000 Muslim men and boys massacred when the town of Srebrenica fell to Bosnian Serb forces in July 1995 was an unusual affair. It was not just that America's former president, Bill Clinton, was there or that security for the 20,000 people who attended was provided in part by the local Bosnian Serb police. Among the dignitaries was the Bosnian Serb prime minister, who talked about “respect for the dead” and called for reconciliation as well as peace. Even a few years ago such scenes would have been inconceivable.

Now, however, Bosnia's main Serb party sees its top priority as preserving the peace accord signed in Dayton, Ohio, in 1995, which ended the Bosnian war by dividing the country into two parts, one dominated by Serbs, the other jointly by Croats and Bosniaks, as Bosnia's Muslims are now officially known. The Serbs' main party says it has abandoned dreams of a Greater Serbia, into which the Serb parts of Bosnia would simply be absorbed. Likewise, Bosnia's main Croat party says it has abandoned its dream of uniting Bosnia's Croat areas with Croatia.

All sweetness and light, then? Well, on one level things look better. All Bosnians now carry the same passport and can move around the country freely, which they could not do a few years ago. Out of a total of 2.2m refugees or people displaced by the war, some 964,000 have either gone home or reclaimed their properties which they may have sold if they did not want to return. According to the UN's High Commission for Refugees, nearly 420,000 have either returned or reclaimed property in areas where they are now in a minority. Since everyone can either now go home or reclaim and sell their property, the hope is that generations to come will not harbour the same sort of resentment as ejected Palestinians or Cypriots.

Moreover, so many Bosniaks have gone back to the Serb Republic, the Bosnian Serb bit of Bosnia, that their votes now carry weight in elections there. Neither Serbia nor Croatia poses a military threat to Bosnia; and Bosnia's armies have been reduced to very small numbers. So the numbers of foreign peacekeepers in the country have come down.

Yet all this progress may still be reversed. Opinion polls show that the ethnic rivalry that tore the country apart a decade ago no longer bothers ordinary people as much as it did. What they worry most about is jobs. And some fear that the economy is so bad that it could again create ethnic tension and revive the political fortunes of violent nationalists.

Bosnia was always poor, but between the second world war and its civil war in the 1990s its economy was propped up because Yugoslavia's rulers put a huge proportion of the arms industry there, along with other large (and usually unprofitable) industries, to create jobs subsidised by the country's richer parts. All this has gone. After 1995 some of the gap was filled by foreign aid, but that is drying up too. The IMF foresees a drop in aid from $699m in 2000 to $218m in 2007. Many of Bosnia's institutions and companies are deep in debt. Poverty is rising and revenue to pay for Bosnia's many tiers of government is shrinking. The World Bank has given warning of “explosive debt indicators”: in 2000 it cost $130m to service Bosnia's debt, but that figure could rise by 2010 to $883m. Up to 40% of Bosnians have no job.

No one even knows how many Bosnians there are. Before the war there were 4.3m, but today as few as 3.3m may still live in the country. Gerald Knaus, who runs a think-tank in Berlin called the European Stability Initiative, says that foreigners' huge investment in reconciliation in Bosnia has been a success, but that new policies are needed to ensure that all that the money spent (by some counts, €17 billion, or $19 billion) is not wasted. He thinks the European Union should step in, “applying the same policies as it has to countries like Greece in the past and now to Romania and Bulgaria - but not Bosnia”. The EU has embarked on a feasibility study, but Bosnians want EU handouts fast.

Poverty in Bosnia may block progress towards reconciliation.