Postwar Political Economy in Bosnia and Herzegovina: The Spoils of Peace

Abstract

In postwar Bosnia and Herzegovina (BiH), international and local captains maneuver to assert control and negotiate areas of collaboration. In each of the Croat and Bosniac areas of the Federation and in the Serb-controlled Republika Srpska (RS), the major political elements that took Bosnia into war now also enjoy the economic spoils in their geographical sectors. Central institutions remain weak in BiH, undermined by war entrepreneurs and patrimonial elites that interact with international organs and external capitalist institutions, adapting their clientism to externally imposed conditionalities. A pseudo international protectorate is operated through the executive management of the external actors: the Office of the High Representative (OHR) of the Peace Implementation Council; the United Nations; the missions of both the Organization for Security and Cooperation in Europe (OSCE) and the European Union (EU); the International Management Group (an EU-funded body that undertakes reconstruction evaluations) ; aid agencies; and international financial institutions (IFIs). They provide executive governance that reflects the values and norms of the powers that dominate the global economy. (1) For example, at the end of 2000, the OHR introduced wide-ranging laws and amendments concerning privatization, wages, and financial operations designed to maintain market reforms that would meet the demands of the IFIs for the privatization of public enterprises and socially owned assets. (2) Indeed, the external actors are drawn into micromanagement in their efforts to implement this vision because they encounter resistance and prevarication. (3) Obviously, the clientist and neoliberal mechanisms for managing investment, shares, and profits are dissimilar. But the normative assumptions of the external actors and the interests of domestic elites coincide in extracting profit from public goods and in fostering opportunities from privatization and discrimination against social ownership. In this there is common ground between in ternational and domestic parties as well as friction and resistance. There has been limited critical research on the political economy of war-torn societies or on the dysfunctional aspects of neoliberalism in peace building. (4) However, a critical theory perspective shows that the maneuvering and collaboration in BiH highlights not only contradictions in the practice of neoliberalism but also the limitations of a paradigm that configures society as an adjunct of the market. It contests the neoliberal discourse of norms that privilege global markets, the noninterventionist state, and the discounting of political and social dynamics. (5) Further, external micromanagement stems from seeing collapsed statist economies as the dysfunctional other, and from attempts to modify the corporatist systems and criminal behavior of local war entrepreneurs. But the external actors juggle between nation building and diminishing the state as an economic actor by privatizing essential services and shifting responsibility for employment and welfare from the state to the individual. This has hardly alleviated a grim social and economic situation that differentiates markedly between participants in the entrepreneurial economy and the excluded poor, unemployed, and welfare dependent. In the first part of this analysis I present a snapshot of the BiH economy after six years of peace. I then examine the prewar and wartime aggrandisement of nationalists that carried over into the postwar settlements. In the next section I deal with the goals and basic mechanisms of the external protectors and the interaction of neoliberalism and clientism, with a particular focus on the privatization process. Finally, I contend that the neoliberal model is dysfunctional in providing the social protection that war-torn societies such as BiH lack. A Dire Economy In 2001, six years after Dayton, the economic situation was officially described as dire. …