The failure of Bosnian political leaders to address grinding poverty and growing unemployment has prompted the first violent protests since the 1992 to 1995 war, with dire warnings of worse to come.
Starting in the industrial hub of Tuzla in the northeast, the protests spread this week across the country, turning into riots that left hundreds injured and Bosnian government buildings in flames.
While unemployment figures range from the Bosnian Central Bank’s estimate of 27.5 percent to the statistical agency’s 44 percent, the Balkan country’s unemployment rate is easily among the highest in Europe.
Joblessness of more than 25 percent among Bosnia’s young adults is a “stunning and problematic” figure, World Bank country director for the Western Balkans Ellen Goldstein said last month.
“High unemployment and low labor 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 gray economy.
Although macroeconomic data showed the Bosnian economy made a fragile recovery of 1 percent last year after shrinking 0.5 percent 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,” political analyst Vahid Sehic said.
Bosnia’s citizens are among the poorest in Europe, with an average monthly salary of 420 euros (US$570).
A shadow economy, endemic corruption and a complex postwar 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.
The employers reportedly had the silent approval of Bosnian authorities eager to help them to avoid bankruptcy and keep unemployment figures down.
“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 decisionmakers who have brought us here,” Zivanovic told the FENA news agency on Saturday.
Foreign investors are reluctant to come to Bosnia because of its poor infrastructure and cumbersome administrative procedures, not to mention 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 political and economic reform efforts.
Foreign investment last year totaled just 252 million euros (US$343 million), Central Bank Governor Kemal Kozaric said.
However, Bosnian Prime Minister Vjekoslav Bevanda said at a recent economic summit in Istanbul that investors could be attracted to a major infrastructure project linking Hungary to the Croatian port of Ploce via Bosnia.
Construction on the road and rail project began several years ago, but of its estimated cost of 4 billion euros, about 600 million euros has been invested so far.
In the energy sector, Bevanda said Bosnia’s coal and lignite mines offered attractive investment opportunities.
The IMF, which in September 2012 awarded Bosnia a two-year standby arrangement worth 384 million euros, approved its fifth installment two weeks ago.
Yet it warned that despite progress “more remains to be done to improve the business environment and the functioning of the labor market.”
“In this regard, it will be particularly critical to put in place new labor market legislation that will contribute to a lasting reduction in unemployment,” the IMF said.
Economic analyst Svetlana Cenic said political consistency and discipline would be required to resolve the crisis.
She warned against expecting significant reforms ahead of general 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 high-level accession talks with the EU in the middle of 2012, trailing behind other Balkan countries. Croatia became a full member last year, Slovenia in 2004.