March 16, 2016 / 8:53 AM / in 2 years

Drive for EU membership could help pull a fractured Bosnia together

TUZLA, Bosnia (Reuters) - Bosnian membership in the European Union might not seem a realistic, or even desirable, goal, but boosters of the idea say working towards joining may be the only way the country can pull itself together 20 years after its devastating war.

A customer shops at a Bingo supermarket in Tuzla March 9, 2016. REUTERS/Dado Ruvic

An ethnically divided nation beset by corruption and economic difficulties, Bosnia formally applied to the 28-nation bloc in February and was told it must progress with economic and social reforms before it can be considered.

Businesses like Bingo shops, set up by Tuzla’s Senad Dzambic in the midst of Bosnia’s 1992-95 conflict and now the country’s largest supermarket chain, are already anticipating the opportunities and challenges to come.

“We have strategically turned towards domestic production with local partners to be able to produce basic food staples and be competitive when the EU products flood the market here,” Dzambic told Reuters.

Some might wonder why Bosnia and other countries even bother given the challenges the EU faces in the migrant crisis, a looming British referendum on leaving the bloc and years of economic emergencies in the euro zone.

But without the prospect of membership Bosnia risks being left behind by its neighbors who also emerged from the break-up of the former Yugoslavia and who either already belong to the bloc or are far further down the road to membership.

That, analysts say, leaves a weak link on the edge of Europe open to continued smuggling of arms and people and ripe for exploitation by various extremist forces, ranging from radical Islamists among otherwise moderate Bosnian Muslims to ultra-nationalist Orthodox Serbs.

“There is no alternative to the EU,” said Igor Gavran, an expert on the Bosnian economy currently at Queen Mary University of London. “Bosnia is so dysfunctional that even this dysfunctional EU, as it seems to be at the moment, is still a role model for Bosnia.”

Of the former Yugoslav countries, Slovenia and Croatia are EU members and Serbia and Montenegro have begun membership negotiations. Macedonia’s progress towards EU membership is blocked by a dispute with Greece over the country’s name.

The hope is that the carrot of eventual EU membership, with its promise of funds for development, access to a single market of 500 million people and freedom to work in other countries, will galvanize Bosnia’s leadership to set aside differences to work together on reforms.

The strategy worked in Croatia, where mainstream political leaders, backed by the majority of Croats, set membership in the EU as their primary goal after their war to gain independence and worked to meet the bloc’s terms, including the arrest of war crimes suspects.

The EU path was cleared for Serbia after the country arrested key culprits from the Bosnian war and struck a series of accords with its former province of Kosovo, with which it waged a war in 1999. Accession talks opened last December.

RECIPE FOR GRIDLOCK

But while both Croatia and Serbia showed the political will to break with their wartime pasts, such determination is still largely missing in Bosnia where political elites continue to obstruct reconciliation efforts for their own political and personal gain, analysts say.

The Dayton agreement that ended Bosnia’s war moreover mandated an unwieldy political system that has encouraged political gridlock: division of the country into a Serb Republic and a Bosniak-Croat Federation with a weak central government.

The result has been wide disagreement on the country’s future direction among its Orthodox Serbs, Catholic Croats and Muslim Bosniaks. The Bosnian Serb leadership favors closer ties with Russia and has threatened the secession of their autonomous republic, and questions Bosnia’s EU bid.

Many ordinary Bosnians are also skeptical.

“We are far away from the EU. This is not going to happen because there is too much crime in this country,” Vujadin Djuric, a private businessman in his 60s, told Reuters as he shopped at a mall in Tuzla.

He also expressed a commonly held wariness of Europe’s motives: “Europe was behind the whole mess that has happened here and now they pretend to be our saviors.”

The process of accession to the EU is long, complicated and fraught: years can go by before a country is accepted as a candidate depending on the progress of reforms, after which negotiations are opened which can last for more years while the candidate aligns its laws with EU standards.

The economic and social challenges in Bosnia are also formidable. In its latest report, the EU said Bosnia had fallen back on some issues, including the freedom of expression and required judiciary reforms.

Bosnia has yet to harmonize its constitution with a 2009 ruling by the European human rights court ordering it to allow minorities, such as Roma and Jews, to run for top offices. Currently only Bosniaks, Serbs and Croats may run for president.

It also has yet to publish the results of its first postwar census held in 2013, another request from the EU, because the country’s two regions cannot agree on the methodology in counting citizens. The census is at risk of being annulled.

The economy, which grew by 3.1 percent year-on-year in the third quarter of last year, is weighed down by a bloated public sector and saddled with one of Europe’s highest unemployment rates at 27.7 percent.

It is struggling to reach agreement with the International Monetary Fund on a new 1 billion marka ($558 million) loan agreement.

THE SPARK THAT IGNITES A FLAME?

In the midst of the general pessimism, the fact the EU application process is moving forward offers a glimmer of hope.

Bosnia was allowed to submit its application by implementing a number of reforms agreed last summer with the EU, and created a requested coordination mechanism for dealing with the bloc with the consent of all governments, although the nationalist Serb Republic government later disputed the deal.

“Outside investors look at the EU as the anchor the country is tied to so even the process is a really, really good signal to investors that Bosnia is a stable environment to invest in,” Ian Brown, head of the European Bank for Reconstruction and Development’s mission in Bosnia, told Reuters in an interview.

The example of Bingo, which operates in both autonomous regions, shows how business can overcome the country’s complex administrative and ethnic barriers.

Along with the retailing business which has annual revenue of 800 million Bosnian marka ($450 million), Dzambic developed Bingo’s own food production and acquired several companies producing food, textile and furniture, employing another 300 people on top of Bingo’s 5,200 employees.

“We as retailers are already preparing in order to be well-positioned, logistically supported and backed with appropriate certificates and standards,” Dzambic said in the interview.

Many observers believe Bosnia’s decision-making procedures make it unlikely the country has any chance of joining the EU before 2025. But some politicians hope the spark lit by the application can be coaxed into a flame relatively quickly.

“If we work and if we show readiness for an internal agreement on the European issues, it is realistic to get the candidacy by the end of 2017,” said Foreign Minister Igor Crnadak, who is in the pro-reform and pro-EU Serbian camp in the current central state government. But he added:

“If we don’t work (together), this will not happen”.

(1$ = 1.782 Bosnian marka)

additional reporting by Gordana Katana and Gabriela Baczynska in Brussels; Editing by Adrian Croft and Sonya Hepinstall

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