KEEPING THE LIGHTS ON IN BOSNIA-HERZEGOVINA

by Brian Gallagher

The last few weeks have seen events in
Bosnia-Herzegovina that could have destabilized the
entire country and cost it much needed international
investment. The international media failed to report
on it. These events concerned the Croat run Aluminij
factory in BiH. It is the most successful firm there,
producing 25% of its exports and is a major source of
employment. The Bosniak (muslim) run electricity firm
- Elektroprivreda BiH - threatened to cut off
electricity to the factory, which would have resulted
in its closing down. High Representative Paddy Ashdown
had to step in to prevent this. The whole affair
demonstrates yet again that BiH needs to provide
proper safeguards for its three national groups.

Aluminij is situated near the southern town of Mostar.
It was severely damaged by attacking Serbian forces
during the war. After the war, the Croats got the firm
back on its feet and made it a success - in stark
contrast to enterprises around the rest of the
country. It currently employs hundreds of people from
the local region, pays them BiH's highest wages, keeps
thousands more employed indirectly and has secured
inward investment from Germany, Switzerland and
Croatia. An incredible feat in a war torn,
impoverished country.

When Aluminij became successful it attracted unwanted
interest from the Bosniak run Federation government -
on which territory Aluminij is situated. It was
claimed that the company was stolen from BiH in a
mafia scam and that non-Croat workers had lost their
jobs - needless to say when Aluminij was re-starting
no one was interested in the firm.

Unprofitable firms and those run into the ground have
not been given this kind of treatment. It was fairly
clear what was going on; forces in Sarajevo want to
destroy or take over the firm, which would devastate
the economy of largely Croat occupied West
Herzegovina. This is effectively a political and
economic war against the Croats.

The latest action against the firm has been to damage
it via threatening its electricity. Electricity is
provided to the firm by Debis International - a
subsidiary of Daimler Chrysler - based in Germany. In
turn, it purchases electricity from Elektroprivreda
BiH, which is wholly owned by the Bosniak government.
The contract with Debis International ran to the end
of 2004. Elektroprivreda BiH unilaterally broke off
the contract with Debis International in 2003,
claiming it could get more money on the open market.
Aluminij's electricity supply - and how much it would
have to pay - became uncertain. Unable to properly
function in such conditions, the firm prepared to
close down its operations on 31 December 2003.

The effect on the Mostar/West Herzegovina economy
would have devastating. It would cause large scale
unemployment amongst Croats and many would have to
leave BiH to find work - an outcome no doubt desired
by some in Sarajevo. It would be a massive blow to
Croat/Bosniak relations - already poor - with
unpredictable results. It would have had an appalling
effect on investors into BiH.

Aluminij has major international partners such as
Daimler Chrysler and Glencore International. Croatian
firm TLM Sibenik owns 12% of Aluminij and the Croatian
port of Ploce depends on business from Aluminij. If
Aluminij had closed down because of the political
behavior of Sarajevo, no major investor in their
right mind would invest in BiH. The whole of this
struggling country would suffer for the desire of some
Bosniak politicians to economically attack the Croats.


At the very last moment, a rightly annoyed High
Representative Paddy Ashdown directly intervened,
issuing a 'Decision' that effectively meant that
electricity would continue to be supplied to the firm
on 1 January 2004. Ashdown is no fool; he understood
what was at stake. He has prudently made economic
investment into BiH a priority. The closure of
Aluminij would have destroyed his efforts. No doubt
Aluminij's economic partners were pressing behind the
scenes. Indeed, the German government protested to
Sarajevo over the breaking of the Debis International
contract.

Despite the importance of this affair, the
international media and 'expert' groups ignored it.
The International Crisis Group's 'Crisiswatch'
newsletter somehow failed to spot this crisis in its
BiH section.

Ashdown should be congratulated for his move. He's
done the Croats in particular and the country as a
whole a big favour. However, the whole incident shows
that political structures in BiH need to be changed.

Some form of devolutionary change and institutional
protections are needed to ensure one national group
cannot use economic or political means to attack
another group in this manner.

There is some recognition that change is needed. EU
parliamentarians recently signed a declaration to
change the Dayton agreement BiH is currently based on.
The German think tank European Stability Initiative
just recently released a constructive report.
Essentially, it calls for the cantonisation of BiH
based on current boundaries - but dispensing with the
entities of Republika Srpska and the Federation.

Whatever change does occur, it's important that the
relative wealth of the Croats is not exploited under
cover of 'redistributing' to 'poorer areas' - read
Bosniaks and Serbs. That would be grossly unfair,
create tensions and would encourage - not unreasonably
- secession by the Croats.

In the meantime however, Paddy Ashdown should continue
his good work in seeing that Aluminij is fully
protected, and continues to make its major
contribution to BiH.


© Brian Gallagher

My 'Viewpoint from London' column appears fortnightly
in the Australian 'Croatian Herald' and thereafter at
www.croatiafocus.com