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Analysis: Bosnia flounders, 12 months without government

SARAJEVO (Reuters) - Hopes for a quick government in Bosnia were hardly high when rival ethnic nationalists polled strongly in an election last October.

But a year on -- and with Serbs, Croats and Muslims still deadlocked -- the Balkan country risks further disintegration, cut off from international funding and paralysed between opposing visions of its future.

“We don’t even read the constitution in the same way,” Zlatko Lagumdzija, head of the Social Democratic Party (SDP), said last week.

He spoke after leaders of the six largest parties again failed to overcome their differences in talks on forming a national government that would bridge Serbs, Croats and Muslims in some semblance of a unitary state almost two decades since war tore them apart.

The impasse has cost the country of 3.8 million people access to vital international funds, and integration into the European Union is effectively on hold. Next year, Bosnia faces running out of cash if it doesn’t get the funds.

The lack of a central government is also seen as a disincentive to foreign investment which has already fallen sharply in the last few years.

At the heart of the dispute are competing visions of Bosnia’s future and how it should be governed -- as a multi-ethnic, coherent state or as the divided, dysfunctional entity created by the 1995 Dayton peace treaty that ended the fighting.

With the rest of the ex-Yugoslav republics pushing to join Slovenia in the EU, Bosnia faces yet more disappointment when Brussels issues its latest report card on October 12.

Bosnia’s 1992-95 war -- in which about 100,000 people died -- ended in a U.S.-negotiated peace deal that split the country into two autonomous, ethnically-based regions with a rotating presidential triumvirate and an international overseer.

The unwieldy, highly decentralised arrangement has long acted as a brake on development, but the rivalry between the Muslim-Croat federation and the Serb republic -- linked by a weak central government -- has reached new heights in recent years as nationalists pursue opposing agendas.

When the country voted a year ago, Serb and Croat nationalists emerged ever stronger among their ethnic constituencies.

But at the national level, the Muslim-led SDP -- the closest thing Bosnia has to a multi-ethnic party -- has upset the balance by proposing Croats from its own ranks for positions in the national government, angering the nationalists who say the SDP is essentially a Muslim party which can only lay claim to Muslim positions.

The dispute has turned on its head the concept of strict ethnic division and power-sharing, as enshrined under Dayton.

The Serb republic has long demanded strict adherence to Dayton, even going so far as to threaten secession if Bosnia becomes more integrated as sought by the SDP and, in principle, the country’s Western backers.


“We have a situation here where one party is trying to transcend the Dayton framework, which worked largely on power-sharing between nationalist parties,” said a Western diplomat, who declined to be named.

“It’s difficult, because the rules are still set by Dayton, but trying to move beyond a nationalist framework is in the long-term interest of the country.”

Meanwhile, ratings agencies have downgraded Bosnia’s outlook and the International Monetary Fund and EU are withholding funds already written into the state budget, leaving the country facing a 2011 shortfall that could see state institutions close next year.

Foreign direct investment has slowed dramatically, by about 70 percent since 2008 given the economic crisis abroad and the political turmoil at home. Unemployment is rising, and carrying with it the risk of social unrest.

“There is a serious danger of Bosnia falling behind its neighbours in terms where it stands in EU accession process,” Britain’s ambassador to Bosnia, Nigel Casey, told Reuters in an interview.

“The consequences are already being felt on the economy. A lack of the central government is a serious disincentive for serious investors.”

But some analysts argue that even if the rival blocs agree on a government, it remains unlikely such a coalition could function effectively given the competing ideologies.

“How can you have a government that will pursue even minimal reforms if you have diametrically opposed interests,” said Kurt Bassuener, senior associate at the Democratisation Policy Council think-tank.

Some Bosnians are calling for another vote.

“We want a new election, we don’t want to pay for a two-layer government,” said conceptual artist Damir Niksic, who joined other activists in a self-proclaimed ‘alternative’ cabinet which tried to enter the government building in Sarajevo on Monday.

They were stopped by security guards.

A caretaker government is in place, but lacks a majority in parliament to pass legislation. Under Bosnia’s hybrid legal framework, there is no such thing as an early election or an institution that can call it.

Reporting By Daria Sito-Sucic; Editing by Matt Robinson and Matthew Jones