Many In Bosnia Doubt Elections Will Tackle Dysfunctional Economy

With nationalist rhetoric dominating the campaign for Bosnia's Oct. 2 election, many doubt the vote will usher in leaders who would focus on reforms to tackle a dysfunctional economy and unblock the country's path to European Union membership.

Since the 2018 election, progress towards liberalising the economy and improving rule of law has ground to a halt while ruling Serb, Croat and Bosniak parties trade threats with an intensity unseen since Bosnia's devastating 1990s war.

Bosnia's post-war, autonomous Serb entity has often snarled the work of its weak central government, Croats threaten "territorial re-organisation" where they live, and Bosniaks - who battled separatist Serbs and Croats during the war - warn they will defend Bosnia's state integrity at any cost.

"It is very difficult to imagine the possibility of current political elites changing because the system of ethno-nationalist politics and institutions has been firmly entrenched," said Sarajevo University professor Asim Mujkic.

Bosnians will vote for new Serb, Croat and Bosniak members of the country's inter-ethnic presidency as well as deputies in the national, regional and cantonal assemblies.

The Dayton peace accords that ended the 1992-95 war established a system of ethnic quotas at numerous levels of government, making Bosnia the country with the highest number of government officials relative to its population.

Bosnian lawmakers have the highest salaries in the Balkan region and numerous perks but the number of laws adopted to tackle real-life issues of market reform, jobs, poor rule of law, corruption and organised crime is disproportionately low.

Young people have emigrated in droves, disillusioned with a political system based on ethnic and family connections.

"Political influence in Bosnia is exclusively negative and it is rarely possible to find any positive effects of politics on the economy," said economist Igor Gavran.

According to the United Nations Population Fund (UNFPA), about 300,000 people have left the landlocked former Yugoslav republic of 3.5 million since the last census in 2013.

In March, the International Monetary Fund put Bosnia's unemployment rate at about 30% but this does not include a large grey economy that employers created to avoid paying high taxes.

Foreign investment has been scarce in recent years due to political instability and Serb threats of secession, ranging between just 400 and 500 million euros annually.

GOVERNMENT 'DOES NOT CARE'

Ruling parties regularly reject laws aimed at easing tax and regulatory burdens on businesses and citizens, such as laws cutting excise taxes on fuel and lowering VAT on basic food staples that were proposed in March but never approved.

Bosnia in August recorded a 16.8% annualised inflation rate, one of Europe's highest, driven in part by the war in Ukraine.

Employers say they have had to cope alone with soaring costs of transport and raw materials, labour shortages caused by emigration and lack of legal provisions for foreign workers.

"Since December 2021 the price of fuel has risen over 50% but we have no response from government," said Edin Causevic, director of international transport company Frigosped in the central town of Zepce.

"They don't care."

Causevic said Bosnia's international hauliers are not being compensated for excise tax on fuel they pay abroad while being obstructed by red tape at Bosnia's border crossings.

"Not a single measure they (ruling parties) have instituted has made business easier for us," said Nagib Mujkic, director of Tisa Komerc, a metal and plastic components producer in Zepce.

"I often wonder if they do it intentionally or because they lack knowledge."

None of the business figures interviewed by Reuters believes the situation will change after the election.

"It's ridiculous that there are few business people on these lists of (election) candidates, as opposed to those who are used to living off other people's work. People who could contribute to a better society are not there (in politics)," Mujkic said.