VIEWPOINT FROM LONDON

KEEPING THE LIGHTS ON IN BOSNIA-HERZEGOVINA

by Brian Gallagher

The Croatian Herald, Australia No. 998 - 16.01.04

The last few weeks have seen events in Bosnia-Herzegovina that could have destabilised 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 behaviour 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