Joining the EU remains a dream for Bosnia

Joining the European Union would put Bosnia and Herzegovina squarely on the investment map. But for now it seems that the hosts of this year’s EBRD annual meetings are not ready to make the step up yet

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Step by step. Bosnia and Herzegovina’s hopes of joining the European Union rely on following this mantra. It is the best — and really the only — way to ensure that in the years and maybe the decades to come, this nation of 3.5m people puts itself in the best possible position of being able to join the world’s largest single market.

The process will not be easy — nor has it been so far. All six western Balkan states aspire to EU membership, Bosnia included, but at present there is little immediate chance of the bloc’s powerbrokers, particularly Germany and France, fully embracing the concept.

In April, French president Emmanuel Macron said all six had to resolve themselves to “work[ing] on the stability of the region”, and in particular, on ensuring that it does not backslide, falling prey to a resurgence of the kind of horrific ethnic conflict that gripped the region in the 1990s.

Bosnia faces a raft of challenges as it inches slowly along the road to accession. In 2015, it resolved a territorial fracas with Montenegro over a five-mile stretch of Adriatic seacoast in the Sutorina valley. But border disputes with Croatia and Serbia linger, and show little sign of resolution.

From the outset, the accession process has been more stop than start. Bosnia has been recognised as a “potential candidate country” since 2003. A Stabilisation and Association Process agreement requiring it to carry out a number of institutional and structural reforms was signed in 2008, ratified in 2010, and enforced in 2015.

Bosnia formally applied for EU membership in February 2016 and will remain in this limbo state until its status is raised a notch, to official “candidate country”, a decision that can only be made by the European Council. To be sure, there is much that Bosnia and Herzegovina can do to further its cause and expedite this process.


‘No reform progress’

In an official fact sheet on the Balkan state published in April 2018, the European Commission pointed to the still-glaring need for reform at every level of economy and society. Despite the reform process being at a very early stage, “no progress ha[d] been achieved” over the previous year, it wrote. Corruption was still “widespread” and remained an “issue of concern”, while “significant efforts were still needed regarding financial investigations [and] improving counter-terrorism efforts”.

There were a few ticks in its box, though one got the sense, reading the document, of a country being damned with faint praise. Bosnia had made some headway in fighting organised crime, and was doing a tidy job at overhauling its judicial system. But more effort was needed to improve freedom of expression, it said, pointing to political attacks on journalists and the continued prevalence of gender-based violence.

EBRD

In an exclusive interview with GlobalMarkets, Senad Softic´, governor of the Central Bank of Bosnia and Herzegovina, insists the country has “come a long way in the process of EU accession”, and adds that being part of the bloc would boost growth, create more jobs, raise living standards, and ensure greater political stability.

He admitts Bosnia had to “speed up the process of reforming its public administration and judicial system, and to intensify the fight against corruption and crime”.

Rule of law, the business climate, protection of investors, better infrastructure, enhanced institutional capacity: all of these factors have to be radically improved before the EU can view Bosnia and Herzegovina as a direct peer, a valuable and valued economic, financial and political partner.

Many of the challenges the country faces can and will only be resolved over time. There are no short cuts and the EU is a complex edifice. Joining the team will put Bosnia and Herzegovina squarely on the investment map. Capital will flow in and jobs and growth will follow. But it is manifestly clear that the country is not ready to make the step up yet. 

When in March 2019 Milorad Dodik, the chairman of Bosnia’s three-member state presidency, submitted to the EU a long-overdue set of answers to more than 600 questions posed the previous year, the EU found that 20 of them were left blank. The head of the Enlargement Commission, Johannes Hahn, played down the issue, noting that the overarching goal was in any case to secure a “positive opinion” of Bosnia’s candidate status.

Referencing the incomplete document, Dodik was candid about the problem, noting that the government was “not in a position to respond… because of a lack of comprehensive information”. A dearth of data is a problem in most frontier states, particularly those desperately trying to stitch a country together from scratch.

But it is notable, and not a little worrying, that the questions Bosnia struggled to answer related to issues of justice, freedom, and national security.


Uphill battle

Europe in turn faces its own dilemma. It can only do so much to transform frontier markets on its distant borders into fully functioning Western-style democracies that protect citizens’ rights and investors’ interests. Brussels also faces an uphill battle in convincing richer states to admit poorer nations into its club, and at present none of the official candidate candidates, a list that includes Serbia, Turkey and Albania, look set to be asked, in the near-term, to join the single market.  

Gunter Deuber, head of economics, fixed income and foreign exchange research at Raiffeisen Bank International, believes that for Bosnia and Herzegovina, joining the EU is “light years away. They have not even started accession negotiations, and even when they do, my guess is that it will take them 10 or 15 years, or longer.”

He draws a comparison with Cyprus, which joined in 2004 after seven years of accession talks, but which, 15 years later, remains a divided state. “Bosnia faces the same challenges on its borders,” Deuber adds. “So I’d be surprised if we see anything substantial happen before 2030.”

For whoever is running the European project at the end of the next decade, this may be problematic. So long as the people of Bosnia and Herzegovina believe a better future — one in which they are seen by the leaders of Germany and France, and by the suits in Brussels, as a peer and a partner — is possible, the country will continue to move forward in a positive manner.

But, adds Deuber “if people on the ground feel that accession is a long time away, that it won’t happen, that it won’t change their lives and surroundings, or those of the next generation”, they may lose hope. “In that situation, you can run up against a situation where the country’s existence could again be threatened.”

To some, talk of unravelling at this week’s EBRD conference in Sarajevo might seem out of place, even a little disrespectful to the hosts, but it would be wise, at a time when a far larger and richer Atlantic state is busy unravelling as it leaves the European Union, to remind ourselves that for countries like Bosnia and Herzegovina, joining the EU matters deeply. For the west Balkan state, it has to be the only and the right way forward.