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Economy of Bosnia-Herzegovina

Next to Macedonia, Bosnia and Herzegovina was the poorest republic in the old Yugoslav Federation. For the most part, agriculture has been in private hands, but farms have been small and inefficient, and food has traditionally been a net import for the country. Industry still is greatly overstaffed, reflecting the legacy of the centrally-planned economy. Under Tito, military industries were pushed in the republic; Bosnia hosted a large share of Yugoslavia's defense plants. Three years of interethnic strife destroyed the economy and infrastructure in Bosnia, caused the death of about 200,000 people, and displaced half of the population.

Considerable progress has been made since peace was reestablished. Due to Bosnia and Herzegovina's strict currency board regime, which links the Konvertibilna Marka (BAM) to the Euro, inflation has remained low. However, growth has been uneven, with the Republika Srpska outpacing the Federation for the first time since Dayton. Bosnia and Herzegovina's most immediate task remains economic revitalization. In order to do this fully, the environment must be conducive to a private sector, market-led economy. Privatization has been slow, and unemployment remains high. The introduction of a value-added tax (VAT) in 2006 has increased the government's tax revenues and resulted in a budget surplus.

BiH's top economic priorities are: acceleration of EU integration by concluding a Stabilization and Association Agreement (SAA); strengthening the fiscal system; public administration reform; World Trade Organization (WTO) membership; and securing economic growth by fostering a dynamic, competitive private sector. To date, work on these priorities has been inconsistent. The country has received a substantial amount of foreign assistance but must prepare for declining assistance flows in the future.

GDP (2006 IMF est., purchasing power parity): $33.75 billion. Nominal GDP (Central Bank and IMF figures): $11.51 billion. If non-observed economy is included, nominal GDP is estimated by the Central Bank to be $13.4 billion.
GDP real growth rate (2006 World Bank est.): 6.2%.
Income per capita (2006 IMF est., purchasing power parity): $8,370. Nominal GDP per capita: $2,995, or, including the estimated gray economy, $3,487.
Inflation rate (2006 est.): 7.4%. (This is a one-time effect of the introduction of a value-added tax.)
Natural resources: Hydropower, coal, iron ore, bauxite, manganese, forests, copper, chromium, lead, zinc, cobalt, nickel, clay, gypsum, salt, sand, forests.
Agriculture: Products--wheat, corn, fruits, vegetables, livestock.
Industry: Steel, aluminum, minerals, vehicle assembly, textiles, tobacco products, wooden furniture, explosives, munitions, aircraft repair, domestic appliances, oil refining.
Trade (2006 Central Bank figure): Exports--$2.5 billion f.o.b.

Geography of Bosnia-Herzegovina

Roughly triangular in shape, and the geopolitical centre of the former Yugoslav federation, Bosnia and Herzegovina shares borders with Serbia and Montenegro in the east and southeast, and Croatia to the north and west, with a short Adriatic coastline of 20km (12 miles) in the southeast, but no ports. Official Name: Bosnia and Herzegovina Capital: Sarajevo Area: 51,233 sq. km, slightly smaller than West Virginia. Cities: Capital--Sarajevo (est. pop 387,876); Banja Luka (220,407); Mostar (208,904); Tuzla (118,500); Bihac (49,544). Terrain: Mountains in the central and southern regions, plains along the Sava River in the north. Climate: Hot summers and cold winters; areas of high elevation have short, cool summers and long severe winters; mild, rainy winters in the southeast.

Government of Bosnia-Herzegovina

General Government Framework Information and Information Regarding the President and the Cabinet. Under the provisions of the Dayton Peace Accords, the Entities have competencies in areas such as finance, taxation, business development, and general legislation. Entities and cantons control their own budgets, spending on infrastructure, health care, and education. Ongoing reforms have led to the creation of a single, multi-ethnic military under state-level command and control to replace the previous Entity-based institutions and a state-level Indirect Taxation Authority (ITA) that is responsible for the implementation of a state-wide value-added tax (VAT), revenues from which fund the governments of the state of Bosnia and Herzegovina as well as the two Entities. Customs, which had been collected by agencies of the two Entities, also is now collected by a new single state customs service.

The Presidency in Bosnia and Herzegovina rotates among three members (Bosniak, Serb, Croat), each elected for a 4-year term. The three members of the Presidency are directly elected (the Federation votes for the Bosniak/Croat, and the Republika Srpska for the Serb).

The Presidency is responsible for:

Conducting the foreign policy of Bosnia and Herzegovina;
Appointing ambassadors and other international representatives, no more than two-thirds of which may come from the Federation;
Representing Bosnia and Herzegovina in European and international organizations and institutions and seeking membership in such organizations and institutions of which it is not a member;
Negotiating, denouncing, and, with the consent of the Parliamentary Assembly, ratifying treaties of Bosnia and Herzegovina;
Executing decisions of the Parliamentary Assembly;
Proposing, upon the recommendation of the Council of Ministers, an annual budget to the Parliamentary Assembly;
Reporting as requested, but no less than annually, to the Parliamentary Assembly on expenditures by the Presidency;
Coordinating as necessary with international and non-governmental organizations in Bosnia and Herzegovina, and;
Performing such other functions as may be necessary to carry out its duties, as may be assigned to it by the Parliamentary Assembly, or as may be agreed by the Entities.

The Chair of the Council of Ministers is nominated by the Presidency and approved by the House of Representatives. He is then responsible for appointing a Foreign Minister, Minister of Foreign Trade, and others as appropriate. The Council is responsible for carrying out the policies and decisions in the fields of foreign policy; foreign trade policy; customs policy; monetary policy; finances of the institutions and for the international obligations of Bosnia and Herzegovina; immigration, refugee, and asylum policy and regulation; international and inter-Entity criminal law enforcement, including relations with Interpol; establishment and operation of common and international communications facilities; regulation of inter-Entity transportation; air traffic control; facilitation of inter-Entity coordination; and other matters as agreed by the Entities.

Legislature. The Parliamentary Assembly is the lawmaking body in Bosnia and Herzegovina. It consists of two houses: the House of Peoples and the House of Representatives.

The House of Peoples includes 15 delegates, two-thirds of whom come from the Federation (5 Croats and 5 Bosniaks) and one-third from the Republika Srpska (5 Serbs). Nine members of the House of Peoples constitutes a quorum, provided that at least three delegates from each group are present. Federation representatives are selected by the House of Peoples of the Federation, and Republika Srpska representatives are selected by the Republika Srpska National Assembly.

The House of Representatives is comprised of 42 members, two-thirds elected from the Federation and one-third elected from the Republika Srpska. Federation representatives are elected directly by the voters of the Federation, and Republika Srpska representatives are directly elected by Republika Srpska voters.

The Parliamentary Assembly is responsible for enacting legislation as necessary to implement decisions of the Presidency or to carry out the responsibilities of the Assembly under the constitution; deciding upon the sources and amounts of revenues for the operations of the institutions of Bosnia and Herzegovina and international obligations of Bosnia and Herzegovina; approving a budget for the institutions of Bosnia and Herzegovina; and deciding whether to consent to the ratification of treaties.

Judiciary. The Constitutional Court of Bosnia and Herzegovina is the supreme, final arbiter of legal matters. It is composed of nine members: four are selected by the House of Representatives of the Federation, two by the Assembly of the Republika Srpska, and three by the President of the European Court of Human Rights after consultation with the Presidency. The Constitutional Court's original jurisdiction lies in deciding any constitutional dispute that arises between the Entities or between Bosnia and Herzegovina and an Entity or Entities. The Court also has appellate jurisdiction within the territory of Bosnia and Herzegovina. Both the Federation and the Republika Srpska government have established lower court systems for their territories.

Principal Government Officials
State Level

Tri-Presidency--Zeljko Komsic (Bosnian Croat and current Chairman), Nebojsa Radmanovic (Bosnian Serb), Haris Silajdzic (Bosniak),
Chairman of the Council of Ministers--Nikola Spiric

Bosnia and Herzegovina maintains an embassy in the United States at 2109 E Street NW, Washington, DC 20037 (tel.: 202-337-1500; fax: 202-337-1502).

Type: Parliamentary democracy.
Constitution: The Dayton Agreement, signed December 14, 1995, included a new constitution now in force.
Independence: April 1992 (from Yugoslavia).
Branches: Executive--Chairman of the Presidency and two other members of three-member rotating presidency (chief of state), Chairman of the Council of Ministers (head of government), Council of Ministers (cabinet). Legislative--bicameral parliamentary assembly, consisting of national House of Representatives and House of Peoples (parliament). Judicial--Supreme Court, Constitutional Court, both supervised by the Ministry of Justice.
Subdivisions: Two Entities: Federation of Bosnia and Herzegovina (divided into 10 cantons) and Republika Srpska. In accordance with Annex 2, Article V, of the Dayton Peace Agreement that left the unresolved status of Brcko subject to binding international arbitration, an Arbitration Tribunal was formed in mid-1996. On March 5, 1999, the Tribunal issued its Final Award. The Final Award established a special District for the entire pre-war Brcko Opstina, under the exclusive sovereignty of Bosnia and Herzegovina. The territory of the District belongs simultaneously to both Entities, the Republika Srpska and the Federation, in condominium. Therefore, the territories of the two Entities overlap in the Brcko District. In accordance with the Final Award, the District is self-governing and has a single, unitary, multiethnic, democratic Government; a unified and multiethnic police force operating under a single command structure and an independent judiciary. The District Government exercises, throughout the pre-war Brcko Opstina, those powers previously exercised by the two Entities and the former three municipal governments. The Brcko district is demilitarized.
Political parties: Party of Democratic Action (SDA); Croatian Democratic Union of BiH (HDZ-BiH); Serb Democratic Party (SDS); Party for Bosnia and Herzegovina (SBiH); Croatian Democratic Union-1990 (HDZ-1990); Bosnian Party (BOSS); Social Democratic Union (SDU); Croatian Party of Rights (HSP); Civic Democratic Party (GDS); Alliance of Independent Social Democrats (SNSD); Social Democratic Party (SDP); Socialist Party of Republika Srpska (SPRS); Party for Democratic Progress (PDP); National Democratic Union (DNZ); Democratic Peoples' Alliance (DNS); Bosnian Patriotic Party (BPS); Work for Progress (RzB); Serb Radical Party (SRS).
Suffrage: Universal at age 18.

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History of Bosnia-Herzegovina

For the first centuries of the Christian era, Bosnia was part of the Roman Empire. After the fall of Rome, Bosnia was contested by Byzantium and Rome's successors in the west. Slavs settled the region in the 7th century, and the kingdoms of Serbia and Croatia split control of Bosnia in the 9th century. The 11th and 12th centuries saw the rule of the region by the kingdom of Hungary. The medieval kingdom of Bosnia gained its independence around 1200 A.D. Bosnia remained independent until 1463, when Ottoman Turks conquered the region.

During Ottoman rule, many Bosnians converted from Christianity in favor of Islam. Bosnia was under Ottoman rule until 1878, when it was given to Austria-Hungary as a colony. While those living in Bosnia came under rule by the Austrian-Hungarian Empire, South Slavs in Serbia and elsewhere were calling for a South Slav state. World War I began when Serb nationalist Gavrilo Princip assassinated the Archduke Ferdinand in Sarajevo. Following the Great War, Bosnia became part of the South Slav state of Yugoslavia, only to be given to Nazi-puppet Croatia in World War II. During this period, many atrocities were committed against Jews, Serbs, and others who resisted the occupation. The Cold War saw the establishment of the Communist Federal Republic of Yugoslavia under Josip Broz Tito, and the reestablishment of Bosnia as a republic with its medieval borders within the federation of Yugoslavia.

Yugoslavia's unraveling was hastened by the rise of Slobodan Milosevic to power in 1986. Milosevic's embrace of Serb nationalism led to intrastate ethnic strife. Slovenia and Croatia both declared independence from Yugoslavia in 1991. In February 1992, the Bosnian Government held a referendum on independence. Bosnia's parliament declared the republic's independence on April 5, 1992. However, this move was opposed by Serb representatives who favored remaining in Yugoslavia. Bosnian Serbs, supported by neighboring Serbia, responded with armed resistance in an effort to partition the republic along ethnic lines to create a "greater Serbia." Full recognition of its independence by the United States and most European countries occurred on April 7, and Bosnia-Herzegovina was admitted to the United Nations on May 22, 1992.

In March 1994, Muslims and Croats in Bosnia signed an agreement creating the Federation of Bosnia and Herzegovina. This narrowed the field of warring parties to two. The conflict continued through most of 1995, and many atrocities were committed, including acts of genocide committed by members of the Army of Republika Srpska in and around Srebrenica from July 12-22, 1995, where approximate 8,000 Bosnian Muslim men and boys were killed. The conflict ended with the November 21, 1995 Dayton Peace Agreement, which was formally signed on December 14, 1995 in Paris.

Radovan Karadzic and Ratko Mladic, the political and military leaders of the Bosnian Serb separatist movement, were indicted by the International Criminal Tribunal for the Former Yugoslavia (www.un.org/icty) in The Hague in July 1995 on charges of genocide and crimes against humanity stemming from their role in the Srebrenica massacre. Karadzic and Mladic remain at large.

Bosnia and Herzegovina today consists of two Entities--the Federation of Bosnia and Herzegovina, which is largely Bosniak and Croat, and the Republika Srpska, which is primarily Serb. In July 2000, the Constitutional Court of Bosnia and Herzegovina rendered a decision whereby Bosniaks, Croats, and Serbs are recognized as constituent people throughout the territory of Bosnia and Herzegovina. In March 2002, this decision was formally recognized and agreed by the major political parties in both Entities.

The most recent national elections took place in October 2006, electing new state presidency members; Entity governments; and state, Entity, and cantonal parliaments. The traditionally nationalist parties (SDS, HDZ, SDA) lost ground to emerging opposition parties (SNSD, SBiH, HDZ-1990), although the opposition parties relied heavily on ethnically based messages to appeal to voters. A six-party coalition has formed a national government. The next national elections are scheduled for October 2010. Bosnia and Herzegovina introduced the direct election of mayors at municipal elections held in October 2004.

The international community retains an extraordinary civilian and military presence in BiH stemming from the Dayton Peace Accords. The Dayton Accords created the position of High Representative, an international official charged with overseeing implementation of the civilian aspects of the agreement. The current High Representative (since July 2007) is Slovakia's Miroslav Lajcak (www.ohr.int).

In December 1995, NATO deployed a 60,000-troop Implementation Force (IFOR) to oversee implementation of the military aspects of the peace agreement. IFOR transitioned into a smaller Stabilization Force (SFOR) in 2006. With the end of the SFOR mission in December 2005, the European Union (EU) assumed primary responsibility for military stabilization operations. Approximately 2,500 EU troops remain deployed in Bosnia (www.euforbih.org). NATO maintains a small headquarters operation with responsibility to assist with defense reform and efforts against persons indicted for war crimes and counterterrorism (www.afsouth.nato.int/NHQSA/index.htm).

People of Bosnia-Herzegovina

Nationalities: Bosniak (Muslim), Bosnian Croat, Bosnian Serb.

Population (July 2004 est.): 4,007,608 (note: all data dealing with population are subject to considerable error because of the dislocations caused by military action and ethnic cleansing).

Population growth rate (2004 est.): 0.45%.

Ethnic groups: Bosniak 48.3%, Serb 34.0%, Croat 15.4%, others 2.3%. (Source: UNDP Human Development Report 2002--Bosnia-Herzegovina)

Religions: Muslim (40%); Orthodox (31%); Catholic (15%); Protestant (4%); other (10%).

Languages: Bosnian, Serbian, Croatian (formerly "Serbo-Croatian").

Education: Mandatory 8 years of primary school, 4 years in secondary school, and 4 years in universities and academies. In Bosnia and Herzegovina, there are 407 primary schools with 250,000 students, 171 secondary schools with 80,000 students, 7 universities in the major cities (Sarajevo, Mostar, Banja Luka, Tuzla, Bihac, and Foca) and 6 academies (4 pedagogic and 2 art academies).

Education: Adult literacy rate--male 94.1%, female 78.0%.

Health: Infant mortality rate--(2005 est.) 21.05 deaths/1,000 live births. Life expectancy (2005 est.)--male 70.09, female 75.8.

Work force (2001 est.): 1.026 million.