Bosnia’s EU Application: Political Ruse or Misguided Optimism?

Bosnia’s plan to submit an application to join the EU in 2016 is more of a strategy to divert attention from internal political and economic problems rather than an indicator of real progress.

The last two months of 2015 were marked by optimism about Bosnia’s EU prospects. In November 2015, the EU progress report provided more a positive assessment than the country arguably deserved, leading to brash statements in the following month from the government that Bosnia would formally apply for membership in January 2016.

Instead, on January 1, the European Parliament suspended preferential trade arrangements with Bosnia after the country repeatedly failed to adjust its export quotas to EU levels. A week later, the EU delegation in Sarajevo announced that without releasing the October 2013 census data, Bosnia cannot submit its EU application.

In spite of these setbacks, Bosnian policymakers seem determined to submit their application in the coming weeks. This claim should not be seen as an indicator of a major breakthrough, but as a strategy aimed at diverting attention from the country’s economic and political problems before the 2016 municipal elections.

Few analysts believe Bosnia will be able to submit a credible application, let alone be successful in obtaining candidacy in the next two years. It is hard to see how Bosnia could go ahead without risking receipt of a highly negative opinion by the European Commission.

History of troubled relations with the EU:

Since 2005, when Bosnia and Herzegovina officially started negotiating the roadmap for its EU negotiations and membership, the so-called Stabilization and Association Agreement, SAA, its European path has been marked by a series of stalls, mitigated only by the leniency of Brussels. Such leniency was motivated by a perceived need to create a momentum for reforms in the troubled country.

The SAA between Bosnia and the European Union was at last signed back in 2008. But even before all the member states adopted it, it was frozen by a ruling in 2009 concerning discrimination against national minorities contained in Bosnia’s 1995 constitution.

This so-called “Sejdic-Finci” ruling, named after the main claimants, said members of other national groups other than Bosniaks, Croats and Serbs must be allowed to run for the state presidency and for the parliament’s House of Peoples.

As a result of the parties’ failure to agree on changing this rule, constitutional reform became an insurmountable obstacle for the country on its EU path.

But delivery on the Sejdic-Finci ruling was not the only condition needed to unlock the SAA. Other key stumbling blocks were the adoption of a state aid law, EU coordination mechanism, the conduct of a national census and closure of the international Office of the High Representative, OHR.

In 2010, the EU dropped the last condition, without much explanation, as unrealistic. Bosnia adopted a state aid law in 2012, although it was never implemented. The census was finally conducted in October 2013.

Although Bosnia’s two entities – the Federation of Bosnia and Herzegovina and Republika Srpska – failed to agree on how to define a resident, an issue with repercussions for up 350,000 people, nearly a tenth of the population – the conduct of the census was a major success.

It seemed that, technically, “only” the coordination mechanism and the Sejdic-Finci ruling stood in the way of an EU application. In its attempt to create positive momentum, the EU lowered the bar once again and decided to drop this condition in 2014 and re-focus on the economy.

In early 2015, kick-started by a British-German economic initiative announced in November 2014, the EU did a U-turn on Bosnia. In exchange for Bosnia’s commitment to a political and economic reform agenda, the EU allowed the unlocking of SAA, which entered into force in July 2015.

Brussels also pledged to provide 37.2 million euros for Bosnia over the next three years to support this reform agenda. Such a generous financial pledge caught the eye of Bosnia’s politicians who started delivering on some of the promised reforms.

From the outside, it appeared that Bosnia was “back on the EU track”, as the EU progress report stated in November 2015. But, beyond this diplomatic hype, internal developments were less positive.

Conflicts with the RS and a weak economy:

Most importantly, relations between the two entities seriously deteriorated in 2015. The Republika Srpska President, Milorad Dodik, announced a referendum on the state judiciary and the OHR, which will be most likely held in April 2016. He also temporarily suspended his entity’s cooperation with the state security services, SIPA, in December 2015. Later, he disregarded another decision of the Constitutional Court – the 91st decision ignored in this fashion – which ruled that the celebration of the RS national day on 9 January was discriminatory.

Bosnian institutions failed to deal with such attacks or enforce compliance: both the Constitutional Court and the SIPA have since been under permanent attacks by the RS leader.

In addition, opinion in the Republika Srpska leans almost as much to Moscow as to Brussels. A survey by Bosnia’s Directorate for European Integration from 2015 showed that while 91 per cent of citizens in the Federation entity would vote “Yes” in a referendum to join the EU, the number was far lower in the RS, only 58 per cent.

Though Croat-Bosniak relations within the Federation improved last year, increasing tensions between RS and the other entity give only limited hope that any of the outstanding issues – including the publication of the census data – would be addressed this year.

The poor shape of the economy is another serious issue, in particular in the Serb-majority entity.

Bosnia nearly failed to finance its budget of approximately 800 million euro, which was belatedly adopted in May 2015. Reforms adopted in 2015, such as new entity labour laws, were clearly motivated by the hope of receiving international financial injections to save the country from bankruptcy. Without such external aid, Bosnia cannot fund its overburdened state and entity budgets.

This is why the EU trade conditions give more hope for a successful resolution, especially since the suspension of preferential trade arrangements was long in the making.

Since 2000, EU and Bosnia’s economic relations have been guided by special autonomous trade measures, ATMs, which expired at the end of 2015.

The ATMs allowed Bosnia free access to the EU market for almost all agricultural products without tariffs. The free-trade zone was further extended with the 2008 Interim Agreement on trade, a temporary replacement for the frozen SAA.

But since Croatia joined the EU in July 2013, Bosnia has failed to adjust its trade quotas granted under these measures to take into account its traditional trade with Croatia, arguing that it would damage its economy if trade with Croatia decreased.

Given the dominance of the EU in the fields of exports – in 2015, 72.1 per cent of goods exports from Bosnia went to the EU, including Croatia – an agreement will have to be reached if the country is to survive economically. EU trade and investments are indispensible for Bosnia’s liquidity.

Membership prospects distant:

Amid continuing conflicts with the RS over its challenges to the state’s central powers combined with a dire economic outlook, the prospects of Bosnia’s EU membership are as far away as ever.

The year 2025 is now an optimistic estimate. But there is no doubt that the government will continue to pursue its intent to apply this year, especially before the October 2016 local elections.

In the meantime, it Bosnia will struggle to have its EU application forwarded to the European Commission and thus accepted this year. However, Brussels will continue to demonstrate understanding towards Bosnia, as a gesture of goodwill.

Yet even if it drops more conditions, it will not be able to ignore the separatist tendencies of the RS President, who is clinging to power and is willing to use all means available to retain it.

Therefore, 2016 is unlikely to be the year when Bosnia presents a credible application to the EU; it risks too much embarrassment from a frank appraisal of an unrealistic application by the European Commission.

Though it might send and application to the European Council, its submission will not change the dynamics of Bosnia’s painfully slow and unwieldy progress, hindered as it is by deep internal political and economic problems.

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