Activists stage a performance in Sarajevo with puppets of former Bosnian Muslim leader Sulejman Tihic, Bosnian Serb leader Milorad Dodik, and Bosnian Croat leader Dragan Covic.Danilo Krstanovic / Reuters

Next month marks the 20th anniversary of the Dayton agreement, which brought peace to Bosnia and Herzegovina. The agreement ended a war that had lasted more than three and a half years, killing 100,000 people and displacing upward of 2 million. But according to the late Richard Holbrooke, the U.S. diplomat considered the treaty’s chief architect, Dayton was “brokered by an impatient American administration determined more to end the war ... than to establish the basis for a viable and sustainable state.”

Twenty years on, Holbrooke has been proven painfully right.

Dayton created a byzantine governance system that constitutionally entrenched, rather than resolved, the divisions that emerged from the war. Bosnia and Herzegovina—colloquially known as just Bosnia—was divided into two entities, the Federation of Bosnia and Herzegovina and the Republika Srpska. The Federation of Bosnia and Herzegovina was further split into 10 cantons, and the contested city of Brčko was given special district status, while the state presidency rotates between the representatives of the three constituent peoples—Bosniaks, Croats, and Serbs.* With a population of 3.8 million people, Bosnia has three presidents, 13 prime ministers and as many governments, more than 180 ministers, and over 700 members of parliament. The outcome is an ungovernable mess. Two years after the 2013 census was completed, the results haven’t yet been announced, because the Federation and Republika Srpska each carried out its own census, with different methodologies.

The divide reaches into all aspects of life. In the city of Mostar, “everything is double, every activity, every firm: We have two different companies picking up garbage, Komos in the [Bosniak] east, Parkovi in the [Croat] west,” said Đenan Jelin, an activist. “The education system in the city is divided: The east uses Sarajevo’s syllabus, the west Zagreb’s.” A secondary school in Mostar that offers vocational training in transportation studies “teaches two shifts, one in the morning for Bosniaks, and another in the afternoon for Croats,” Jelin added. Bosniak students call the street the school is on Šantićeva, its pre-war name, rather than Mile Budak as it is now officially known. Even the school has two names—mašinsko-saobraćajna škola in Bosnian and prometna škola in Croatian—and two quite different websites.

This doubling-up of everything can seem comic. But the system entrenched by Dayton has done serious damage to Bosnia’s development. “The political caste uses Dayton to stay in power,” explained Nermina Mujagić, a political-science professor at Sarajevo University. “Dayton is a convenient scapegoat to justify why nothing is being done to address the plunder of the state’s assets and pervasive corruption.”

The process of post-war privatization is a case in point. The prospects at first seemed promising: In a 1997 paper, the European Commission and the World Bank found that “only a small portion of the overall industrial capacity has been damaged” by the war. Foreign experts prescribed a “complete overhaul,” in the form of privatization and other economic reforms, wrote the EastWest Institute in a report that same year.

Naturally, the Federation and Republika Srpska each created its own privatization agency, but for once the result was identical: the systematic transfer of assets into the hands of war-profiteers and politicians, as well as their families, friends and cronies. Too often, the new owners had no interest in restarting industrial production. Instead, they sold the machinery when possible, disposed of the rest as scrap metal and put up the land for either rent or sale. Entire industries were turned into housing or commercial estates, hotels, and malls.

De-industrialization and massive unemployment ensued. Damir Miljević, the advisor for privatization to the Republika Srpska prime minister in 2001, calculated that out of 1,200 privatized industries in the entity, just 10 have survived. Inequality is rampant: By some estimates, 300 people in Bosnia have €7 billion in assets, while 40 percent of the population is unemployed, and youth unemployment is over 60 percent, the highest rate in the world. The young and educated leave Bosnia for better prospects in the EU.

To date, with rare exceptions, no one has been held accountable for the privatization debacle. And while International Monetary Fund keeps the state on life-support with injections of money, the political elites buy social peace by dispensing jobs in exchange for votes. Miljević, the former advisor, called it “vote hiring.” “If the [Republika Srpska] Ministry of Finance had 78 employees in 2005, today it has 280, and this after relinquishing some of its responsibilities. … This is the case across the spectrum in government institutions,” he said.

Just how fragile the established order is became obvious in February 2014, when workers’ riots spread across Bosnia. Republika Srpska’s leadership depicted the protests as an attempt to dismantle their entity and mostly succeeded in avoiding contagion. Meanwhile, in the Federation, politicians of all stripes started a smear campaign against the workers, calling them hooligans and drug-addicts—and using nationalist rhetoric and the specter of civil war to divide the protest camp.

On the surface, stability appears to have been restored, but it is deceptive, and punctuated by strikes and demonstrations. Hoping to join the EU, Bosnia is carrying out a new raft of EU-backed economic reforms, including even more privatization. But the reforms have received a scathing review from the EU, which calls them “vaguely defined” and “piecemeal at best.” Above all, they do nothing to address the country’s chronic governance crisis.


* This article has been updated to clarify the distinction between Bosnia and Herzegovina and the Federation of Bosnia and Herzegovina.

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