Creative Destruction of Bosnia and Herzegovina

Demographic decline, bad economic conditions, corruption and the destruction of Bosnia and Herzegovina

According to United Nations estimates, if the mass emigration of the population does not stop, Bosnia and Herzegovina will lose half of its entire population by 2070 and be reduced to only one and a half million inhabitants.

What is particularly worrying is the departure of young people who do not plan to return, which would lead to a demographic catastrophe for the country. A 2021 United Nations survey suggests that up to 47 percent of young people aged 18 to 29 are considering leaving Bosnia and Herzegovina, and this number is increasing every year.

Signing of Dayton Peace Agreement

After World War II, Bosnia and Herzegovina was a republic inside communist Yugoslavia, with a majority Christian population. Serbs were the majority in the country, until 1970s when the Muslims surpassed them in numbers. Its important to note that the Bosniak national identity (Bosnian Muslims) did not develop until later in the 90s, after the bloody civil war. Therefore, they have regarded themselves as Muslims not only by faith, but also by national identity.

This shift in population has changed the internal socio-economic and political dynamics in the country, which was one of the factors that has led to the civil war. The war in Bosnia and Herzegovina was a catastrophic event, and the US and NATO decided to intervene in the war to try and stop it. This has led to the signing of the Dayton Peace Accords in 1995, which has successfully brought the war to the end, but it has created a fully dysfunctional country.

Today, Bosnia and Herzegovina has three presidents on a national level, but also two different political entities, one with Serb majority- Republic of Srpska, and the Federation of Bosnia and Herzegovina, which is further divided into cantons, some with Bosniak and other with Croat majority. Republic of Srpska has all elements of a country: flag, anthem, population, government, president, independent state organs etc. It is not soo different with the Federation of Bosnia and Herzegovina as well. This division has stopped the war, but it has led to the absence of a centrally led government with clear hierarchy. It is for this very reason that the country has been affected by a high degree of corruption.

Additionally, Bosnia and Herzegovina is the protectorate of the West: it has an Office of High Representative (OHR), which has the power to change democratically elected politicians, impose laws and many other jurisdictions, all with a goal of “securing peace” in the country. However, many of these High Representatives have made more damage than good with their actions in the country and has made it almost impossible to have a country where every ethnic groups is contempt with it. Not to mention that the “current” High Representative was not approved by the UN Security Council (this is how they are usually appointed), which has led to the evaporation of political authority of the OHR and new political crises in the country.

Bosnia and Herzegovina for multiple years has been hanging on a thread with a promise from the Brussels that it would become a EU member in the near future. If the entire region of Western Balkans were to be included in the EU, then that by itself would solve one of the biggest causes of wars in the Balkans- changing borders along ethnic lines. However, this promise of the “promised land” is losing its validity in the eyes of the people from the Balkans, and the country once again is in a big political crisis, with a renewed talks about secession and the abolition of the Dayton Peace Accords, which is the only thread still keeping the country afloat.

International Factors

In EU cities and institutions, one of the biggest challenges to Bosnia and Herzegovina's general progress and its rapprochement with the EU is the advocacy of Republic of Srpska's secession by its representatives. Of course, every story needs a villain, and in the West, this role has consistently been played by the Serbs and their representatives from the early 1990s to the present day. This oversimplification is tragically comic because advocating secession is not the problem but a symptom; the problem is Bosnia and Herzegovina itself.

The apparent political complexity of Dayton Bosnia is an excellent excuse for domestic politicians to shift responsibility to the "other side" and for foreign powers to justify meddling in the country's internal political issues. However, is Bosnia and Herzegovina dysfunctional because of its Dayton constitution, or was it an irrational creation from the very beginning, given that up to 50 percent of its population would support secession while 50 percent of young people want to leave the country? In any case, Bosnia and Herzegovina has once again justified its favorite slogan: "Where logic ends, Bosnia begins."

Timothy William Waters, an American law professor at Indiana University who was once a researcher at the Hague Tribunal and an OSCE human rights officer in Bosnia and Herzegovina, argues that the best solution to the Bosnian question is precisely secession. He notes that American foreign policy towards Bosnia and Herzegovina opposed secession for three reasons: the danger of leading to war, the expansion of Russian influence on Republic of Srpska, and the potential validation of the events of Srebrenica by secession.

As a solution from an American perspective, Professor Waters offers the following suggestions: paralysis can also lead to conflict, and society is so divided that peaceful secession is possible, except if Bosniak representatives do not try to intervene militarily, which can be avoided with NATO's physical presence and guarantees. Second, U.S. policy actually enables regional destabilization and the strengthening of Russian presence in Bosnia and Herzegovina. Professor Waters sees the solution in Republic of Srpska getting what it wants and, in return, becoming a NATO member. Third, as someone who influenced the conviction of five individuals of Serbian nationality for war crimes at the Hague Tribunal, Waters notes that an independent Republic of Srpska would have no reason to behave "aggressively" towards other ethnic groups. Monuments and memorial centers should be erected for the dead, but the living should not be forced to live together, especially if it is against their will.

Such views on regional political events are rare among U.S. experts, and without financial support, they are quite invisible in the Washington swamp. American foreign policy, which still holds the entire region under its political hegemony, has a simple formula—imposing its will as long as the given subject does not accept it. This formula has only failed in the case of Vietnam and Afghanistan, where Americans gave up on their long-term plans. Maybe the US and the EU should just let Bosnia and Herzegovina break apart and then integrate its pieces in its political and economic order.

Is it possible to conclude in which direction things will go in the case of Republic of Srpska and Bosnia and Herzegovina? It is difficult to say, but for now, it seems that the U.S. plans to keep the situation frozen as long as all ethnic groups do not accept Bosnia and Herzegovina as it is—so until one of these two states breaks apart.

In many ways, Bosnia and Herzegovina resembles a failed marriage: toxic, with no love and trust, but whose existence is forced by the parents of the couple. From a Western perspective, controlled chaos is better than uncontrolled peace, which explains to a large extent selective diplomacy (support for independence referendum in Kosovo and no support for the same in Republic of Srpska). One thing is clear, in a marriage where there is no happiness, love, sincerity, and mutual trust, there is no future. By all accounts, Bosnia and Herzegovina is a failed state, not only because it is poor, full of corruption, and dysfunctional but also because its citizens do not believe in it.

Internal Factors

A married couple going through a divorce soon faces another reality—they no longer have anyone to blame for their problems and become their own worst enemies. So, if the complete breakup of Bosnia and Herzegovina were to occur, their entities would soon realize that the biggest problem was within them from the beginning.

One characteristic of all people, not just those from the Balkans, is that we blame others for our troubles. This is even more pronounced among nations that have experienced traumatic events and are afflicted by the disease of the mind called the "victim mentality." Such people blame everyone but themselves because they have experienced a certain kind of injustice. To avoid this trap of our collective (un)consciousness, it is necessary to see how the citizens themselves contribute to the dysfunction of the state.

In their book "Why Nations Fail," Daron Acemoglu and James Robinson argue that the differences between developed and underdeveloped countries are not the result of geography, culture, or incompetent leaders but are exclusively political and depend on the quality of state institutions. Thus, a small Slovenia is economically growing and developing, while the rest of the former Yugoslavia is failing. While the south of the Korean Peninsula shines at night, the north is completely engulfed in darkness. This idea is simple—only states with politically inclusive institutions record socio-economic growth, while those with extractive institutions are well on their way to collapse.

The nature of extractive political institutions is such that they generate power in the hands of elites who politically and economically exploit the rest of society. Due to the elites' lack of will to change the status quo, economic inequalities in society arise, poverty ensues, innovation disappears, and there is almost no way out of the situation.

Famous Austrian economist Joseph Schumpeter explains economic development through the concept of creative destruction, through which a state must pass on its path to economic and technological development. It is a process in which the new replaces the old, resources are redistributed, and new losers and winners are created. Economic progress is not only associated with a larger number of educated people or more efficient and better machines but also with the transformation that comes through the process of destabilization.

Due to the fear of losing political and economic power, elites establish a system that hinders economic progress, thereby harming the rest of society. Thus, Gutenberg's printing revolution was delayed by 400 years in the Ottoman Empire due to the fear that written ideas would spread freely and threaten the ruling order. The same was true in Austro-Hungary, where Habsburg ruler Franz Joseph opposed the construction of railways for fear it would enable a revolution in the country. It seems that other Balkan states, which were under the direct influence of these empires for centuries, also established extractive institutions.

All economic indicators point to the fact that the institutions of Bosnia and Herzegovina, as well as other countries in the region, are extractive because Balkan elites apply the handbrake to economic and political changes to preserve their privileged positions. By establishing more inclusive institutions, Bosnia and Herzegovina would enable easier access to economic opportunities for a larger number of its citizens, further stimulating overall economic development.

How to achieve institutional inclusiveness? By introducing transparent procedures and accountability in public administration, strengthening the legal system that guarantees equal rights for all, investing in education and healthcare, strengthening support for entrepreneurship, enabling fair elections, and involving various social groups in decision-making.

As a way out of the crisis, ruling groups usually present attracting more foreign direct investments or some new infrastructure project. Although a highway is significant for economic development, without inclusive institutions, it will only make it easier for everyone to leave the country. The way out for Bosnia and Herzegovina from the path to complete destruction is precisely through strengthening the inclusiveness of institutions and creative destruction.