More than two years and $3 billion in aid later, Bosnia has yet to implement a comprehensive privatization plan to desocialize its economy. “There is a general feeling here that broken‐down state companies are an asset,” explains Kevin Mannion, director of the UN’s International Management Group in Bosnia.
Nevertheless, President Clinton recently extended the U.S. troop commitment to Bosnia indefinitely. After fighting the Cold War for 40 years, American forces now find themselves in the curious position of upholding the institutional remnants of a defunct communist state.
The primary obstacle to privatization in Bosnia has been political foot‐dragging. Under heavy international pressure, the Muslim‐Croat area of Bosnia approved a package of privatization laws last October, but it has yet to be implemented. The Serb area of the country recently said it plans to sell off 250 to 300 state‐owned enterprises, but the World Bank and other international agencies say the plan is seriously flawed and have appealed to Serb authorities to stop its implementation. As of today, foreign companies still may not invest in any state‐owned commercial enterprise in Bosnia.
Many Bosnian officials are resisting privatization in order to protect a highly bureaucratic system of jobs and privileges left over from communist days. In many cases the heads of Bosnia’s major state‐owned enterprises — such as the main utility, Electropiverta — are also members of the SDA political party. Party officials use these state‐owned enterprises to further their own financial and political interests. Officials close to Bosnian president Alija Izetbegovic, for example, also run the state‐owned television station. So far, they have resisted privatization and blocked the start‐up of an independent, Western‐financed competitor.