In November 2014, Germany and the United Kingdom launched a new policy initiative for Bosnia and Herzegovina (BiH). One month later, the European Union adopted the initiative as its own new EU initiative for BiH. Earlier, in February 2014, violent social protests had broken out in BiH and marked the failure of the EU’s previous policy approach in catalyzing real change in the country. At the same time, the protests drew new attention in the West to continuing problems in BiH. This enabled Berlin and London, whose dispute over the correct course of action to take in BiH had blocked the Union from having any meaningful policy, to get together behind a joint initiative. The focus of the new initiative was on structural socio-economic reform. Sensitive political issues like constitutional reform were pushed aside – for consideration at a later stage in enlargement – in order to unblock BiH’s long stalled EU integration process.
From a distance, the initiative may appear successful; in September 2016, less than two years after the start of the new initiative, the Union’s General Affairs Council (GAC) referred BiH’s membership application to the European Commission to prepare an Opinion. This marked the last of three steps in the EU integration process, originally foreseen as a reward for the fulfillment of certain reform conditions. This was followed by the entering into force of the long-delayed Stabilisation and Association Agreement (SAA) and BiH’s official application for membership. In addition, the centerpiece of the initiative, the so-called Reform Agenda was agreed and implementation initiated.
However, close examination of the state of reform within the scope of the EU initiative challenges this positive impression. The reality is that the limited reforms achieved so far are fragile, sustainability of the reforms is highly questionable and the long-term socio-political outlook remains tenuous.
BiH authorities were able to agree with the EU and the International Financial Institutions (IFIs) on a broad agenda for socio-economic reform, the Reform Agenda 2015-18. If fully implemented, the Agenda could profoundly undermine the country’s patronage system – the system that forms the raison d’être of the political elites and the main cause of the state’s dysfunctionality and reform resistance. The Agenda has indeed brought some momentum to needed reforms not seen in a decade. Most of the reform momentum is due to the actions of the IFIs, especially the International Monetary Fund (IMF), which put in place new credit arrangements to support the Agenda and imposed strict financial conditionality. In one of the key reform areas, modernization of the labor market, two new entity labor laws were adopted. Yet this new legislation, praised by the EU and the IFIs for its positive and far-reaching impact, falls far short of expectations. And in all other reform areas covered by the Agenda, structural reforms are still at an early stage. There have been numerous delays since 2015 in the implementation of Reform Agenda measures resulting from disputes among the ruling elites over their entrenched interests which are endangered by the reforms. 2018 is an election year, which means that a very limited time slot remains to implement those multiple structural reforms. It is simply impossible for many of them to be completed within that timeframe.
With respect to other conditions the EU made on BiH’s progress toward EU integration, the Union has continued its practice of retreating from conditionality in the face of resistance to reform. EU institutions have compromised on their own set conditions, lowered conditionality, ignored self-set deadlines and in some cases, dropped conditionality entirely. When conditions were fulfilled, it was mainly due to the EU’s inattention to the substance (or lack thereof) of the “solutions” agreed among BiH political leaders, thus turning conditionality into an exercise in mere box-ticking. The result is that some of the solutions may never function in practice.
Finally, the relationship between the EU and BiH in implementing the EU initiative has turned into a closed-shop operation. Parliaments, civil society and the public at large have largely been bypassed in terms of policy development and policy making. The EU’s unwillingness to – and unfamiliarity with – developing a popular constituency has weakened its leverage and increased that of recalcitrant BiH politicians. An awareness that BiH leaders were not genuinely interested in reform – and the need for broad civic support to overcome this impediment, was allegedly the basis for the initiative to begin with.
Given this background, prospects for the successful further implementation of the Reform Agenda appear grim, even more so because there are a multitude of uncertainties regarding the way forward. At the time it adopted the UK-German initiative in 2014, the EU weakened conditionality for the last step of its BiH initiative – referral of BiH’s membership application to the European Commission - from “full implementation” to “meaningful progress” in implementing the Reform Agenda. Currently, no plan is in place to press for full implementation as an absolute condition for further BiH progress in EU accession. Also, on December 9, 2016, the European Commission handed the Questionnaire over to BiH authorities, the answers to which will enable the preparation of its Opinion on the membership application. Since then, government institutions at all levels have been busy answering several thousands of questions. There are already signs that they will lose focus on implementing the Reform Agenda, or worse, that political elites could use the Questionnaire as an excuse to dodge further reforms.
However, the Reform Agenda process has proven that the leading international actors in BiH can successfully push for the country to get on a sustainable reform track – as demonstrated by the IMF’s application of tough conditionality. It’s not because conditionality doesn’t or cannot work in BiH – as many EU officials argue – that the EU initiative has so far yielded only limited results, but rather because the EU has lacked the political will to consistently signal and apply tough, strict conditionality. This is due to the low priority that Germany and other key EU actors have assigned to BiH, amidst other pressing international challenges and an increasingly complicated geopolitical order. Yet a collapse of the Reform Agenda may not be just another failure of the EU in BiH. Loss of EU initiative risks leading to renewed violent social unrest that in 2014 triggered these responses, with the likelihood that politicians this time will succeed in deflecting it in an ethnic direction, unlike 2014. Such intentionally diversion into ethnic violence would pose a direct security risk to the EU. To prevent such a scenario requires political will and leadership by the EU, but primarily by Germany, to genuinely lead the Reform Agenda towards successful completion. No substantial additional resources are needed, but a strategic re-thinking and adjustment of the initiative is required. This process must include the EU’s acceptance and inclusion of BiH’s citizens as its allies in pushing for structural socio-economic reforms.