Institute for War and Peace Reporting | Giving Voice, Driving Change

Banja Luka Faces Bleak Future

Practically bankrupted by its own leaders, Republika Srpska finds itself isolated and impoverished
By Gordana Katana

Anita Krivokuca, a cleaner, is the main breadwinner for her family of six, but her salary is barely enough to make ends meet. Her husband Branko gets up at three o'clock in the morning to try to scrape together some extra cash unloading fruit and vegetable trucks at Banja Luka's market.

Like many thousands of families across Republika Srpska, RS, the Krivokucas are facing a daily battle for survival - a situation unlikely to improve any time soon.

Before the war, Bosnia's economy relied mostly on heavy industry but the sector was either destroyed or plundered during and after the conflict. Subsequent attempts to revive the economy have largely failed - privatisation has stalled, foreign investors have been put off by the slow pace of reform and Western financial aid has been witheld.

It's not hard to understand why economists are saying RS is facing its severest year since 1995.

The final nail was driven into the economic coffin earlier this month when violent protests in Banja Luka and Trebinje over the rebuilding of the towns' mosques warned off any remaining investors.

Half the labour force of 320,000 is currently out of work. Those in employment are earning an average of 230 marks a month, which is half that needed to pay the food bill for a family of four. Anita Krivokuca earns 150 marks a month while her husband makes about 10 marks each time he does an early morning shift at Banja Luka market.

Recent studies indicate that 60 per cent of the population is living below the poverty line.

People are forced into moonlighting and trading in contraband goods in order to support their families.

Before the war, forty-year-old Mladen worked in the Rudi Cajevac television manufacturing facility in Banja Luka - one of the largest of its kind in the former Yugoslavia. After being demobbed in 1995, he returned home to find an empty shell of a factory. "While we were fighting, our directors plundered everything that was worth plundering," he said.

Now he finds that his family cannot get by on his wife's salary of 300 marks, which is often paid months late. Mladen has turned to selling cigarettes - a flourishing racket - convinced he will never again find regular employment.

Economists are not offering people like him much hope. They argue things will only improve if privatisation is accelerated. But, as many analyst point out, the process has been deliberately slowed by successive governments bent on milking public companies before releasing them for sale.

A year-long court case brought by workers against three Banja Luka state companies illustrates the point. Workers at all three have accused the directors of lowering the value of company assets by renting property out to party officials for peppercorn rents and even selling it on for trivial sums. The workers' allegations have been backed up by the body responsible for monitoring the privatisation process in RS.

Economic prospects have not been helped by a wave of strikes. Teachers, rail, timber, hospital and iron and steel workers have protested over low salaries and delayed payments, as well as the current government's failure to compensate an estimated 40,000 public sector employees who will lose their jobs in planned privatisations.

The strikers are angry with Prime Minister Mladen Ivanic who was brought to power last year by dint of his plans for fundamental economic reform. In addition to pledging tens of thousands of new jobs, he committed himself to easing taxation in the private sector and the creation of a viable welfare programme. Seven months down the line, neither jobs nor social benefits have materialised.

Much of Ivanic's programme has been stalled by the international community's decision to withhold its monthly contribution to government coffers of around 20 million marks.

The money, meant to help redevelop the country's infrastructure, was suspended when the Serbian Democratic Party, SDS, set up by war crimes indictee Radovan Karadzic, triumphed in recent elections.

The West's decision to pull the plug on funding was based on SDS opposition to its pre-conditions for investment and aid - the speeding up of refugee repatriation, constitutional changes and full cooperation with The Hague. All are anathema to SDS members and their supporters who see these demands as betrayals of their "national interests".

Ivanic has been trying to woo back investors by attempting to implement some reforms, such as cracking down on customs violations and bringing in anti-corruption legislation. He has little choice, as his current budget of eight million marks falls way short of RS needs.

One of his biggest problems is the payment of public sector salaries, much of which were paid with foreign credit. Ivanic is also going to have to placate pensioners, refugees and war-invalids who are all threatening protests if the state continues, as they say, to "marginalise" them.

And, as if that weren't enough, Ivanic's tiny budget is also supposed to cover the wages of army officers who, up till now, had been paid by Serbia. So far, the government has scraped by, paying salaries as infrequently as possible but people's patience is evidently wearing thin.

Given the economic chaos, it is no surprise to see queues of young people outside US, Canadian and other Western embassies, nor to learn that around 20,000 young educated people are waiting for immigration visas.

For the rest, years of hardship and survival loom.

Gordana Katana is a correspondent for Oslobodjenje