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

Bank Closure Provokes Croat Wrath

Bosnian Croat hardliners are furious over attempts to sever their financial lifeline
By Janez Kovac

Tensions are running high in Bosnian Croat-populated areas following attempts by international and local officials to take over a bank believed to fund the community's separatist movement.


Bosnian Croat minister Mladen Ivankovic claimed a car bomb attack on his home in Siroki Brijeg earlier this week was the work of Croatian Democratic Union, HDZ, radicals who declared self-rule last month, in defiance of the Sarajevo government and the international officials.


Ivankovic, who together with his brother owns one of the most successful meat processing plants in Bosnia, is reported to have angered the HDZ with his backing for the new government.


"We sincerely regret that the Croatian Democratic Union, after obvious and media attacks on us, has now resorted to terrorism against our home and family members," the brothers said in a statement.


In another worrying development, Bosnian Croats soldiers who recently left Federal forces to bolster self-rule plans occupied an army barracks in Busovaca.


The incidents came several days after NATO soldiers, UN security forces, western auditors and local financial police moved against Hercegovacka Banka, allegedly a a key source of finance for Bosnian Croat separatist institutions.


The international and local officials, confronted by hundreds of protesters, closed down several branches, taking away documentation as part of an investigation into the bank's affairs.


The situation was the most tense in west Mostar, Siroki Brijeg and Grude, where financial police was beaten up and several western officials held hostage at gun point. The mobs also overturned and burnt their vehicles.


Speaking at a joint press conference with SFOR commander Lt. Gen. Michael Dodson on Saturday, Bosnia's top western mediator, Wolfgang Petritsch, condemned the "extremist" violence. "I will not tolerate mob rule," he said. "Their leaders inhabit a sick parallel universe in which violence and greed decides everything."


General Dodson said Croat extremists had clearly coordinated the violence to prevent the inquiry into the bank's affairs. "This bank was obviously very important to them because they found it necessary to organise groups of people to disrupt the legal investigation," he said.


While the bomb attack on Ivankovic's home is a worrying development, the fact that last Friday's demonstrations were so poorly attended suggests that support for Croat nationalists is not what it used to be. Similar protests several years ago would have drawn tens of thousands of people onto the streets.


They would also have received the backing of the former Zagreb regime. On this occasion though, as violence and tension gripped Herzegovina, the new Bosnian foreign minister Zlatko Lagumdzija was in the Croatian capital having talks with the country's moderate leadership.


Zagreb and Sarajevo have a common interest in eliminating the Bosnian Croats' parallel institutions and finances, as both countries are being undermined by the extremists' smuggling rings.


Hercegovacka Banka is believed to be controlled by Bosnian Croat nationalists. Ever since HDZ hardliners declared their intention to establish a separate entity in Bosnia-Herzegovina a month ago, the bank has played a key role in maintaining support for self-rule by continuing to pay the salaries and pensions to members of the Croat community.


It is obvious that HDZ extremists cannot count on continuing public support, since the results of the last general elections showed that public support for the party is declining. In elections last November, the HDZ garnered around 150,000 votes, half of what they won four years before.


HDZ officials ensured that Hercegovacka Banka became the principal bank for the collection of revenue from the customs service and the tax authorities. It was also one of the main banks for payments to the population in southern Bosnia.


When Croat nationalists defied Bosnia's new moderate leadership, it stopped paying funds to the federal and state budgets, using the money instead to try to establish a parallel financial system.


Withheld funds are believed to have been used to pay Croat police and soldiers in order to secure their allegiance.


Most of the 8,000 Croat troops in the Federation's army recently deserted to bolster the self-rule plans - while those still loyal to the Sarajevo authorities are reportedly under growing pressure to defect.


One of the most high-profile defections came this week when commander Tomo Knezevic announced that he disbanded his brigade.


Western diplomats say there was also evidence that the bank held a number of secret accounts which are thought to have funded illegal transactions and trafficking in weapons, drugs, stolen cars and immigrants.


Janez Kovac is a regular IWPR contributor