BOSNIA'S NEW YEAR OF FIREWORKS AND HOUSE BOMBS.

Like virtually everywhere across the globe, Bosnia's central squares were packed with revelling crowds enjoying the celebrations on New Year's Eve. But the singing and dancing crowds were not thronging the streets as a testament to a happy country. Rather the occasion offered a rare opportunity for people to forget their problems and those blighting the country.

Amidst the fancy and expensive fireworks organised in all the bigger cities, the loudest bang came from an explosion which damaged the home of Muslim returnee in the Bosnian Croat controlled town of Stolac in southern Bosnia.

In the closing weeks of 1999 the Bosnian parliament repeatedly failed to adopt essential import tax legislation, forcing Bosnia's top international mediator, Wolfgang Petritsch, to intervene. On January 1 the government of the Muslim-Croat federation raised fuel prices by 10 per cent, prompting fears that general inflation will follow.

"As much as I wish you and your country the best, I cannot help feeling worried," said Petritsch, in an open letter to the Bosnian people published on New Year's Eve. Like many analysts, both local and international, Petritsch said he sees the year 2000 as an important crossroads for Bosnia.

From an optimistic viewpoint for the third year running Bosnia-Herzegovina has registered one of the biggest rates of increase in GDP in the world. Many homes have been repaired and people can now travel largely unmolested around the country regardless of their ethnic or religious origins. The experience of Bosnia demonstrates that reconciliation is not only possible but already taking place.

But not all is rosy. From a pessimistic viewpoint the picture is quite different, mostly thanks to local politicians. The increase in GPD and the general improvement in living standards is largely based on foreign donations and loans. The fragile Bosnian economy relies heavily on the millions of U.S. dollars earned from the expenditure of the thousands of Western officials living and working in the country.

Rather than investing in the reconstruction and regeneration of Bosnia's shattered industry, money pours into the expansion of an already monstrous bureaucratic apparatus. Corrupt, self-indulgent and incompetent local leaders and ruling parties bicker over trivial matters, constantly feeding ethnic tensions as their only means of clinging onto power. While local politicians make a mockery of the parliament and joint institutions, High Representative Petritsch is forced to use his powers and impose legislation.

"Western governments and donors are becoming impatient," Petritsch said. "I appeal to both politicians and citizens to take the growing disgruntlement in the West seriously and to change course." Petritsch quoted specialised international business magazines and publications, which label the country "aid-addicted", and proposed reducing foreign involvement in Bosnia to a basic military presence only.

Yet several local and international experts recently warned that already reduced foreign aid, combined with a burgeoning bureaucracy, weak industry and an enormous import-export deficit, could easily propel Bosnia into her first serious post-war economic crisis in the year 2000.

Prices and unemployment are expected to rise, triggering inflation and mass civil unrest. Pension payments are seriously in arrears - August payments only reached their recipients in December - prompting angry pensioners to threaten protests unless the situation is resolved.

Trade unions have promised more nation-wide strikes, demonstrations and chaos unless pay and working conditions improve in 2000. At present an estimated 50 per cent of Bosnians are unemployed. Average incomes of those people fortunate enough to have a job are around 300 German Marks (DM), while monthly out-goings for an average family are around 500 DM.

Impatient Western governments have already started to re-direct aid to Kosovo and the Stability Pact for Southeastern Europe, Petritsch said in his letter. "What we need now is a radical change," he added.

But the ruling Bosnian Serb, Croat and Muslim parties seem either unwilling or unable to make any changes, for better or worse. Frustrated by corruption and the constant obstructions placed in the way of refugees returning home, Petritsch sacked 22 local leaders from all ethnic groups on December 22. In the same month the NATO-led peace force published the findings following an October 14 raid in West Mostar. The operation provided proof that the Bosnian Croat secret service (SNS) was illegally producing pornography, forfeiting credit cards and mobile phone chips, not to mention wire-tapping and monitoring the work of international organisations in Central and Southern Bosnia.

Angered by Petritsch's sacking of Bosnian Croat officials and NATO's publication of the damaging evidence against the SNS, the Croatian Democratic Union in Bosnia party retaliated by refusing to accept the dismissals and rejecting legislation recently introduced by Petritsch.

Meanwhile the local media are uncovering new evidence of corruption within the Muslim political leadership on an almost daily basis. During recent weeks independent local magazines published articles concerning several state-owned companies run by a party loyalist, which have been financing secret deals with the ruling Muslim Party of Democratic Action (SDA). As yet no formal investigation or legal action has been taken against those mentioned.

At the same time, the Organisation for Security and Cooperation in Europe (OSCE), charged with overseeing the Bosnian elections, has recently discovered evidence of fraud within the registration process of Bosnian voters living in the United States and Germany. The OSCE believes SDA officials are responsible and have decided to remove up to 15 candidates once the full lists are finalised.

The situation is no better in the Bosnian Serb-controlled part of the country. There, the moderate prime minister, Milorad Dodik, has failed to fulfil most of his economic and social pledges and programs, despite generous financial and political support from the international community. As a result, Dodik's government is facing increased public scorn and could easily lose the upcoming local and parliamentary elections to the hard-line nationalist Serb Democratic Party.

In their traditional New Year's Eve statements, the three members of the Bosnian tripartite presidency - Croat Ante Jelavic, Serb Zivko Radisic and Muslim Alija Izetbegovic - failed to offer any concrete plans for the coming year. Instead they only offered only vague statements on democracy and ethnic interests.

Zlatko Lagumdzija, president of the leading opposition Social Democratic Party (SDP) calls such complacency "a tragedy". And he warns that the situation in Bosnia next year will only get worse - a shift which from which he believes his party, like its counterpart in Croatia, stands to benefit handsomely.

Petritsch also stressed that the situation in Bosnia could be best improved through political change at the ballot box. "By insisting on the rule of law and, ultimately, using the ballot box you can ensure that they [the political leaders] do not get away with corruption, self-indulgence and negligence," Petritsch said in his New Year's Eve letter. Addressing the Bosnian electorate, he emphasised: "The way to a prosperous Bosnia-Herzegovina and to Europe depends on you."

Janez Kovac is a pseudonym for a journalist from Sarajevo.