Bosnia and Herzegovina
Population: 3,856,181 (July 2017 est.)
Internet country code: .ba
a wide medium blue vertical band on the fly side with a yellow isosceles triangle abutting the band and the top of the flag; the remainder of the flag is medium blue with seven full five-pointed white stars and two half stars top and bottom along the hypotenuse of the triangle; the triangle approximates the shape of the country and its three points stand for the constituent peoples – Bosniaks, Croats, and Serbs; the stars represent Europe and are meant to be continuous (thus the half stars at top and bottom); the colors (white, blue, and yellow) are often associated with neutrality and peace, and traditionally are linked with Bosnia
Bosnia and Herzegovina / Bosna i Hercegovina / Босна и Херцеговина
Bosnia and Herzegovina declared sovereignty in October 1991 and independence from the former Yugoslavia on 3 March 1992 after a referendum boycotted by ethnic Serbs. The Bosnian Serbs – supported by neighboring Serbia and Montenegro – responded with armed resistance aimed at partitioning the republic along ethnic lines and joining Serb-held areas to form a “Greater Serbia.” In March 1994, Bosniaks and Croats reduced the number of warring factions from three to two by signing an agreement creating a joint Bosniak/Croat Federation of Bosnia and Herzegovina. On 21 November 1995, in Dayton, Ohio, the warring parties initialed a peace agreement that ended three years of interethnic civil strife (the final agreement was signed in Paris on 14 December 1995). The Dayton Peace Accords retained Bosnia and Herzegovina’s international boundaries and created a multi-ethnic and democratic government charged with conducting foreign, diplomatic, and fiscal policy. Also recognized was a second tier of government composed of two entities roughly equal in size: the Bosniak/Bosnian Croat Federation of Bosnia and Herzegovina and the Bosnian Serb-led Republika Srpska (RS). The Federation and RS governments are responsible for overseeing most government functions. Additionally, the Dayton Accords established the Office of the High Representative (OHR) to oversee the implementation of the civilian aspects of the agreement. The Peace Implementation Council (PIC) at its conference in Bonn in 1997 also gave the High Representative the authority to impose legislation and remove officials, the so-called “Bonn Powers.” An original NATO-led international peacekeeping force (IFOR) of 60,000 troops assembled in 1995 was succeeded over time by a smaller, NATO-led Stabilization Force (SFOR). In 2004, European Union peacekeeping troops (EUFOR) replaced SFOR. Currently EUFOR deploys around 600 troops in theater in a policing capacity.
Bosnia and Herzegovina has a transitional economy with limited market reforms. The economy relies heavily on the export of metals, energy, textiles, and furniture as well as on remittances and foreign aid. A highly decentralized government hampers economic policy coordination and reform, while excessive bureaucracy and a segmented market discourage foreign investment. The economy is among the least competitive in the region. Foreign banks, primarily from Austria and Italy, control much of the banking sector, though the largest bank is a private domestic one. The konvertibilna marka (convertible mark) – the national currency introduced in 1998 – is pegged to the euro through a currency board arrangement, which has maintained confidence in the currency and has facilitated reliable trade links with European partners. Bosnia and Herzegovina became a full member of the Central European Free Trade Agreement in September 2007. In 2016, Bosnia began a three-year IMF loan program, but it has struggled to meet the economic reform benchmarks required to receive all funding installments.
Bosnia and Herzegovina’s private sector is growing slowly, but foreign investment dropped sharply after 2007 and remains low. High unemployment remains the most serious macroeconomic problem. Successful implementation of a value-added tax in 2006 provided a steady source of revenue for the government and helped rein in gray-market activity, though public perceptions of government corruption and misuse of taxpayer money has encouraged a large informal economy to persist. National-level statistics have improved over time, but a large share of economic activity remains unofficial and unrecorded.
Bosnia and Herzegovina’s top economic priorities are: acceleration of integration into the EU; strengthening the fiscal system; public administration reform; World Trade Organization membership; and securing economic growth by fostering a dynamic, competitive private sector.