The best deal Kosovo and Serbia can get
The best deal Kosovo and Serbia can get
Report / Europe & Central Asia 3 minutes

Republika Srpska in the Post-Kosovo Era

Repercussions from Kosovo continue to shake Republika Srpska (RS), and may prove a catalyst for further transformation and reform.

Executive Summary

Repercussions from Kosovo continue to shake Republika Srpska (RS), and may prove a catalyst for further transformation and reform.  The war’s collateral damage included severance of trade ties with the Federal Republic of Yugoslavia (FRY); a dramatic rise in unemployment; a sharp drop in production and state revenues; and a tide of Serbian refugees from FRY into RS.

Despite this the security situation, which looked dangerous at the beginning of April, did not deteriorate out of control, and the government in Banja Luka was able to stabilise its position and survive.  The government itself deserves credit for keeping its head throughout the crisis.  The international community, especially OHR and the US government, did good work behind the scenes keeping the ruling Sloga coalition together.  And a generally well-judged and low-key response by SFOR managed to strike a balance between preserving security and not provoking incidents by its own actions.

As Republika Srpska enters the post-Kosovo era it faces a crossroads, both economically and politically.  RS now can move forward towards an integrated European future as part of BiH.  Or it can move backwards, towards economic, social and political misery.

The international community has to seize this chance to orient RS towards the right choice, but it also has to work out how to get better results on minority returns.  As things stand, RS Prime Minister Milorad Dodik knows he will receive foreign support whatever he does, because he keeps RS politically and economically at a distance from FRY, and this keeps Bosnia out of the headlines at a time when there is enough trouble elsewhere in the Balkans.  How to back Dodik’s sensible economic policies while still making progress with the rest of the Dayton agenda?

Reasoning behind the current policy runs: “if Dodik can successfully promote self-sustaining economic growth, he will be able to operate with more authority and effectiveness throughout RS. The resulting economic growth will increase his domestic popularity at the expense of the ultra-nationalist parties.  This will enable Dodik to take tougher decisions to implement returns”.  The disadvantage of this policy is that it undermines the status of return as an issue at the very top of the agenda.  Two alternative policies are available but both carry risks.

The first alternative is to suggest to the Banja Luka government that political support from the international community (keeping Sloga in power) will in future depend not only on its sensible management of the economy but also on progress in other areas of the DPA.  The difficulty with this idea is that no politician of any stature in RS stands up for minority returns.  If Dodik is not trying hard enough, it is still difficult to see who will try harder.

The second alternative is to use aid conditionality.  Here the threat is not to remove Dodik himself, but to cut off his vital supplies of foreign subsidy unless more minorities start to return home to RS.  This will be effective only if the truth is that the Banja Luka government is not doing enough simply because it knows it does not have to.  But if the truth is that the Banja Luka government is not powerful enough to enforce its will against hostile mayors who are barons in their own fief, then all that will happen is that the RS economy will collapse, and the resulting chaos would be hard to control.  Western governments, anxious not to have Bosnia back on their TV screens, are not anxious to take the risk.

So, if the alternatives to the prevalent policy are unappetising, then securing modest prosperity for RS seems to be the only way forward.   The current state of the economy gives an opportunity to promote political and economic reintegration with the remainder of Bosnia and Herzegovina and with the wider world.   This is an objective worth securing for its own sake.

The report concludes with suggestions for measures to promote prosperity in RS and its integration into the economy of BiH.

Sarajevo, 5 July 1999

Subscribe to Crisis Group’s Email Updates

Receive the best source of conflict analysis right in your inbox.