Europeanisation and conflict networks: private sector development in post-conflict Bosnia–Herzegovina

Abstract

Focusing on conflict legacy, this article contributes to the study of domestic mediating conditions as an explanation of "shallow Europeanisation" in the Western Balkans, defined as a disconnect between European rules and local practices. It critiques the prevalent neoWeberian understanding of state capacity, which highlights rule-enforcement capability of state institutions, but reduces conflict legacy to a question of resources. The article argues that a relational approach to state capacity which attributes its strength to enduring ties among state and non-state actors better captures the challenge to European Union (EU)-driven domestic transformation in a post-conflict context. A case study of the Hercegovina Holding is used to unravel a Bosnian Croat network originating during the 1992-1995 Bosnian war. The empirical evidence of the network's operation illustrates how key EU benchmarks for private sector development can be undermined, making a case for a more rigorous conceptualisation of conflict legacy as a domestic constraint on the EU's leverage.

How Peace Agreements Undermine the Rule of Law in New War Settings

“…Again, Bosnia represents an illuminating example. Annual reports on the Stabilisation and Accession Process (SAP) show that Bosnia has been slow to advance sales of state‐owned property, that there exist significant barriers to private sector development, that there are significant weaknesses in banking sector supervision, competition rules and antitrust legislation (Bojiic‐Dzelilovic & Kostovicova, , pp. 19–35).…”

“…Bojicic‐Dzelilovic and Kostovicova use the example of Hercegovina Holdings to demonstrate how entrenched predatory networks obstruct legal reforms (Bojiicic‐Dzelilovic and Kostovicova, ). Herzegovina Holdings is a business structure erected around the dealings of the Hercegovacka bank, which was largely controlled by the HVO, the Bosnian Croat armed group.…”

“…Many of those involved in Hercegovina Holdings have been able to hold on to their gains and the story is illustrative of similar networks among other ethnic groups. The result, Bojicic‐Dzelilovic and Kostovicova suggest is an arbitrary and unstable legal order in which the state's enforcement capacity is ‘deliberately undermined rather than being the consequence of deficient expertise and organisational weakness of designated institutions’ (Bojicic‐Dzelilovic & Kostovicova, ).…”

“…The resulting investigation revealed how a range of operations, including tax evasion, loans to privileged customers, bail‐outs and money laundering contributed to the personal enrichment of the Bosnian Croat elite. Bojicic‐Dzelilovic and Kostovicova argue that the ‘elevation of their social status and power was inextricable from their political role as “protectors” of Bosnian Croat interests’ (Bojicic‐Dzelilovic & Kostovicova, ). Many of those involved in Hercegovina Holdings have been able to hold on to their gains and the story is illustrative of similar networks among other ethnic groups.…”

Informality, Inequality and Social Reintegration in Post-War Transition

“…Reports in the local media frequently feature cases that illustrate privileged access to bank loans, particularly in the two majority state-owned banks in Bosnia-Herzegovina's two entities, granted to individuals close to elite groups, or who have privileged access to business contracts. Despite significant progress in business environment reforms that served to reduce the red tape, thereby narrowing opportunities for the abuse of rules and regulations, the system of bypassing the rules through personal connections holds firmly in place (Bojicic-Dzelilovic & Kostovicova, 2013). This kind of arbitrary system is seen right down to the most commonplace of transactions, where access to credit backed by suspect collateral 9 or securing preferred premises to start up a business (or access to healthcare, a secure place at the university and so on) is often mediated through personal channels and involves some sort of rule non-compliance.…”