Corruption and Governance

All of the countries in the region need to urgently address underlying issues of governance and corruption. The persistence of these problems explains the attraction of EU reforms and the disappointment in their lack of effectiveness in Croatia. In each country that we visited there is the sense that the political elite have no incentive to change a system that benefits them.

In Croatia, a constricted press, entrenched bureaucracy, and a slow judicial system that lacks independence have left the country “in a state of chaos,” according to one opposition leader. “In the current political coalition, you cannot differentiate what is a personal and what is a professional relationship between politicians and judges,” laments this opposition politician. A civil society leader echoes that sentiment, saying, “The legal system is full of loopholes and flaws,” with judges often elected based on political ties. The civil society leader pointed to the case of Ivo Sanader, the former prime minister of Croatia, who was convicted of corruption and yet released after only two-and-a-half years of a ten-year sentence.[i] The head judge in the case against Sanader was observed drinking coffee with the secretary of Sanader’s party, the Croatian Democratic Union (HDZ), yet did not see an issue with this meeting. This system underscores the public’s lack of faith in privatization: they see any further sales of government assets as likely to benefit only corrupt politicians and businesspeople.

Serbia faces an entrenched ruling elite and a restrictive media environment, with the added challenge of Russia using Serbia and the Republika Srpska to maintain both regional influence and leverage in Western Europe. “The people are afraid of changes, especially the political elite,” says one civil society activist. “The tycoons do not want change to happen because they are in control and can continue to personally benefit from the chaotic economic and socio-political situation.” The government’s strategy, says one opposition leader, is “to marginalize crucial issues in Serbia so they can remain in power.” One representative from a major international company pointed to the problem of corruption: “We are losing deals because of corruption even though we might offer a better price, product, and terms. We can complain but the government does not care . . . wherever there is public involvement, there is corruption.”

Both BiH and Kosovo are hampered by the inability to make laws, let alone enforce them. To amend the constitution in Kosovo requires a two-thirds majority of the mandated twenty seats held by minorities in parliament, half of which are held by Serbs “and influenced by Belgrade,” according to a Kosovo NGO.

In BiH, the structure of the Dayton Accords allows Republika Srpska to hold the federation of Bosnia and Herzegovina hostage. The city of Mostar, home to some of the most intense fighting between Croats and Bosniaks during the war, has not held elections since 2008, reflecting deep concerns that voting would unleash renewed conflict. “I fear certain developments can quickly turn negative and we have to understand that we are at a turning point and that a lack of readiness will be our downfall,” says a high-ranking official.

However, to blame the Dayton Accords is to ignore the disincentives for those in power to relinquish the seats that provide money and influence. “There is no political leadership in BiH and no progress or development in the country while those in power are benefiting from the status quo,” says one former official. “It’s a lucrative business to be the one in power,” echoes one U.S. official, “The issue with reforms is that they know what happened in Croatia—the prime minister was jailed as the last part of Croatia’s EU negotiation process.”

Corruption is one of the world’s trickiest issues to stamp out. Yet some of our interviewees offered ideas that might help shift the power balance. One option is to create alternate power sources. BiH, whose economy is stagnant and often corrupt, is currently ruled primarily by the SDA party and few other political parties can compete. Bolstering competition in the political arena would be one way of holding politicians accountable. In addition, one businessman suggests that business has the power to address stagnation in the political sphere. By bringing steady and improving wages to the region, particularly through IT development, this entrepreneur argues that an emerging middle and professional class will help “unlock” the political realm.

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[i] Former Croatian Prime Minister Ivo Sanader sentenced to 10 years in prison; Croatia jails ex-PM Sanader for 10 years over graft. (2012, November 20). Retrieved February 16, 2017, from http://www.reuters.com/article/us-croatia-sanader-idUSBRE8AJ0FV20121120

Photo Credit: Free at last? Former Croatian Prime Minister Ivo Sanader leaves prison following a much-reduced sentence. (Borna Filić/PIXSELL)

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