The Political Economy of Diaspora Capitalism by ERSTE Foundation

2015–2016

ERSTE Foundation Fellowship for Social Research Diasporas, nation states and mainstream societies in Central and Eastern Europe

The Political Economy of Diaspora Capitalism, diaspora formations and some notes on Bosnia and Herzegovina Boriša Mraović

The Political Economy of Diaspora Capitalism, diaspora formations and some notes on Bosnia and Herzegovina Boriša Mraović* Independent researcher, Sarajevo ERSTE Social research fellowship 2014-2016 Working paper November, 2016 Abstract This paper discusses connections between migration related phenomena and he dynamic of international capitalism. The discussion follows the broader argument concerning the historical and world systemic nature of capitalism. By analysing the phenomena of diaspora, it seeks to contribute to the analysis of the relationships of migration and the international developments in inequality, impoverishment and environmental transition engineered by operations of contemporary capitalism. The analysis explores the ways in which uneven capitalist development influences diaspora formation but also shows how diaspora formations involve particular and complex social-political relationships, based on which the internationality of capitalism is sustained. The case of Bosnia and Herzegovina is used as an attempt to map this broad argument over a particular cases indicative of these process in the 21st century. Keywords: capitalism, international, uneven development, diaspora, migrations

Email: borisa.mraovic@gmail.com

Introduction1 A number of theoretical, empirical and policy efforts emerged since 2000’s under the heading “migration and development”. This wave of “optimism” in studying said relationship, brought by the rediscovery of remittances also brought a new appreciation for the transnational links and flows. However, this optimism “tended to go along with a striking level of amnesia of decades of prior research” which have all collided around an agreement over a “heterogeneous nature of migration-development interactions as well as their contingency on spatial and temporal scales of analysis and more general processes of social and economic change, which should forestall any blanket assertions on migration development interactions“(de Haas, 2007, 49). Kapur (2005) have pointed out the ideological roots of this new focus of attention that fits well into the subjective core of the neoliberal governance turn: individuals as human capitals and self-governing units (Kapur, 2005; cf. Brown, 2015). The empirical fact is that the increasing migration has been a steady feature of the most recent history. Economistic take on theses processes went on to examine the phenomena in a hypothetical space without considering the social reality of economic exchange and thus developed mostly static and essentialist categorical approach (Sinatti & Horst, 2014). Diaspora studies and studies of internationalism, on the other hand, have explored these questions in a much more socially embedded manner, as involving actual groups and communities, and material, symbolic and cultural exchange practices. They had described in detail ways in which diaspora as a connection is sustained socially and politically across the whole range of diaspora formations and geographical configurations (literature is enormous, see for example: Levitt, 1998; Vertovec, 2004; Levitt & Nyberg-Sorensen, 2004; Laguerre, 2006; Brinkerhoff, 2009). Another attempt to deal with these questions has been developing within the critical rapprochement of the idea of migration and development. The primary concern of this approach is to discover connections between the change in patterns and in the character of migration and 2

the dynamic of global economic and political structuring. It argues for a strong theoretical reorientation which understands migration as a historical and multi-determined dependent variable (against being assumed mostly as an independent) deeply entangled with the international forces and relations (Delgado Wise, 2014; Van Hear, 2014; Castles, 2009). In this vain, Castles (2009) argues that it “is mistaken to see migration and development in isolation from wider issues of global power, wealth and inequality” (462). In his view, we need to theorize the way contemporary movement of populations is integrated in the worldwide processes of exchange of goods, informations and symbols and the structuring of ills and benefits of contemporary world: “mobility of people is an integral part of the major changes currently affecting all regions of world. Studying migration separately from this context is likely to lead to mistaken ideas on its potential for enhancing economic, political and social change” (Castles, 2009, 462). Studying this integration requires a theoretical model for explaining how and where exactly connections are established and performed and how do they interact with the forces operative and effective in the international space. It is necessary to specify theoretical connections between the dynamic of migration related formations, the international dynamic of economic and geopolitical forces and their real local effects in the “web of life” of the everyday. Castles (2009) argues for a model that can include “complexity and contradictions“ and develops an argument “built around the central concept of social transformation and the way this is brought about simultaneously in South and North by neo-liberal globalization“(463). My attempt consists of recombining these ideas with propositions and insights of the “worldsystem analysis” and the critical geographical studies of capitalism, which posis existence of a historical-geographical capitalist formation whose forms interpenetrate – more or less, and in a variety of ways – almost the entire world (Vallerstein, 2004, Arrighi, 2010; Harvey, 2006; 2005; Brenner & Theodore, 2005). In systemic perspective, the world economic exchange takes the 3

form of a historical dynamic, sequenced in long cycles of accumulation and determined by relationships between core and periphery, two types of relations of production, distinguished as those capable to monopolize and extract surpluses (core) and those structured by fierce competitiveness (periphery) (Vallerstein, 2004).2 The question is how is migration related to the process of historical development of contemporary capitalism - its governing mechanisms, apparatuses, actors, and rationalities? In a recent study called How the West Came to Rule, Anievas and Nisancioglu (2015) try to demonstrate, through a long historical argument ,how the study of capitalism and its historical development, including the one undertaken within the world-system analysis, has so far mostly failed to develop a satisfactory explanation of the “international” dimension of capitalist history. This is broadly true also for studying the dialectics between migration and development. Diaspora phenomena is a great example to show how trans-state economic and geopolitical dynamics are involved in the creation and recreation of migration related formations. Proper treatment of the questions concerning the nature of international and the dynamic of forces that play out in this field requires what could be described as a critical international political economic analysis: an approach which tries to analyse actual economic relationships between institutions and actors and the way they are integrated within the international-political relations and systemic conditions which distribute stratifications and exploitation increasingly, and in an increasingly complex way, internationally and across social and class lines (cf. Robinson, 2011). Dominant contemporary framing of such systemic processes rests on the assertion that the “ultimate goal of society is simply the increase of national GDP, the production of more and more wealth“(Graeber, 2006, 70).3 My assumption is that diaspora offers a perfect example of how our understanding of development and economics cannot be reduced to “the production of material objects – discrete, self-identical things that one can own“ but have to include the 4

attempt to “understand the (equally material) processes by which people create and shape one another” (Graeber, 2006, 71). In diaspora formations, social ties and imaginaries transcend simple economic function and suggest why it is mistaken to conceptualize their role in development within the neoclassical developmental model. What we call economy does not revolve solely through the market exchange of principally equal actors with the rational objective of generating surplus but also either in a more egalitarian or more hierarchical manner ordered by the social norms and institutions (Graeber, 2011; Polanyi, 1947; Harvey, 2006). Thus, economic phenomena must be understood as being embedded into to the broader dynamic structure of socio-political institutions and relations (Karl Polanyi ([1947] 2001; cf. Basu, 2003). Since quite distant and broad arguments are brought together, the theoretical connections and empirical inferences are only roughly outlined. The paper continues with the short examination of the current sequence of capitalist development and discusses several points of integration between capitalist spread across the planet and the steadily enlarging economic dimension of migration. From this point, it tries to outline ways in which these connections can be theorized as socially embedded within broader dynamic of international flows and relations. Finally, this framework is employed to examine some previous research as well as the interview data collected throughout Bosnia and Herzegovina (BiH) during 2015 regarding the dynamic and significance of diaspora relationships.4 Capitalist world-system and the economics of diaspora In the most general sense, capitalism can be understood as a particular historical mode of production and appropriation of value. In the abstract language of the regulatory school it can be described as comprising of a regime of accumulation and the mode of regulation (Aglietta, 1979 [2015]). Its historical development can be viewed as progressing in sequences distinguished by certain dominant institutional forms but also by systemic invariances such are 5

crises of accumulation, which are part of its cyclic movement and market bubbles (Varoufakis 2011, Harvey 2006, Stiglitz, 2006). According to one opinion, the present sequence is characterized “by the rise of a globally-integrated production and financial system, an emergent transnational capitalist class, and incipient transnational state apparatuses” (Robinson, 2011, 349). Although this is hardly a definitive specification, there is a significant amount of evidence which point to the workings of worldwide forces which shape economic and political developments across countries and regions From the perspective of inequality especially, studies of global trends showed consistent global patterns: first a decrease from 1971 until 1980 and a great and still ongoing increase starting with the global debt-crisis 1981-1982, suggesting certain social-economic lock-in that is operable at the world-wide scale, which suggests how inequality is a global macroeconomic issue which cannot be confronted with national policies (Galbraith, 2007, 2012; Basu, 2005). Such character was enabled and achieved by the historical development of certain institutional arrangements (states, trans-state and interstate formations) and rules of conduct enforced and maintained within international space. Arrighi (2010) analysed the history of world capitalism as long accumulation cycles, each characterized by the dominant geopolitical position of a particular state or block. The world character of the system is in effect the outcome of actions by this particular “hegemon” state or block, which both dominates but also (politically) leads the larger group of state actors. Hegemonic relationships and geopolitical contest then take further shape through the operation of international organizations with different soft and hard powers. Thus, it is important to distinguish how international systemic and institutional conditions sustain and translate international power relations: “In subtle and not-so-subtle ways, big countries bully small countries, big business extorts from powerless consumers, and husbands coerce wives, using as pawns and bringing into exchange (often unobtrusively) goods that in standard economics are assumed to be beyond the reach of the market” (Basu, 2003, 4). 6

The turning phase, out of which current sequence spans, starts in 1971 with the abandonment of the gold standard, capital controls and fixed exchange rates – the dissolution of the so-called Bretton-Woods system regulating the international monetary relations and obligations. In the late 1970’s, after early experiments in South America in Chile, early 1980’s brought Anglophone countries at their “neo-liberal turn”. Soon after this new rationality spread as a governance doctrine throughout the developed west and beyond. A peak of this turn coincided with the opening of China to international markets and unleashing a real-life experimental proof that successful capitalism does not really need democracy. (Brown, 2015; Blyth, 2013; Harvey, 2005; Mirowski & Plehwe, 2009).5 Another turning point was the end of the “actually existing socialisms” in Eastern Europe and the spread of US geopolitical reach and influence followed by the spread of the neoliberal development toolkit.6 In the later part of this sequence, toward the end of 20th century many developing countries, including post-socialist europe were put in front of the strategic choice in regard to development strategies, a choice between protecting local actors from international competition and integrating them into international structure of exchange (Robinson, 2011). Majority accepted the latter route either by being structurally forced or willingly convinced that “there is no alternative”. This meant adopting the so called “Washington consensus” development tool-box as a list of measures which will result in “development” of underdeveloped - pursued also as a catch-all policy by IMF, an institution which played very particular role since late 70’s in diffusing neoliberal governance (Stiglitz, 2006; Blyth 2012; cf. Williamson, 2004). A whole range of processes ensued: proliferation of the liberalization policy (Simmons & Elkins, 2004), deepening privatization, the emergence of “flexible” labour markets, turn to market-driven, outward-oriented policies, but also proliferation of hybrid instruments of financial rendering of value, which largely were responsible for the 2007 meltdown (Varoufakis, 2011; Harvey, 2006; Burgess 2012). 7

The period brought growth in global exports and the enormous increase in direct foreign investments which grew more than hundred times (Lukas, 2008). According to some accounts, diaspora agents were among those which have benefited the most from the deregulation of international economic exchange, especially foreign exchange markets (Cohen, 2008). Certain developments seem supportive of such a view. Since the opening of China toward international markets the country has received over 120 billion in foreign investments and about the same in loans and the Chinese in the diaspora seems to be responsible for very big portions of the total sums involved (Cohen, 2008; Harvey, 2006). Diasporas were also first to re-establish connections after dissolution of the so called “Eastern bloc”. They found themselves in a position to support a creation of links with their home countries and their faster integration in the international regime of exchange. Technological advances in financial markets have speeded up transactions and enabled great „increase in the volume and diversity which make them difficult to track and police“(Cohen, 2008, 143; cf. Kapur, 2001). In many ways, diaspora formations, but also actions through and around them seem to be coevolving with the capitalist developments and technological advancements which in a more general way mean “condensation of time through space” which is a phenomenon experienced more immediately by diaspora relationships (Harvey, 2006; for specific diaspora dimension cf. Lewitt & Rajaram, 2013).Remittances reveal one of the most immediate, easily recorded and most studied consequences of the rise in migratory and diaspora formations and relationships. There was a giant rise in transfers from $31.1 billion in 1990 to $76.8 billion in 2000 and $325 billion in 2010 (de Haas, 2007, World Bank, 2011). They amounted to the twice the size of annual flows of foreign aid and two-thirds the size of foreign direct investment (FDI) (Bhavnani & Peters, 2013). From 2000 to 2007 an average annual growth rate of remittances at the global level was 17.6 percent. In 2008 it has declined significantly for all regions of the world with the growth rate 8

of only 8.77 percent (Graph 1). The lowest rate of growth was recorded in Latin American with a reported growth of only 0.25 percent. On the other hand, a study by Policy Department of the DG for External Policies of the EU finds that remittances continued to play a co-insurance or risk mitigation roles during downturns while sustaining further interconnectedness at the global scale (Kamuleta, 2014). This points to the complex recombination of capitalist and migration related dynamic. Decline in remittances flows to Latin America may be connected connected with the shocks in the housing markets in US, which served as one of the early engines of the ongoing economic crisis (Ruiz & Vargas-Silva, 2009). Another research shows how in the case of Mexico drop of inflow is connected with earlier school dropouts triggered by the structure of labour demand in the US (Campos-Vazquez & Sobarzo, 2012). While remittances may help household budget restraints this suggests how they may also have undesired broader social consequences. On average, economic effects of the decline are unevenly distributed and have greater impact on regions or communities which are more dependent on this inflow for consumer expenditure or health insurance. According to some recent views, remittances may be better analysed not as an „aggregate of choices made by autonomous individuals in response to economic incentives and a limited set of basic natural motivations“, but rather in the context of everyday practices and existing social relations “understood as part of everyday life rather than as the intentional outcomes of choices about ‘doing development“(Page & Mercer, 2012: 14). A closer look suggests how remitting behaviour is fundamentally socially embedded. Findings have shown how remitting is not only partially determined by the income differentials as the neoclassical assumption would hold, but differ in regard to gender and legal status of the migrant, the duration of the time spent abroad, attributes of network structures in the receiving location as well as interpretative frames distributed across different diaspora formations (Holst, Schafer & Schrooten, 2012; McKenzie & Morten, 2009; Singh & Robertson, 2012). 9

At the same time, in broad geographical terms, the sequence brought the new global division of labour where Southern industrial workforce have outgrown that of the North, with almost 80 per cent of the global industrial workforce in 2011 up from 53 per cent in 1980 and 34 per cent in 1950 (ILO, 2011). This transition caused a rapid impoverishment of large proportions of the working populations in the South. Another side of the turn was the enormous concentration of capital and wealth and the sharp rise in global, regional and in-state inequalities (Piketty, 2014; Galbraith, 2012).7 Only from 2006 to 2008, the overall revenue of 100 top corporations rose for over 21 percent, and at the present, 500 top multinational companies operate with the 40 percent of total global income and are dominant agents in financial and productive industries, services and commercial spheres (Delgado Wise, Márquez-Covarrubias & Puentes, 2013; Huws, 2012).8 Patterns of accumulation were profoundly internationalized and in many cases ceased to “depend on a domestic market or internal social reproduction” (Robinson, 2011, 361). In the longer historical perspective changes in the structure and the dynamic of capital accumulation in the past 50 years have slowly divorced concerns over accumulation form concerns over any particular country once they came in the position to move things around both materially and financially. This process was however tied with the capacity of the narrow core, primarily the US economy, to sustain global financial system and recycle surpluses (Stiglitz, 2006; Varoufakis, 2011). The ‘divorce’ was accompanied by the massive movement from south to north but also increases in migration across south particularly toward developed gulf countries. This points to the extent at which human dynamic of transnational exchange revolves in the international space structured by the dynamic induced and supported by actors and forces which may be of the same kind as those that shape global inequalities (cf. Galbratih, 2012). This is where we find our first important connection: international and unequal patterns of accumulation are likely to be the macro factor of migration. Between 1960 and 2010, the share of international migrants living in OECD countries increased from 37 percent to 56 percent 10

(Burgess, 2012). By 2009, about 80 percent of all migrants were from developing countries (UNDP, 2009). At the same time, in 2010, the global “reserve army of labour” comprised some 2.4 billion people. An estimated 942 million of those employed represent a so called “working poor” which live below the US$2 a day poverty line while more than 1.5 billion of employed live in vulnerable conditions (ILO, 2011; Delgado Wise, 2013, Pradella, 2015). By choosing it developmental path fashioned according to the above mentioned “tool-kit”, the states mostly affected have little at their disposal but also little incentives to try to time these forces.9 Second important features of this historical sequence is the change in the structure of labour market regimes in developed economies. Across countries there was a decrease of labour share in national incomes, decline of labour power and the expansion of atypical and low-wage employment in UK, Germany, Italy and elsewhere (ILO & OECD, 2015; Pradella, 2015). Germany, for example, experienced a very sharp rise of low-wage sector which in large parts depends on migrant work, from about 13 percent in the mid-1990 to 20 percent in 2005. In the mid-2000’s migrant workforce in the total employment amounted to around 13.7 percent, with higher percentages in the low-wage sector (Pradella, 2015). Countries such as US, Australia and Canada try to optimize their demand of migrant labour in relation to what is available at the market, and where rising demand exist (Lukas, 2008) however this obviously does not prevent irregular migration which is fairly directly driven by the demand side i.e. by labour needs but also by policies of core dominated countries. This period was accompanied with the expansion of outsourcing/offshoring arrangements as well as the growth of subcontracting services, non-union employment and service industries (Pradella, 2015; Burgess, 2012). Labour-intensive forms of agriculture in EU and United States, but also increasingly skilled sectors, services, and domestic work, became highly dependent on migrant workers, in some fields, such as care labour, especially women (Lukas, 2008).

Such restructuring further underlined the forces of uneven development which seem to operate as international factors of general migratory patterns among various social segments, especially in low skilled manual labour, case work, and mid-level skilled work. Highly skilled, tertiary educated labour force was also strongly affected thus creating a situation conductive to the so called brain drain. This process developed significantly in many countries, sometimes reaching proportions of over 70 and 80 percent outflow reducing the internal stock of knowledge and skills as means of development across whole regions (World Bank, 2011; Kale, Wield & Chataway, 2008; Horvat, 2004). A broad look suggests that major empirical processes involving migration are deeply capitalistdependent. There is a dynamic similarity which points to the co-determining relationship with the dynamic forces of capitalism. Furthermore, if there exist certain international dimension of capitalism it is precisely here that we must look for general answers concerning the dynamic of migration. This is however only one part of what over-determines this dynamic, the other one being the way these macro relationships play out in social reality of diaspora relationships. Entanglement of diaspora economics Diasporas as social-historical formations are created and maintained through complex arrangements. They differ on a number of factors including the origins of the formation, place of formation, historical dynamic of formation, as well as the conditions, expressions and the context of current formation. Diaspora is hardy a clear analytical term (cf. Brubaker, 2005) but in the common understanding the core of the phenomena, common to all particular cases, is a certain enduring individual attachment that is socially performed. This attachment can establish in relation to a locality, a territory, a state or in relation to a belief regarding the shared regional, biological, cultural or historical formation,n which is most usually, but not necessarily, geographically specified (cf. Cohen, 2008). While this may be the individual core of what being diaspora means, it means very little outside of the collective practices which involves some sort 12Â Â

of transnational exchange, either symbolic or material, united by a common reference and (or) a functional relation (Page & Mercer, 2012). Diaspora formations are created as practices of ‘transnationalism from bellow’ which expresses the “human dynamic of transnational ties”. In this sense understanding diaspora means accounting for “what actually happens and what is actually exchanged” (Valenta & Strabac, 2011:163).10 A challenge is to specify the ways global ordering of capitalism and this multi-actor actions work in relation to the capacity of a particular diaspora formation to act, as well as how this ordering works through diaspora.11 A significant determinant of the capacity of diaspora will be of legal and political nature. It will differ if diaspora are formally recognized, formally organized and institutionally supported or if they are excluded populations on the edges of legality. Furthermore, this capacity will be dependent on actions and regulations of regulatory actors i.e. states and other non-state regulators such as international organizations. These relations will establish an environment which will be more or less enabling to a capacity of diaspora to act. In the modern sense, as minorities, diaspora can appear only within the system of territorially bounded entities i.e. states and under certain rules which govern this system. Such space and rules in use will be conductive for certain behaviour and absolutely unfriendly for others. It is this basic structure of the international arena and the operative forces of migration management which in the contemporary conditions create ‘vagabonds’ and ‘tourists’ and determine distribute capabilities across class lines internationally (Van Hear, 2014). Consider two extremes. You are a private financial institutions wishing to invest into high tech business venture in a developing country. Current hegemonic international regime has already developed mechanisms which will help your venture. In ideological terms, your intent is in tune with the general developmental paradigm which sees FDI as a principal tool for bringing development to underdeveloped regions. Institutional conditions are also likely to be supportive at different levels of engagement at both state and interstate level. You may be exempted from 13

profit tax or be directly supported by the government as part of the employment support program. Now, consider the situation in which you are a diaspora led organization dedicated to violent political change in the country you or your ancestors came from. There will be a combined force working against such intentions. In principle, this means how conductivity to certain action will be distributed on a continuum where at one extreme is the absolute supportive environment, middle position would designate a state in which there are neither support nor active opposition while the other extreme represents an absolute opposition to a particular behaviour. As of recently the environment seems to be increasingly conductive. It is often forgotten that, before becoming “agents of development”, diaspora were often „regarded as uniquely privileged” and looked upon with a “considerable jealousy” among both “their dependent kinsmen” but also “the urban elite” (Ballard, 1987, 37). For years, diaspora was an ambivalent group notion, sometimes portrayed as traitors, and sometimes as equals within the confines of the political community (Shaffer, 2003). What is at stake here is a process of change in regard to the public image of diaspora, taking place in many countries. A lot of it is the result of conscious efforts by governments to portray diaspora as important resources and sometimes even as ‘new national heroes’ (Rodriguez, 2002; Nyíri, 2001). We are witnessing a growing and increasingly complex influence that migrants from the developing world are exerting, intentionally or not, on political processes in their countries of origin either through electoral politics, non-electoral civic engagement, or influence on patterns of governance back home (Burgess, 2012). In the recent times, the absence of political cleavages between diaspora and home elites, their engagements in trade and outsourcing of manufacturing, became increasingly recognized and acted upon by state authorities. This is likely what increasingly legitimized diaspora to advance their engagement in a political sphere. Such effects have been observed in many developing countries such as Mexico, the Dominican Republic, El Salvador, the 14

Philippines, Lebanon, Cape Verde, Mali and Myanmar (Simpson, 2013; Burgess, 2012). Here we see an increasing effect of mobilization processes across the 'transnational imagined communities' but also how, under favourable conditions, diaspora can act as a strong collective agent in a very determinate political manner (cf. Sokefeld, 2006). If we look at how actions of different actors developed historically, diaspora groups, informal diaspora networks, organizations, domestic organizations and professional networks were the first to examine the economic potential that these formations can carry. Initial structured efforts in the 90’s developed primarily as bottom-up initiatives, without much help from governments (Larner, 2007; Kapur, 2001). States became increasingly involved post facto, after it was discovered how diaspora played very significant role in developing particular industries as it was the case in electronics in China, Korea or Taiwan (Larner, 2007). Since then an increasing number of states developed measures in order to explore “the role that emigrants can continue to play in the development of their former home countries when they sustain connections both with each other and with fellow nationals who remain in their home countries” (Kapur & McHale, 2007, 311).12 A set of initiatives emerged. A particular attention was given to highly skilled diaspora groups both indirectly through investment in science and research or directly through active mobilization of these groups (Larner, 2007: 337). Legislative and institutional interventions across countries brought significant effects. In countries such as India, China and New Zeeland they brought significant growth in domestic industries13 and brought experiments in integration of scientific expatriates by investing in research development and via direct incentives and subsidies to grant seekers (Larner, 2007, Zweig, 2006). Measures included “active mobilization of expatriates through formal initiatives such as investment conferences, industry and sector – specific web links, creation of expert databases, direct appeals by national leaders, short term visits by academics, mentors and industry 15

specialists, and the explicit targeting of financial, market and technical expertise” (Larner, 2007, 337) but also tools such as “diaspora bonds” used in Israel and India (Ketkar & Ratha, 2007). Much of the innovation became possible through technological development and the evolution of communication channels which opened novel possibilities for joint projects and other collaborative actions especially in specific sectors where the home country knowledge base was either non-existent or outdated (Gribble, 2008). These examples point how diaspora has to be understood as a field of actions spreading across the systemic network of exchange, power and influence enacted through actions of different powerful and less powerful actors. They form as historical constructs and relationships that are ever pressured to balance between the imperative to simultaneously preserve and evolve its substances and shapes. The overall effect of actions (including remittances, investments, political involvement) involved in diaspora formation will be multi-determined by the complex interaction of actors, institutions at different localities but also in a broader way by the dynamic of trans-local forces with real local consequences. Notes on the political economy of Bosnia and Herzegovina’s diaspora Let us now see if this loose framework could be mapped for a better understanding of one particular case. For a long time, BiH has been an emigration country. First significant modern wave of migration came after the annexation of Bosnia by the Austro-Hungarian Empire at the end of 19th after which, approximately 140, 000 persons migrated to the present day Turkey (Hoare, 2008). WWII migration was also significant and during this time diaspora communities formed across USA and South America. Migration patterns, especially from 1960 until late 1980’s, brought primarily low skilled work labour migrating towards Western European countries, predominantly Germany, Austria, and Switzerland but also a lot of irregular migration.

BiH’s relationship with the post-WWII capitalist west developed within socialist Yugoslavia. After a break with Soviet influence in 1948, Yugoslavia entered into a closer relationship with capitalist West. Although county was a founding member of the Non-aligned Movement in 1961, and ideologically closer to the Eastern bloc, in practice, it became dependent on the Western Europe markets, and from 1970’s also on credits from IMF which pushed for first “structural reforms” which in many ways pawed the way for the dissolution of the sui generis mixed model of economic self-governance (Zivkovic, 2015, Petak, 2005). The most recent and numerous wave of migration was a consequence of the war of 1992-1995. During this period over 1.3 million persons from BiH took refuge and migrated across Europe, North America and Australia. Around 40 percent of Bosnian refugees were repatriated. Out of this number, from Germany alone there were around 194,000 returns. After 1999, the return process slowed down. In total, it is estimated that around 449,000 people returned from abroad until the beginning of 2010. Besides return, there was significant emigration of Bosnian refugees from the Western European countries to the USA, Canada and Australia, accounting for around 18% of total refugees (Koning, 2008). For the period 2000-2007 an overall positive net migration is estimated at around 63,000 (UNHCR, 2010). It affected all skill segments of the population including very large percentages of highly skilled work force, researchers, Ms and PhD holders (Uvalic, 2005). According to the census results, the overall demographic effect of war and post-war demographic change is over 800,000 people.14 Most recent emigration trends are not well known but some claim how the numbers are rising constantly and especially in the recent years.15 It increasingly involves young people and highly qualified individuals and tends to build on existing networks. According to the recent estimates, participation rate of young population of migrants is 23.9 percent, with a steady 11 to 12 percent being medical doctors and other medical workers (World Bank, 2013).

Homeland institutional and societal conditions are still mostly viewed and analysed as a transitional, sui generis post-war lockdown where ethnic relations permeate social field and trump questions of the institutional design of economy. Capitalist institutions in BiH are considered as underdeveloped because of the strong capture of state by political groups. This view however, misses the point that BiH only shows a particular variant – no matter how particular – emerging under special conditions that follows general trends of labour power disintegration, accent of neoliberal governance – which is not necessarily a policy orientation of domestic actors but rather international organizations such as IMF and EC – and consequences such as the rise of inequality and the rising wealthy class. Unemployment, continual trade deficit, low competitiveness, exports mainly in primary goods and low skilled labour combined with a strong demand of skilled labour from Germany, especially in care and medical services and high skilled labour from Nordic countries, show how international conditions are structuring relations supportive of further outflow and internal structural weakening, and this is a trend which will likely shape the years to come. Diaspora, institutions and involvement What are sometimes called “weaker states” mostly failed to develop systematic institutional efforts to engage their diaspora despite the strong interest among diaspora groups (Ciumas, 2010; Nurse & Jones 2009; Tung & Lazarova, 2006). BiH is one such case. Despite very large diaspora there are almost no official diaspora engagement policies, nor related legislation and diaspora is also almost completely absent from a myriad of strategic documents (Graafland, 2012; Valenta & Ramet, 2011; Nikolic, Mraovic & Cosic, 2011). There is no formal, goal oriented communication with diaspora and this is especially true for second and third generation of migrants where ties have almost fully eroded (Efendic, Babic & Rebmann, 2014; Nikolic, Mraovic & Cosic, 2011; Graafland, 2012). The communication between institutions and diaspora is sustained mostly through informal and private channels and this seems to be the 18

case for both business and scientific relationships (Nikolic, Mraovic & Cosic, 2011; Efendic, Babic & Rebmann, 2014). There are other policies which indirectly pertain to diaspora formations such as the dual citizenship policies which were found crucial for sustaining diaspora relations and activities (Eastmond, 2006). One institutional actor which offsets such a situation is the Department for Diaspora within the Ministry for Human Rights and Refugees of Bosnia and Herzegovina but its actual impact is very limited (Nikolic, Mraovic & Cosic, 2011). A combination of reasons is behind such a bleak policy void, apart from the mentioned dependent capitalist outlook. These include sensitive ethnic balancing which is primary operating mechanism of BiH's policy making at the state level, but also to a significant degree at the lower levels of government, maps the constituent ethnic image onto the image of diaspora which effectively makes the object of a possible intervention inherently divided. Also, within dominant and very limited developmental paradigm in BiH, there is simply no room for seriously considering acting upon diaspora formation for any kind of more general social benefit. Third, due to the extended precarious state of national economy and deepening deficits there are mostly no funds available to be dedicated to any diaspora focused measure. Indeed, when one looks at national spending on research and development in high value-added industries and in science in general it becomes clear how there is very little that can be done. Finally, since short term gains would most likely be very small or might even be completely absent, there are political disincentives to consider any measures seriously. Among diaspora, the overall dynamic points to the reduced interest in direct political engagement. In terms of voting we see a large decline in diaspora electoral involvement. Figures show drastic fall in voting turnout rates: from 398,000 in 1996 election to 22,338 in 2010, which represents only 5 percent of the 1996 turnout rate. Large decrease followed very soon after first post war elections. From this point on, the turnout in diaspora fluctuates around +/- 20,000. In 19Â Â

a similar vein, voters registration decreased from 458,000 in 1996 to 59,000 in 2002 and to 38,000 in 2012.16 This may be an expression of the changing nature of commitment among both first and second generation diaspora as well as to the continuing bleak homeland situation. Elections in 2014 for the first time brought Diaspora Party to the otherwise very colourful political scene of BiH. Their attempt at taking a portion of political power however, was rather unsuccessful both locally and among potential diaspora constituencies. On the other hand, we see a vital dynamic of exchange that operates beyond formal politicaldemocratic venues. Vast and persistent social relationship sustains BiH diaspora formations: over 57 percent of households who have never migrated participates in diaspora relationships while the portion of those who receive remittances is much lower at around 20 percent (Efendic, Babic & Rebmann, 2014). It is worth mentioning that, although the prevailing idea, among both majority of population and authorities, is that diaspora are still genuine part of the original community (Efendic, Babic & Rebmann, 2014), at same time, in the view of the homeland, it is sometimes viewed as a “problematic part of the community not fully in, but also clearly not out”. This underlines the complex arrangement of social and institutional relations and rationalities involved in diaspora formations. It is against these consideration that a diaspora engagement (or containment) strategy have to be built. In rediscovering diaspora as economic agents, this fact have been consistently disregarded and this have limited the perspective in which we are discussing general economic dimensions of diaspora formations. Some spaces of diaspora economics Economic involvement of diaspora shows out in different areas. The investment potential of BiH diaspora seems to be significant but has very limited impact. According to recent estimates, total savings of BiH diaspora in 2009 are estimated at around 5 billion EUR while the average net saving of a BiH diaspora household abroad is over 8,500 EUR annually. However, only small percentage of BiH diaspora in EU countries keep their savings in BiH (Efendic, Babic & 20

Rebmann, 2015). 30 percent of BiH diaspora would be interested in investing in BiH, but only 6 percent actually invested either directly or through loans for business ventures. What seems to be the most prominent reason for such a state of affairs is the lack of trust in the efficiency of institutions and their overall underdevelopment (Jakobsen & Strabac, 2015; Efendic, Babic & Rebmann, 2014). Also, a number of small and medium sized companies is involved in diaspora mediated access to markets and market connections. It seem that they often operate in semi-regular markets with informal or minimal wages and the non-formal employment or short term contracts on full time arrangements. Some of the companies operate in high value added markets, such as ITC, design, architecture, market research, etc. Low labour costs in these sectors makes them price competitive in foreign markets while cultural ties and quality services makes them competitive in relation to large low-cost high-skilled labour markets such as for example in India. While these are surely important connections they remain small in number and are easily outnumbered by the offer of USA, Canada and EU semi-skilled and skilled outsourcing jobs in different industries and services which have flooded BiH’s labour market in the recent years. In this sense the working of diaspora follow the more general working of the capital, engaged in optimizing expenses and the increase of surpluses. In this sense, although specific diaspora will be involved in the international exchange in a variety of ways, general forces of capitalist exchange will inevitably work as an environment shaping the possibilities and incentives. Remittances seem of a particular importance. The size of remittances relative to the GDP places BiH among leaders at the global level (World Bank, 2011). It is much higher than either FDI or ODA (Table 3). However, estimates based on GDP can tell us very little about the broader effects on well-being and thus remittances expressed in the same way don’t say much about the way diaspora formations are involved in affecting well-being of involved populations.17 They are dominantly personalized transfers, largely among family members. 81 percent is used for 21

current consumption, while the remaining portions goes into personal/household debt financing, land/business investment and saving. It is more likely for a person to be on the receiving end of the remittances flow if he or she is a former migrant. (Efendic, Babic & Rebmann, 2014). Some authors suggest that they are important as mechanism of social support and short-term stabilizers, especially for low-income households and play a significant role of in preventing the depression of the overall BiH economy (Jakobsen & Strabac, 2015). In some cases they provide basic subsistence for those on the edges, increases overall consumption and thus has macroeconomic effects which may also have political consequences expressed as a downward pressure on the possibility of the conflict based on social inequality and instability but it also increases consumption. Efendic, Babic and Rebmann (2014) on the other hand, report no relationship between household income distribution and remittances support from abroad. Some findings suggest how remittances may work as engines of further out migration of qualified and semi-qualified which further endanger human base of the society (Dimova and Wolff, 2009; Oruc, 2012) while others point to the very limited impact on the reduction of inequality and poverty (Efendic, Babic & Rebmann, 2014; Oruc, 2012) which is where we are confronted with international forces. Finaly, a global crunch in remittances, following the economic crisis, also affected flows to BiH (Graph 1) showing that although important in macroeconomic terms reliance of remittances inflow can hardly substitute for the missing long term economic strategy in the face of the international economic volatility.18 Conclusions and further research Changing patterns of migration were and remain a constitutive part of the development of the contemporary international capitalism. Global division of labour and capital-labour relations seem to be structurally related to the role of migrant work and diaspora formation. The question arises how these connections relate to the global trend of rising inequality, and the growth of 22Â Â

populations which are employed but poor, increasingly in the developed West. The answer has to take into account and analyse deepening of asymmetries among countries and within countries, the increase of social inequalities, their cross country, cross-region articulations, as well as the spread labour precariousness based on massive oversupply of labour including structurally unemployable populations which shows how work is far from enough to lift out of poverty and misery – whose mirror image is the global tourist traveling at easy across continents. A roper account of this dynamic requires a recognition of the international as a force on its own and the elaboration of the ways it is determining migratory movements, migration related flows and societal impacts. Diaspora as an economic agent form as part of the general and a specific historical-social development of a particular population, location, region or a larger geopolitical configuration and a process. Once we adopt this perspective, recent global movements caused by violent conflicts as well as the development of contemporary diaspora formations acquires a new quality. This is not to say how there are no, so to say, migratory winners but is to say how majority of migration is also a part of the internationalized structure of the exploitation of labour where large portions of migrants are relegated to a special human category and often denied of all rights. At the same time, precisely due to such development, we are witnessing further hybridization of diaspora such is the one we are witnessing in the existence of the so called Islamic state. A closer look at BiH’s diaspora shows how diaspora relationships are multileveled and how it is hardly possible to specify simple account regarding developmental effects of diaspora because of subtle and complex manner in which diaspora as social ties exist and engage. Although BiH would do much better with better designed institutions which are purposefully working with diaspora, the political outlook does not seem supportive, which means that the agency will be limited to the capacities of diaspora organizing groups and actual homeland-diaspora ties. 23

Further refinement and empirical specifications are needed. Theoretical and historical research should further consider and describe in fine detail the way actions and forces of a transnational dynamic have shaped and are shaping migration and diaspora formations. Refined case studies that provide insight in the way different configurations affect dynamics of diaspora formations would be welcomed, especially those which would study how diaspora formations and particular dynamic plays out simultaneously at different locations. Further possible step would be an attempt at comparative research which would seek to identify institutional-action arrangements which produce different effects across regions and countries. Contemporary conditions are likely to further integrate the developmental paths of migration with the mutations of local-national-international configurations of power and exchange of goods and symbols which form capitalism of the 21st century. This calls for a critical research program capable of providing more integrated and systematic framework for going beyond currently divided perspectives. This may require explicitly embracing the political role that a scientific discussion, especially when studying the domain of migration, which is at the core of global political-economic dynamic, may have. The task becomes critical once we admit that, as most recent developments suggest, migration (and related phenomena) will likely play an increasingly important structural role in future international world. References Aglietta, M. (2015). A Theory of Capitalist Regulation: The US Experience. London/New York: Verso. Anievas, Alexander and Kerem Nisancioglu (2015) How the West Came to Rule: The Geopolitical Origins of Capitalism. Pluto Press. Arrighi, G. (2010). The Long Twentieth Century: Money, Power and the Origins of our Times – New and updated edition. London/New York: Verso.

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Tables and graphs

Table 1: Estimates and confirmed numbers of migrant stock in 15 lead host countries Host country Australia Austria Canada Croatia Denmark Germany Italy Montenegro Netherlands Norway Serbia Slovenia Sweden Switzerland USA Total

Total number and descendants

Born in BiH

50.000 135.406 60.000 381.764 24.000 - 28.000 228.000 40.000 21.849 25.440 - 38.880 16.613 300.000 150.000 80.000 60.000 250.000 - 300.000 1.890.512

32.682 68.894 39.150 189.039 22.401 155.000 29.066 21.849 25.440 13.232 298.835 97.142 57.183 41.654 122.529 1.219.292

BiH nationality only With nationality of the host country 1.400 79.571 28.955 6.733 10.963 152.470 31.972 5.209 2.374 1.709 na 38.836 47.511 34.240 43.547 485.490

24.282 53.090 33.770 na 11.438 75.530 3.642 15.000 11.972 14.904 na 96.744 37.849 25.900 78.982 483.103

The total number of recognized refugees 219 409 143 791 119 1.456 247 15.296 1.239 2.714 200 27.419

Source: MHRR BiH (April 2014). The overview of the BiH’s emigration stock.

Table 2: BiH’s emigrations stock, in 51 country, estimates 2014. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Croatia 381764,00 Serbia 300000,00 USA 270000,00 Germany 228000,00 Slovenia 150000,00 Austria 135406,00 Sweden 80000,00 Switzerland 60000,00 Canada 60000,00 Australia 50000,00 Italy 40000,00 Netherlands 32000,00 Denmark 25000,00 Montenegro 21849,00 Norway 16613,00 France 8174,00 United Kingdom 7500,00 Finland 6044,00 Russian Federation 5700,00 Luxembourg 5400,00 Belgium 5200,00 Czech Republic 2259,00 Spain 1352,00 total 1892261,00 Source: MHRR BiH (April 2014). The overview of the BiH’s emigration stock.

Table 3: GDP, FDI, ODA, Remittances, Bosnia and Herzegovina, 2009 – 2013. BiH GDP FDI FDI as % of GDP ODA ODA as % of GDP Remittances R as % of GDP

2009

2010

2011

2012

2013

24,307,242 358,900 1.48 588,726 2.42 2,091,000 8.60

24,878,693 93,700 0.4 725,225 3.04 2,980,000 11.99

25,772,212 612,100 2.4 888,766 3.43 3.553,200 13.79

25,734,322 992,700 3.8 811,564 3.27 3,555,700 13,82

26,259,163 283,860 1,08 745,600 2.84 3,523,000 13.42

Sources: Agency for Statistics of Bosnia and Herzegovina; Central Bank of Bosnia and Herzegovina; Ministry of Security of Bosnia and Herzegovina; Directorate for Economic planning of Bosnia and Herzegovina; World Bank: http://data.worldbank.org/

Graph 1: Global flow of remittances 1998-2015 in USD Billion 700.000 600.000 500.000 400.000 300.000 200.000 100.000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f

Source: World Bank http://data.worldbank.org/

Graph 2: Remmitances inflow to BiH 1998-2015 in USD Billion 3.000

2.500

2.000

1.500

1.000

500

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f

Source: World Bank http://data.worldbank.org/

Notes 1

This paper is the outcome of the ERSTE Foundation Fellowship for Social Research 2015/2016. Author is extremely grateful to wonderful people in ERSTE Foundation for this great opportunity and invaluable support. In terms of the substance of the article, it reflects a particular time and a position in which I am working as an author and a contributor. My original engagement with diaspora was short lived and lasted some two years from 2010 to 2012. Since them my research have moved to a completely another arena and then to yet another. My return to this field thus became an attempt to bring diaspora concerns closer to my current research interest which is oriented to the critique of political economy and international political economy. Thus, it surely shows a lot of tension and not so much rigor in an attempt to discuss meaningfully these two together. I am thankful to the reviewer whose comments were very helpful. All errors are mine. 2 According to Wallerstein “core–periphery is a relationship of production: there are core-like processes and peripheral processes, and they both exist in all countries. A key element here is monopolization versus competition: the more competitive a product is, the more peripheral it is, because the less money you can make on it. The more monopolized a product is, the more core like it will be, because you can make more money on it. So if given kinds of production spread out to more countries, that’s because they have become less profitable within the original loci of production, not because these countries to which the processes spread are successfully ‘developing.” (Wallerstein in: Schouten, 2008) I am aware of the many critical points raised in regard to this particular theoretical approach and while remaining sympathetic to the general counters of the approach my goal is also to incorporate these critical interventions (cf. Wallerstein 1984/2011, 2004). 3 … „in reality wealth has no meaning except as a medium for the growth and self-realization of human beings“ (Greaber, 2007:70). 4 Through 2015 I have conducted 21 semi structured interviews in 8 cities in BiH (Sarajevo, Tuzla, Banjaluka, Livno, Zenica, Doboj, Mostar, Brčko) with Residents who have direct economic diaspora relationships or are involved in diaspora mediated/run business. Interviews explored existing diaspora relationships they are involved in, how do they affect their lives in both practical and social terms, as well as opinions about the relationship with and the role of BH diaspora as such. 5 A literature on neoliberalism of the present is enormous and it has spread into the popular discourse. On the other hand, there are a lot of signs that its broad spread to many different fields and discussions have lessen its explanatory and analytical power and this requires certain return to the conceptual basics; (cf. Flew, 2014). History and the analysis of its rise, on the other hand, its effects and the contention against it, is a facinating story and only there we may look for deeper understanding of what exactly we are talking about and how this complex configuration came about to become an actual force. 6 Cf. Blyth, Mark (2013) 7 What this turn showed are the “numerous ways in which the monopoly of productive resources by one social class makes freedom impossible for the many and, as a direct by-product, concentrates wealth in the hands of the increasingly few” (Varoufakis 2003, 471). 8 Besides this, recent research have shown how TNCs connect in networks in order to produce concentration of control at the core spaces. This research shows how “globally, top holders are at least in the position to exert considerable control, either formally (e.g., voting in shareholder and board meetings) or via informal negotiations” (Vitali, Glattfelder, and Battiston, 2001). The „global corporate control has a distinct bow-tie shape, with a dominant core of 147 firms radiating out from the middle. Each of these 147 own interlocking stakes of one another and together they control 40% of the wealth in the network. A total of 737 control 80% of it all“. 9 These processes points to the fundamental contradiction of the contemporary capitalist world system expressed as the collision of two different logics of power: the territorial and capitalist logic (Harvey, 2006). 10 Once we assume diaspora as agency, a field of action opens up. International practices of diaspora groups may include an obligation or a good will to support a family or friends, maintain a connection, help a local community, support particular political force or directly engage in the homeland political process. Diaspora will act, or try to act, together or against each other, upon available diaspora relationships toward creating new ones and in order to model and influence these relationships toward more or less explicit goals. Actors, such as states but also international actors, organizations, foundations etc. can seek to manage, institutionalize, regulate or provide framework for these flows with differing objectives, at macroeconomic level in terms of growth, investments, savings, employment, “human capital” development or for the purpose of disciplining diaspora into particular roles (cf. Rodriguez, 2002) or for the purpose of political stability or security. Corporations and multinationals or small companies, midsized firms, family business, etc. can pursue goals of using transnational flows for profit making activities. 11 As polities diasporas are “sustained by the political and organizational infrastructures of the sending and receiving countries” (Laguerre 2006, xi).

States can get engaged in different ways. Laguerre (2006) distinguishes five ways: the reincorporation model, the ethnic model, the economic model, the model of political opposition, and the transnational model. Brinkerhoff (2012) specified five possible “government-enabling” roles: mandating, facilitating, resourcing, partnering, and endorsing. So, capable and more interested governments can take some active measures and seek to directly engage or feed upon diaspora in efforts to support economy growth, trade opportunities or other “soft” transfers in terms of expertise in education, technology and the like. Formal state involvement can grows as a clear international matter such as “when they are interpellated or forced to do so by the receiving country. A state may get involved at the international level for the sake of its own reputation when asked to prohibit its citizens from illegally entering the receiving state.” (Laguerre 2006: 50, my emphasis).12 13 In pharmaceutical industry since 1970’s, India managed to increase their domestic supply capacity by 50 to 60 percent and managed to attract Indian pharmaceutical engineers residing in the US which boosted their productivity (Kale et al., 2008) 14 Cf. http://www.popis2013.ba/ 15 New migration both in and from BiH is poorly recorded and reliable statistics are mostly missing. Media have recently reported that according to some estimates around 60,000 people left the country in the past 12 months. 16 Electoral data available at: https://izbori.ba/Default.aspx?CategoryID=418&Lang=3 17 Here we may look for one possible reason behind the political and social instability in recent years epitomized in the big wave of protests which erupted in February 2014 (Arsenijevic, 2014). 18 According to the International Monetary Fund (IMF) interpretation, remittances are recorded in three different sections of the balance of payments: Compensations of employees are the gross earnings of workers residing abroad for less than 12 months, including the value of in-kind benefits (in the current account, subcategory “income”, item code 2310). Workers’ remittances are the value of monetary transfers sent home from workers residing abroad for more than one year (in the current account, subcategory “current transfers”, item code 2391). Migrants’ transfers represent the net wealth of migrants who move from one country of employment to another (in the capital account, subcategory “capital transfers”, item code 2431).