EARLY WARNING SYSTEM 2009 by UNDP in BiH

Early Warning System 2009

The UNDP is the global development network of the UN, an organisation advocating for change and connecting countries through knowledge, experience and resources to help people build a better life. The UNDP is on the ground in 166 countries, working with them on their own solutions to global and national development challenges. As these countries develop their local capacity they can draw upon the people of the UNDP and its wide range of partners.

Supervisor: Armin SIRČO Project Manager & Editor: Nicola NIXON Project Associate: Mersiha ĆURČIĆ Reviewed by: Yuri AFANASIEV, UN Resident Coordinator; Peter Van RUYSSEVELDT, Deputy Resident Representative; Armin SIRČO, Assistant Resident Representative; Amna BERBIĆ, Human Security and Justice Cluster Coordinator; Asja ČENGIĆ, Communications Analyst; Klelija BALTA, Democratic Governance Cluster Coordinator a.i./Gender Advisor; Lucia DESIGIS, Programme Analyst; Marta NOVOVIĆ-MLINARIĆ, Communications Associate Team Leader: Adnan EFENDIĆ Authors: Dina DURAKOVIĆ, Adnan EFENDIĆ, Aleksandar DRAGANIĆ, Eldar SARAJLIĆ, Edin ŠABANOVIĆ and Igor PALANDŽIĆ Translation: Desmond MAURER Cover design: Vedran MUJAGIĆ DTP & layout: Lana NOGO

ISSN: 1986-5678

The views expressed in this report are those of the authors and do not necessarily reflect the views of the United Nations Development Programme.

Early Warning System 2009

Foreword With 2009 closed behind us and the Early Warning System (EWS) finishing its ninth year of monitoring public opinion in the key areas of politics, economy, social security, ethnic relations and public safety, the UNDP is struck by the degree to which the situation has remained virtually unchanged, although not for the better, over the past several years. The list of the most important current issues and problems remains as it was and includes the following: - a lack of improvement in the process of EU integration and the slow implementation of the various associated reforms; - continued failure to revise the post-Dayton institutional arrangement in such a way that would be acceptable to the representatives of three constitutive peoples, while at the same time guaranteeing political and institutional stability through effective government; - the lack of sound economic policies aimed at encouraging stronger economic growth and development. The forewords to both the 2008 and 2007 annual reports highlighted the extent to which the political situation and institutional improvements in the country had benefited from an economic cushion, over recent years; however, at the same time, it warned that this could not be expected to remain the case for much longer. The situation is now clearly different, especially given the impact of the global financial crisis during 2009. Throughout the year the structural incapacity of the political system in Bosnia and Herzegovina to deal with the economic crisis became increasingly evident. We entered 2010 following a year that was also characterised by failed or stalled political negotiations and a distinct lack of progress on the road to the European Union. With an October election on the horizon, it is unlikely that any significant improvement in these areas will occur.

Yuri Afanasiev UN Resident Coordinator in Bosnia and Herzegovina

Early Warning System 2009

Executive Summary The year 2009 will be remembered as one in which many problems affected different areas of life. This did not just affect Bosnia and Herzegovina (BiH) at the local level of, which is monitored directly by the Early Warning System reports, but also to a very great extent in terms of the country's regional and the global context. This report provides explicit evidence that the country passed through a recessionary phase in its economic development, encountered a series of political and institutional obstacles that hindered accelerated progress towards the European Union and the NATO alliance and experienced a whole series of events related to the problems of social discontent, social exclusion, nationalist political intolerance and a general deterioration in public and personal safety. Given the nature of the general situation in BiH during 2009 it is no surprise that overall the Stability Index for BiH (Graph 1) has fallen, continuing a trend that has been present for the last three surveys.

Graph 1: The Stability Index for BiH1 The Stability Index for Bosnia and Herzegovina 110

100

Stability Index for Bosnia and Herzegovina

96.72 103.39 104.92 100 101.56 95.38101.61 100 100 101.59 100 98.44 100 98.41 100 101.61 96.83 101.64 101.61 96.83 98.36 96.67 103.45 101.67 98.36 101.67101.64 98.39 96.72 96.61 103.51 100 101.69 100 98.33 Chain index Composite index 61 59 61 64 64 65 62 63 63 63 64 64 63 63 62 62 63 61 62 63 61 60 58 60 61 60 61 62 61 59 57 59 59 60 60 59

The two components of the general Stability Index were recorded as being depressed in the November 2009 poll, which was also the case with all of the sub-indices that were monitored in this report, including those for economic, inter-ethnic, social and political stability. In other words none of the areas analysed in this report saw progress during 2009, which is worrying in itself. One might cite a number of reasons for this situation for each individual area under observation, but there are also a large number of factors that are endogenously interwoven in more than one area at the same time. One of the basic aims of this report is to identify systemic problems in BiH and to provide early warning to stakeholders in each of the areas covered by the analyses. Accordingly, in the following

1 Source:

research opinion poll conducted by Prism Research for this project in November 2009. 4

Early Warning System 2009 text a brief summary of the key findings from the various sections is provided, with more detail available in the individual sections. The first section reviews the political environment in BiH. On the basis of the results of the public opinion poll, held in November, it has been concluded that there have been very few positive developments in BiH in terms of political life and in how the domestic political process is unfolding (I. POLITICAL STABILITY). In actual fact the opposite is the case as the political crisis has deepened further. As a result of these events BiH has fallen even further behind the other countries in the region, which is confirmed by the fact that BiH is significantly behind the other former Yugoslav states with regard to the process of Euro-Atlantic integration. The political crisis is largely the result of an absence of even a minimum level of political consensus over the future of the state. Unfortunately, given the way in which the polity of BiH was conceived, the question of responsibility for the current situation has become a very complex problem with multiple dimensions. To cap a series of political problems, the perception of confidence in government institutions reached dramatic proportions in 2009 (II. CONFIDENCE IN GOVERNMENT INSTITUTIONS). This may well be a consequence of the situation in the political scene, as described above, and also of the general absence of or weakness in the institutional mechanisms that should be used to mitigate the negative impact of certain political activities. The results of the poll also revealed differences in the views held by the respondents of different ethnicities and how they rated the performance of government and the international institutions. Unfortunately, it would appear that these differences are increasing, in line with the views of the respective political elites. This divergence of opinion is an indicator of deep political and institutional as well as social crisis where the main form of identification would still appear to be nationality. Moving on to the economic environment in BiH, the first thing worth noting is that the global financial and economic crisis did not spare the local economy over the past year (III. ECONOMIC SITUATION IN BiH). Consequently, industrial production fell by 12% in the Federation of Bosnia and Herzegovina (FBiH) during the first eleven months of 2009, while, somewhat unexpectedly, rising by 18% in Republika Srpska (RS)2. The rather high value of the index for the oil producing sector, thanks to production starting at the Bosanski Brod refinery, throws considerable light on the reasons for the disproportional results in RS when compared to the FBiH. While the trends of the Index of Industrial Production differed by entity, unemployment rose in both of the entities of BiH. Compared to 2008 the figure grew by 23,000 people (approximately 5 %)3. It is interesting that unemployment grew more in RS (6.3 %) than in the FBiH (2.7 %) during the first ten months of 20094. Retail prices in BiH fell moderately in both entities when compared to the same period in 2008, which is one of the signs of recession5. In the monetary field, the Central Bank of BiH reported a fall in foreign currency reserves during both 2008 and the first six months of 2009. However, during the second half of 2009 there was a moderate rise in their level, which is a positive sign.

Federal Statistics Office Mjesečni statistički pregled No. 12, Year XIII, December 2009; Republika Srpska Statistics Office Mjesečno saopštenje No. 219/09: Indeksi industrijske proizvodnje December 2009. BiH Statistics Agency Statement: Registrirana nezaposlenost u Oktobru 2009, No. 10, Year III; Federal Statistics Office Mjesečni statistički pregled broj 12, Year XIII, December 2009; Republika Srpska Statistics Office (www.zzrs.org), December 2009. Statistics Agency of BiH Statement: Registrirana nezaposlenost u Oktobru 2009, No. 10, Year III; Federal Statistics Office Mjesečni statistički pregled broj 12, Year XIII, December 2009; Republika Srpska Statistics Office (www.zzrs.org), December 2009. Data for BiH: Statistics Agency of BiH Statement: Indeks potrošačkih cijena u BiH u oktobru 2009, Year III, No. 11.

Early Warning System 2009

The November poll, looking at how the public viewed the economic situation over the past year, saw the highest percentage of the sample describing the economic situation as having deteriorated. Nearly 50% of the sample said that the economic situation has deteriorated, which appears to be an accurate reflection of the actual conditions and the trends shown by the official indicators. Whereas the public opinion poll suggests that the general public of BiH has a very poor opinion of the current economic situation, a survey of the business sector, carried out at the same time, showed a very different response to the situation (IV. THE BUSINESS ENVIRONMENT IN BiH). In fact, the November poll showed a significant positive turnaround in terms of the assessment of the economic situation in comparison to the year before. However, while the answers received suggest that the economic situation in BiH has improved this should be interpreted as the business sector saying that the situation is better than in 2008, but certainly not that there has been any major improvement in the economy. Therefore, if exactly a year ago the greatest deterioration in economic confidence in recent years was noted then this turnaround is a sign that there has been some improvement in the eyes of the business sector. More simply, as suggested by certain official indicators (e.g., the condition of the foreign currency reserves of the Central Bank of BiH), perhaps the worst of the recession in BiH has passed. Despite the fact that most businesses described the economic situation as better6 the survey noted a sharp rise in the level of corporate debt. It was assumed that during the recession that gripped the BiH economy in 2008 and 2009 many companies decided to increase their level of debt in order to overcome the stagnation. Given such a course of events it is no surprise that the percentage of business people who said they had made a loss was up on the previous year. In the section that analyses income and the social welfare system in BiH the data presented continues to illustrate the very poor socio-economic circumstances of the average household in BiH (V. INCOME AND SOCIAL WELFARE). Whereas official statistical data does not show a fall in living standards or purchasing power the results received through the poll show a clear reduction in spending within the framework of the household budget. The proportion of the household budget allocated for food has increased, which has left insufficient room for the other needs to be met. The number of households in BiH living on an income of less than 500 BAM monthly has increased7. The reasons for these trends may well lie among the consequences of the economic crisis: job losses may have reduced the income of individual household members along with lower salaries in certain areas or branches of industry and a reduction in pensions and benefit payments for certain categories of the population. The economic crisis, in addition to its impact on the quality of life and living standards, has left its mark on expectations. The number of individuals who expect their household income to fall over the coming six months has increased, while 15 % of those in employment thought that they might lose their job over the subsequent three months8. The current situation and an uncertain future have increased the number of respondents who would support public protests, strikes and demonstrations. The situation is particularly worrying in the FBiH, where almost two-thirds of respondents stated that they would take such action. At the policy level social inclusion still does not appear to be very high on the agenda of many government representatives, in spite of the fact that more than half of the general population consider themselves as socially excluded on some grounds (VI. SOCIAL INCLUSION). This impression received confirmation through the fact that work on the Social Inclusion Strategy for Bosnia and Herzegovina has already been ongoing for two years. Limitations in the implementation of documents that have been adopted may also be stressed, such as the BiH Strategy for Inclusion of the Romany and the Disability Policy of BiH.

The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009. Public opinion poll conducted by Prism Research in November 2009. 6

Early Warning System 2009 The public opinion poll conducted in November 2009 showed no major changes with regard to perceptions of social exclusion, although the economic crisis has increased the number of people excluded on the basis of unemployment. The current unemployment insurance system allows for benefit payments to only 2% of the unemployed, while the basic role of the employment bureau has been reduced to securing the right to healthcare. Generally speaking, the economic situation is worse in rural than in urban areas, as a result of low and irregular income, the unregulated employment status of people working in agriculture and the current pension and disability insurance policy. The situation is similar when the sample is examined from a gender perspective, where the levels of cash income favour men and other disparities can be found in the enjoyment of legally guaranteed employment-related rights. The failure of these policies to provide enough support for a decent standard of living is most likely a contributing factor behind the desire of nearly two-thirds of the population aged between 18 and 35 to leave the country. On the basis of the survey results, it appears that perceived inequality, based on being of an ethnic minority, in certain areas of BiH is 'partly' responsible for denying certain groups equal participation in formal institutions and other spheres of public life. The indicators for the last reporting period suggest that relations between the various ethnic groups in BiH have deteriorated moderately (VII. ETHNIC RELATIONS AND STABILITY). The Interethnic Stability Index is down on the previous reporting period. The worsening political situation in the country and the long-standing failure of political negotiations between the ethnic leaders, principally on constitutional change, may be perceived as having contributed to this fall. The poll conducted in November also showed a fall in the level of support for refugee return and an increase in concern that war might break out again were EUFOR to withdraw, as well as an increase in ethnic distance (particularly between Croat and Bosniak respondents). On the other hand, there was also a modest increase in the willingness, based on better job prospects, to move to a town where another ethnicity was in the majority. This was particularly marked amongst the younger generation, most likely due to the burning problem of youth unemployment. In terms of their support for nationalist political platforms, overall, it appears that, according to the poll, people do not believe that the ethnic nationalist parties are the answer to their political problems, as has been the trend for some time. Bosniak respondents in particular appear to be disappointed by their ethnic political representatives. However, support for the main ethnic parties of Serb or Croat affiliation was somewhat stronger, as can be seen from the continued support of Croat respondents for the HDZ and the support of Serb respondents for the SNSD9. Yet in the poll results most people seemed largely apolitical, at least with regard to support for political parties. A certain number of respondents either expressed no desire to vote or were unsure as to which of the parties on offer to give their vote. As a result of poor political relations in BiH the people's identification with both their ethnic community and the State may have declined to some degree. This is mostly true of the Bosniaks respondents, whose level of pride in both their ethnicity and the State has fallen more significantly during the recent reporting period than has been the case for those who identified themselves as Serb or Croat respondents. Finally, concerns over public and personal safety in BiH are increasing as is evident from the downward trend of the Security Stability Index (VIII. PUBLIC AND PERSONAL SECURITY). The reasons behind this modest fall can be attributed to the recorded increase in break-ins at privately owned buildings as well as the number of serious crimes in both entities of BiH, namely murder. Public attitudes are most likely still influenced by last year's debates over public safety and a number of unfortunate events that involved minors. In addition to the poor general sense of public safety, as reflected in the poll results, public perception in this regard may well have been influenced by the effects of the global financial crisis. This is also likely to be connected to the prospect of social unrest and dissatisfaction among certain categories of the population with state and entity government economic policy.

SPublic opinion poll conducted by Prism Research in November 2009. See Chapter 4, Graph 2 â&#x20AC;&#x153;The number of people who expect their income to decreaseâ&#x20AC;?. Public opinion poll conducted by Prism Research in November 2009. 7

Early Warning System 2009 The data, in this regard, shows that the social and financial causes of public dissatisfaction that are likely to cause public unrest are more important, at least to a certain degree, than the political, namely ethnic, factors which are normally considered as playing the dominant role within BiH society. The percentage of the public who would take to the streets over their national rights was considerably smaller than the percentage that would do so over job losses. The data from the reporting period thus suggests the primacy for the individual of social/financial status over ethnic/national rights in BiH. Similarly, there is interesting data which indicates that the age group most ready to protest is for those between 36 and 50 years of age; one might have expected, as a general principle, that the younger generation would generally be more prepared to resort to such public expressions of discontent. While the rates for almost all categories of criminal activity were up in the FBiH there was actually less dissatisfaction with the level of police assistance received. In RS, on the contrary, there has been a significant change in public disapproval of special police actions. Similarly, more than half of the sample said that they thought corruption was a factor in the police force, which has had a considerable impact on the overall perception of the police's role in society. This, at least in part, reflects the political context in which the police operate; the force's approval rating is higher in RS than in the FBiH, in spite of the high level of dissatisfaction with the actual police assistance received in RS and of the level of perceived corruption within the force. Like the police, the courts' public approval rating is also in decline. Following the key findings of the previous summary it may be imagined that the life satisfaction of respondents could be affected by many of the social, economic, political and other problems discussed in the report. In the last poll we included a question that asked respondents about their life satisfaction; a question that was replicated from the European Quality of Life Survey (EQLS). According to the results of the EQLS, residents of the EU are generally satisfied and happy with their lives10 and report their life satisfaction to be at an average of 7 out of 10. Yet the situation in BiH is quite different; the average value of life satisfaction was only 5.6 out of 10. If this result is compared with the EQLS survey then BiH sits towards the bottom of the list of EU member states and EU candidate countries. In the EQLS the lowest scores were obtained in Bulgaria (5.0), Macedonia (5.2) and Hungary (5.6), while the highest level of life satisfaction was evident in Denmark at 8.5. Yet it cannot be said that the situation in BiH is necessarily worse than in other countries in South East Europe, especially having in mind that life satisfaction in BiH appears to be the same as in Hungary and slightly â&#x20AC;&#x153;betterâ&#x20AC;? than in Bulgaria and Macedonia. All in all, many problems discussed in this report most likely impact negatively upon the broader life satisfaction of BiH citizens.

European Foundation for the Improvement of Living and Working Conditions (2006): Second European Quality of Life Survey, first findings, p. 2. 8

Contents Foreword.......................................................................................................................................................................................

Executive Summary ..................................................................................................................................................................

Contents .......................................................................................................................................................................................

Key Indicators for BiH ............................................................................................................................................................... 11 I.

Political Stability ................................................................................................................................................................. 14 1.

The Political Stability Index ....................................................................................................................................... 15

The Reporting Period at a Glance ........................................................................................................................... 16

3. Public Pessimism at a Dramatic Level .................................................................................................................... 18 4. Support for the European Integration Process is High .................................................................................. 20 5. More than Half will Not Vote for the Current Political Parties .................................................................... 21 6. Conclusion ...................................................................................................................................................................... 23 II

Confidence in Government Institutions ...................................................................................................................... 24 1. The Reporting Period at a Glance ....................................................................................................................... 25 2. Different Ethnic Groups' Confidence in Institutions Vary Greatly ........................................................... 27 3. Support is Up for the Office of the High Representative ............................................................................ 29 4. Conclusion ...................................................................................................................................................................... 31

III. The Economic Situation in BiH ........................................................................................................................................ 32 1. The Economic Stability Index Falls .......................................................................................................................... 33 2. Results for Industrial Production Differ by Entity .............................................................................................. 34 3. Increased Unemployment Still a Major Macroeconomic Problem ............................................................. 36 4. Retail Prices and Central Bank Foreign Currency Reserves both Modestly Down.............................. 37 5. Balance of Foreign Trade Moderately Improved .............................................................................................. 40 6. Public Opinion on the Economic Situation further Worsens ........................................................................ 42 7. Conclusion ...................................................................................................................................................................... 44 IV. The Business Environment in BiH ................................................................................................................................. 45 1. The Economic Situation in 2009 Better than the Previous Year ................................................................. 46 2. Increase in Bosnian and Herzegovinian Company Debt ............................................................................... 48 3. Institutional Problems Hinder Business Sector Development ..................................................................... 50 4. Domestic Institutions Cause High Direct and Indirect Costs ........................................................................ 52 5. Conclusion ....................................................................................................................................................................... 56 V. Income and Social Welfare ................................................................................................................................................ 57 1. The Social Stability Index for Bosnia and Herzegovina ................................................................................. 58 2. Number of Low-income Households Increasing .............................................................................................. 61 3. Crisis affects Public Expectations ........................................................................................................................... 63 4. Purchasing Power and Living Standards in Moderate Decline .................................................................... 67 9

Contents 5. Minimum Living Standards and Social Protection Require more Attention .......................................... 71 6. Conclusion ................................................................................................................................................................... 73 VI. Social Inclusion .................................................................................................................................................................. 74 1. Social Inclusion: How High is it on the Governmentâ&#x20AC;&#x2122;s Agenda?................................................................... 75 2. At the Last Count, more than Half the Population were Socially Excluded.......................................... 77 3. Social Inclusion and Ethnic Division ................................................................................................................... 81 4. Consociational Democracy: Cause or Consequence of Social Exclusion ................................................ 84 5. Conclusion ..................................................................................................................................................................... 87 VII. Ethnic Relations and Stability .......................................................................................................................................... 88 1. The Interethnic Stability Index and the Political Context in Bosnia and Herzegovina ....................... 89 2. Ethnic Division and Discrimination on the Rise ............................................................................................. 91 3. Declining Support for Refugee Return ............................................................................................................... 93 4. Social Distance: Party Politics and the Ethnic Affect .................................................................................... 95 5. Ethnic Pride and the State of Bosnia and Herzegovina ............................................................................... 99 6. Conclusion .................................................................................................................................................................... 101 VIII.Public and Personal Security ......................................................................................................................................... 102 1. The Security Stability Index: a Gentle but Steady Fall ................................................................................... 103 2. Collective Security: what after EUFOR?................................................................................................................ 105 3. The Global Economic Crisis and the Potential for Social Unrest .................................................................. 107 4. Personal Safety and Criminal Activity.................................................................................................................... 109 5. Confidence and Perceived Corruption within the Police and Judiciary ................................................. 112 6. Conclusion ..................................................................................................................................................................... 114 Special Insert on the Environment ..................................................................................................................................... 115

Key Indicators for BiH No. who expect household income to contract (in %)

Number of low income households (in %)

25.0

100.0 86.3

90.0 80.0 70.0 60.0

71.4

66.5

21.63

20.40

20.0

18.77 13.62

14.24

15.0

11.53

59.4 10.0

47.0

50.0

37.638.6

38.1

40.0

10.80

10.53 Urban

5.00

Rural

28.1

30.0 20.0

FBiH RS Brčko District

10.0

0.00 Nov 07

Jun 08

Nov 08

Nov 09

0.0 Sept 08

Nov 08

Nov 09

Do you think the High Representative’s powers should be reduced, in creased, or stay the same?

No. of people who think they may lose their job during next three months (in %)

100.0 90.0 80.0 70.0 60.0

17.09 FBiH 15.41

74% 61%

50.0 40.0

RS Nov 09 Nov 08

22.28

0.00

10.00

33%

30.0 20.0

12.91

20.00

18%

19%

10.0

25% 24%

22%

Reduced Increased Stay the same DK/NA

0.0 Bosniak majority

Croat majority

Serb majority

30.00

Central Bank Bosnia and Herzegovina Foreign Currency Reserves (in millions of KM)

Company trading in BiH 90

8.000

80 70 60

7.000 6.000

78 72

67.3

5.000

40 4.000 3.000

30 20

2.000

10 0

1.000

26 18

32.7

18 Profit (%) Loss (%)

April Sept Dec Mar Aug Sept Dec Nov 2007 2007 2007 2008 2008 2008 2008 2009

0 XII XII XII XII XII XII I II 2003 2004 20052006 2007 2008 2009

III

VII VIII

With regard to current political conditions, things in BiH are getting worse

All things considered, would you say that Bosnia and Herzegovina will benefit from membership of the European Union? 100

100 86.7% 74.5%

77.7%

60 % 40 Yes No Don’t know/ Won’t answer

20 0 Bosniak majority

Croat majority

Serb majority

Brčko district

Total sample %

67.6%

80 70 60

75.0% 63.4%

67.0%

50 50.0%

50.9%

30 20 10 0 March 08

June 08

Sept 08

Nov 08

Nov 09

Key Indicators for BiH

Some people say that only the ethnic or ethnically affiliated parties in BiH can protect the vital ethnic/national interests of the ethnic group they represent. Do you agree or disagree with this opinion?

How proud are you of belonging to your ethnic group? 4% 2% 3%

13%

100 90 80 70 60

Very proud Somewhat Not very Not at all Not important

50 40 30 20

76% Disagree Agree

10 0 BiH

FBiH

Brcko

Bosniaks

Serbs

Croats

Do you think that in the case of EUFORâ&#x20AC;&#x2122;s withrawal from BiH there might be an another war?

No. of people who have confidence in others - November 2009 (in %) 25.0

11%

25%

20.50

20.0

18.38

17.98

16.40

15.0

12.90

10.0 6.88

64%

Yes No Donâ&#x20AC;&#x2122;t know

% who expect deterioration in BiH due to the current political situation

Minorities Majorities

5.00 0.00

Bosniak majority areas Croatian majority areas Serbian majority areas

% who expect deterioration in BiH due to the current political situation - minorities 100

100.0

80 70 60

80.0 70.0 60.0

40.0

30 20

30.0 20.0

81,1 75,9

60,3 47,4 46,6 41,2

10 0

10.0

Bosniak majority areas Croat majority areas Serb majority areas

82,1

82,5

50.0

0.0

90,7

90.0

Nov 07

Nov 07 79.4 80.2 82.4

Nov 08 79.7 52.9 50.3

Nov 09 89.6 71.4 64.0

Minority in BMA

Nov 08 Minority in CMA

Nov 09 Minority in SMA

Key Indicators for BiH

Average salary trends in FBiH and RS (in the first 10 months of 2009)

Would leave BiH if they had the opportunity (in%) 100.0 90.0

900

800

791 771

700

813

785

795

798

781

786

792 773

794

793

790

786

790

793

792

783

785

789

80.0 70.0 60.0 50.0

RS FBiH

40.0 30.0 20.0 10.0

01/09 02/09 03/09 04/09 05/09 06/09 07/09 08/09 09/09 10/09

0.0

Trends in the Consumer Price Index (CPI) in FBiH and RS (in the first 10 months of 2009)

BiH

FBiH

18-35

36-50

51+

Nov 07

45.58

46.41

44.21

65.90

56.42

19.54

Nov 08

40.36

40.08

41.56

63.29

39.38

17.57

Nov 09

44.02

52.10

32.69

66.54

51.92

22.22

101.50 101.00

101.00 100.50 100.00 99.50 99.00 98.50 98.00

99.90 99.90

100.10

99.90 99.90 99.70

100.30

100.10 100.30 99.90 100.00 99.90 99.90 99.90 99.79

100.90 100.60

99.00 FBiH 90.50

01/09 02/09 03/09 04/09 05/09 06/09 07/09 08/09 09/09 10/09

I. Political Stability

By Dina DurakoviÄ&#x2021;

1. The Political Stability Index 2. The Reporting Period at a Glance 3. Public Pessimism at a Dramatic Level 4. Support for the European Integration Process is High 5. More than Half will Not Vote for the Current Political Parties 6. Conclusion

1. The Political Stability Index The level of the Political Stability Index for 2009 was the lowest since our surveys began and is an urgent indicator of political conditions in Bosnia and Herzegovina. In a year that many consider to have be the least stable politically since the Dayton Agreement was signed negative trends have dominated not only political life at the state level and the work of all state level institutions, but also lower level institutions. The economic crisis showed its teeth during 2009; however, dealing with it has hardly been at the forefront of politicians' attention, no more than it has been a priority for the responsible state level institutions. This has also contributed to this exceptionally poor general picture. Representatives of international institutions continued to operate in 2009 much as they had done in 2008, with clear signs of declining interest and influence over political events within the country. Unfortunately, this process was not accompanied by any improvement in the performance of the state level institutions during 2009, no more so than it had been earlier.

Graph 1: The Political Stability Index11 The Political Stability Index for Bosnia and Herzegovina 110

100

Political Stability Index

50 40

96 103 103 96 103 98 96 101 98 103 103 96 101 94 101 100 94 100 101 100 96 94 110 100 100 96 107 92 103 96 101 90 104 102 92 Chain index Composite index 56 54 56 58 56 58 57 55 56 55 57 59 57 58 55 56 56 53 53 54 54 52 49 54 54 54 52 56 52 54 52 53 48 50 51 47

Source: Table 11 was under annex to the Prism Research poll conducted for this project in November 2009. 15

2. The Reporting Period at a Glance The negative political trends of 2008 continued and worsened during 2009, as the depth of the crisis affecting political processes in Bosnia and Herzegovina became clear. It would not be going too far to say that the State as a whole founds itself in perhaps its worst political crisis since the Dayton Agreement was signed, an assessment which is supported by the value of our Political Stability Index for 2009. As pointed out in the annual report for 2008, representatives of the SNSD, the SDA and the HDZ in BiH reached agreement in principle (the so-called Prud Agreement) late that year on key political issues, which included the status of state owned property, the status of BrÄ?ko district and a census. This was an attempt to kick-start the political process out of the dead calm that it had fallen into during the second half of that year. Yet it immediately became obvious that the parties to the agreement held such different interpretations as to what had been agreed as to make it questionable whether any real agreement had in fact been reached. Pessimistic predictions were proven accurate as the process stumbled before it had even begun and the lack of political will to reach a compromise was obvious. The use of negative rhetoric in political life continued unabated from the very beginning of 2009, with the ruling coalition a coalition in name only. Throughout the year increasingly aggressive signals were sent by the governing SNSD in Republika Srpska (RS) that stressed the inviolate nature of the entity, while denying the State and its institutions, rejecting talks on constitutional change and questioning the role of the international community. On the other hand, the Federation of Bosnia and Herzegovina was suffering from internal problems and increasingly poor relations between the ruling SDA and HDZ BiH. Representatives of the Croat parties became increasingly vocal about how dysfunctional the Federation was and about their own disadvantaged status at both the federal and the state level, while representatives of the Bosniak parties continued to advocate for the strengthening of the state level of government, albeit without offering any concrete plans for dealing with the crisis. As mentioned above, the performance of state level institutions has probably never been lower than during 2009. As a result of this climate no major advances were made in the reform process. BiH made no significant progress with regard to the Euro-Atlantic processes during 2009. Approval was not forthcoming for the liberalisation of the visa regime, because the relevant EU institutions concluded that the country had not met the conditions specified. Moreover, at the beginning of December approval was denied to Bosnia and Herzegovina to move forward with the NATO Membership Action Plan (MAP), essentially for the same reasons. Finally, the European Commission reported that Bosnia and Herzegovina had not made satisfactory progress in the EU accession process, issuing its most negative progress report to date in mid-October 12. It is stated in the report that progress towards EU accession has been negligible, that the political climate has significantly worsened, that only a small number of the laws whose passage is required by the process have actually been passed and that the implementation of reforms continues to go slowly because of the absence of political consensus.13 By contrast, there has been significant progress on the path to European integration in the region. In early November Croatia and Slovenia reached agreement over international arbitration to deal with the long-running border dispute that had threatened to put an abrupt halt to Croatia's progress towards EU accession. The European Union also ap-

European Commission 2009: Progress Report 2009, at http://www.delbih.ec.europa.eu/docs/ProgressReport20092.pdf . 13 Ibid. 16

Political Stability proved the liberalisation of the visa regime for Montenegro, Serbia and Macedonia, which came into effect as of 19 December and means that the citizens of these countries can now travel to European Union countries (except Great Britain and Ireland) without visas. At the same time, a clear message was sent to Bosnia and Herzegovina from the institutions of the European Union and the NATO alliance that there would be no relaxation of conditions and that the country would have to begin to meet its obligations. The relationship of local officials to the international community also remained conflicted. While representatives of parties from RS took a very clear stand on this issue by claiming that the international community was part of the problem and not the solution for Bosnia and Herzegovina the representatives of parties based in the Federation generally took the view that the international community should play an even more active role. The international community launched a further attempt to deal with the crisis in the form of a joint initiative of the United States and the European Union. The former High Representative, Carl Bildt, together with US Deputy Secretary of State, James Steinberg, initiated yet another round of talks between the political leaders on constitutional change. The American-European initiators presented a package of constitutional amendments which would have, amongst other things, reinforced the House of Representatives by increasing the number of deputies, increased the number of deputies in the House of the Peoples, restrained abuse of the principle of the protection of vital national interests and strengthened the role of the Chair of the Council of Ministers, but would have retained entity voting. The package contained changes which, in the view of many, seemed relatively modest and insufficient. The so-called Butmir Process lasted a relatively short period of time, because after only a few rounds of negotiation and revision of the initially proposed changes the final proposal was only acceptable to the SDA. The other parties rejected it either because it did not include enough changes or because it included too many. In 2009 there was a change of High Representative, as Miroslav Lajčak left to take up the position of Foreign Minister of Slovakia in March. He was replaced by Valentin Inzko, an Austrian diplomat with previous experience as Ambassador to Bosnia and Herzegovina. Right at the beginning of his mandate the new High Representative was faced with a multitude of problems. One of his first decrees, intended to ensure the continued operation of the state owned electricity transmission company, “Elektroprenos BiH” 14, met with an exceptionally strong reaction from RS, whose Premier announced that it would be the last such decree and that any attempt to impose decisions in the future would be rejected by the smaller entity. The threat was tested quickly enough. Throughout the year the leaders of the ruling parties took diametrically opposed positions on the issue of extending the mandate of foreign prosecutors and judges at the Court of Bosnia and Herzegovina. While representatives of the Croat and Bosniak parties supported retaining foreign citizens in these institutions, SNSD representatives, supported by most other parties in RS, in no uncertain terms opposed extending their mandate. A decision was finally brought by the High Representative on 14 December when he issued a decree ensuring that foreign citizens would continue to have a presence in the court for the next three years, but only in the war crimes department. This decree left everybody unhappy, including those who had supported the continued presence of foreigners. The latter were dissatisfied that the decree did not relate to foreign judges and prosecutors in all departments and in particular the Department for the Fight against Organised Crime and Corruption. On the other hand, the parties from RS, led by the SNSD, refused to recognise the High Representative's decision as valid, calling an extraordinary session of the RS National Assembly over the issue and even threatening to hold a referendum. A rare positive event in the political life of BiH in 2009 was the country’s acceptance as a non-permanent member of the UN Security Council, with a mandate from 2010-2012. This took place in October and was preceded by a flurry of diplomacy. Membership of the Security Council is considered to be Bosnia and Herzegovina's greatest foreign policy success since the end of the war, though one must stress that the real challenges lies ahead. Given the domestic political climate and the difficulty of reaching consensus on issues where the country must have a single position, there is justified concern as to how ready Bosnia and Herzegovina is to participate appropriately and competently in the work of the Council. 14

The relevant decisions are available at http://www.ohr.int/decisions/archive.asp. 17

3. Public Pessimism at a Dramatic Level The negative trends in political life were accompanied by similar trends in public opinion. At the end of 2009 we noted a very worrying level of pessimism amongst the sample as a whole regarding the future of Bosnia and Herzegovina. As much as 75% of the total sample described the political situation as deteriorating, while just 17% felt that things were moving in a positive direction (see Table 1 in annex). The most dramatic results were for the Bosniak sample, which had a very negative view during 2008 and by the end of 2009 as much as 91% of this group felt that Bosnia and Herzegovina was moving in the wrong direction. Pessimism was also at very high levels for the samples from the other two groups, though not as high: 71% of the Croat sample and 63% of the Serb sample shared the view that the State is headed in the wrong direction politically. It is important to note that there was a significant increase in pessimism amongst all three groups in late 2009 when compared to the same period in 2008, with pessimism up 11 points for the Bosniak sample, 13 points for the Serb sample and 18 points for the Croat sample. These indicators are in line with the samples' assessments of the economic conditions in the country. Some 80.5% of the total sample described the economic situation as poor in November 2009, which represents a rise of approximately 15 points on the same period the previous year, while just 1.1% felt that the economic situation was good. More details on the results of our poll related to this question may be found in the economic section of this report. The percentage of the sample of people that â&#x20AC;&#x153;would leave Bosnia and Herzegovina if the opportunity aroseâ&#x20AC;? was 44%, a modest increase on the previous year, while the 18 to 35 age group continued to stand out in regard to this opinion. The main change that we noticed relates to the 36 to 50 age group. In this group some 13% more of the sample (giving a total of 52%) stated that they would be prepared to leave Bosnia and Herzegovina to live in another country. Looking at the breakdown according to ethnicity the main change noted was amongst Bosniak respondents: 17% more compared to the last survey. For the two other groups the number that gave a positive answer to the question fell, so that 36% of Croat respondents and 33% of Serb respondents now say that, if offered the opportunity to do so, they would leave Bosnia and Herzegovina to live in another country (see Tables 4 and 5 in the annex).

Political Stability Graph 2: In what direction do you think Bosnia and Herzegovina is headed? 15 With regard to current political conditions, things in BiH are getting worse

100 90 80

75.0%

Total sample %

70 60

63.4%

67.0%

50.0%

50.9%

30 20 10 0

March 08

June 08

Sept 08

Nov 08

Nov 09

Source: Table 1 in annex. 19

4. Support for the European Integration Process is High At the same time, support amongst the overall sample for the European integration process has risen by some 7 points, compared to late 2008, reaching 83%. Bosniak respondents continued to be the most likely to express support (94%), followed by the Serb sample (73%, up 16 points on the previous period) and then Croat respondents (71%) (see Table 6 under annex). In spite of the relatively similar levels of support expressed by the respondents of all ethnic groups their views on the European Union itself differed considerably. As much as 70% of the Bosniak sample had a very positive view of the European Union, compared to just 26% of the Serb sample and 38% of the Croat sample. Members of these two groups were more likely to hold a relatively positive view of the European Union: 53% of Serb respondents and 41% of Croat respondents. Approximately 10% of the Serb sample, 7% of the Croat sample and 2% of the Bosniak sample held a generally negative view of the EU (Table 8 in annex). Nevertheless, more than half of the total sample thought that Bosnia and Herzegovina would benefit from EU membership: 68% of the Croat sample, 75% of the Serb sample and 87% of the Bosniak sample (see Table 7 in annex).

Graph 3: Will Bosnia and Herzegovina benefit from EU membership or not?16 All things considered, would you say that Bosnia and Herzegovina will benefit from membership of the European Union? 100.0

86.7%

80.0

74.5%

67.6%

77.7%

60.0

% 40.0 20.0 0 Bosniak majority

Croat majority Yes

16 Source: Table

BrÄ?ko district

Serb majority

Don't know / don't answer

7 in annex. 20

5. More than Half will Not Vote for the Current Political Parties During 2009 the Bosniak sample was the most negative in its assessment of how the governing parties have performed, which is no doubt related to their highly pessimistic attitudes about the future of the country and the economy. This was also the subsample with the most clearly defined attitudes regarding how the parties are doing, as a considerably smaller number of individuals from this ethnic group, compared to the two others, failed to express an opinion with regard to the performance of the parties. Dissatisfaction amongst the Bosniak sample was very obvious. As much as 83% did not consider the parties in government to be even relatively successful in defining and implementing key reforms, while 90% described them as being insufficiently responsible and or accountable to the public and 89% took the view that they do not deserve to remain in power. However, when asked whether a change of the parties in government would accelerate the implementation of key reforms and the economic recovery of the country far fewer, only 66%, said that they thought it might. This certainly suggests a considerable lack of confidence in the parties that represent the alternative to the current Government, but nonetheless more than half of this ethnic sample believed that a change would bring an improvement. The two other ethnic samples were considerably less critical of the impact of the parties in power. Not unlike 2008, the Serb sample's position in 2009 was not unanimous. When asked whether they considered the governing parties to be relatively successful in defining and implementing key reforms 35% said that they did, 25% said they did not and 38% were unwilling to answer the question. The response to other questions was similar: 27% of the Serb sample said the ruling parties showed sufficient responsibility towards the public, 33% said they did not, while 36% were undecided. Some 30% of this group said that the ruling parties deserved to remain in power, but 20% said a change in the parties at the top would bring an improvement with regard to the implementation of key reforms and economic recovery. Croat opinion lay somewhere in the middle; just over half this group (51%) felt the government was failing in the implementation of key reforms, while 56% said that the governing parties did not show sufficient responsibility towards the public. Some 52% of this group said that the governing parties did not deserve to remain in power, while 45% said that replacing them would bring economic recovery and accelerated implementation of key reforms (see Table 10 in annex). It is also interesting to review the responses of the public when asked “What party they would vote for if general elections were held now?” The first thing to notice is that more than half of all groups would not choose any of the political parties currently on offer, while some 17% said that they had no intention of voting, 23% that they would not vote for any particular party and 19% refused to answer the question as to whom they would vote for. The most popular of the political options on offer to the sample as a whole continued to be the SNSD (14 % of the total sample), followed by the SDP (9%) and the SDA (7%). The showing of the SNSD is a consequence of the continued high level of support the party enjoys with the Serb sample, 35% of whom said that they would vote for the SNSD. The party has practically no support amongst the other two ethnic groups. Serb sample support for the SDS fell visibly during 2009 with just 4% saying that they would vote for the party right now, which is down by 7 points on the final quarter of 2008. One of the reasons for this may well be the appearance of a new party on the political scene in the smaller entity of Bosnia and Herzegovina, led by the former senior SDS party official Dragan Čavić. Approximately 2% of the Serb sample would vote for his Democratic Party and, given that this is a newly formed party, we will follow its performance in future reports. 21

Political Stability

Turning to the Croat sample, the HDZ continues to enjoy by far the most convincing support with 29% of respondents from this group saying that, if elections were held at the time, they would vote for the HDZ. They are followed by the Narodna stranka Radom za boljitak at 4%, while support for the HDZ 1990 has collapsed with just 1% of the Croat sample ready to vote for this party, which is down 4 points on the final quarter of 2008. With the Bosniak sample, the SDP enjoyed the greater support (19%) then the ruling SDA (15%), although both parties saw their support decline in 2009. There was a significant drop in support for the Stranka za BiH during the reporting period, with just 2% of Bosniak respondents saying that they would vote for this party at present, down five points on the previous reporting period (see Table 9 in annex).

6. Conclusion There were almost no positive developments in Bosnia and Herzegovina in 2009 in either political life or in how the domestic political process is unfolding. The opposite is the case, in fact, as the radicalisation of political life has continued and the political crisis has further deepened. As a result of these events Bosnia and Herzegovina has fallen even further behind the other countries of the region, as confirmed by the fact that Bosnia and Herzegovina is the only one (alongside Albania) whose citizens have not been granted a liberal visa regime by the EU, as well as the only one not to have made significant progress in the process of Euro-Atlantic integration. Our survey results well illustrate the general atmosphere of pessimism afflicting the country. It is particularly worrying that as much as 75% of the public thought that Bosnia and Herzegovina is headed in the wrong direction, while 81% also believed that the economic situation in Bosnia and Herzegovina is poor. The political crisis is largely due to the absence of even a modicum of political consensus over the future of the State, although one should not ignore the reduced interest of the so-called international community in becoming involved to any significant extent in a political process for which it is, nonetheless, still an unavoidable element. The fact that each active intervention by the High Representative requires lengthy consultation and the harmonisation of the positions of the member states of the Peace Implementation Council, often resulting in a consensus that is at the expense of the true interests of the State, has put the wind at the back of radical political forces. On the other hand, neither should one pass lightly over the fact that the primary responsibility for the condition of the country lies exclusively with the domestic political establishment. Unfortunately, given the way that the polity of Bosnia and Herzegovina was conceived, with an Office of the High Representative that depends on the agreement of states with very different interests and positions, the question of responsibility for the current situation becomes a very complex problem with multiple aspects. This creates a situation with no obvious way out, in which institutional responsibility is a fluid category and the prospects for resolving the political crises are ever diminishing.

II. Confidence in Government Institutions

By Dina DurakoviÄ&#x2021;

1. The Reporting Period at a Glance 2. Different Ethnic Groups' Confidence in Institutions Vary Greatly 3. Support is Up for the Office of the High Representative 4. Conclusion

1. The Reporting Period at a Glance The downward trend in institutional stability that was already evident in 2008 continued throughout 2009. The profound political crisis in Bosnia and Herzegovina has led to almost absolute gridlock in state level institutions and has had a very serious impact on the performance of lower level authorities. In state level institutions it is already usual for political crises to produce serious problems in their day-to-day operations, which in 2009 resulted in the failure to meet the conditions for progress towards Euro-Atlantic integration and the liberalisation of the visa regime. In fact, it was the failure of the state level Parliament to pass the required legislation that was the main reason for Bosnia and Herzegovina being left off the list of countries that are no longer subject to visa requirements by European Union member states, being denied inclusion in the NATO Membership Action Plan and receiving the worst progress report to date in the EU accession process.17 The main aspects of state level institutional functionality remain much as in the previous year with extreme politicisation of the political decision making processes, outvoting on an ethnic basis and a lack of compromise. In the absence of institutional mechanisms, which might help to mitigate these negative aspects, state level institutions find themselves practically incapable of functioning. There is also crisis at the level of the Federation of Bosnia and Herzegovina in how both the Government and Parliament are doing their jobs. The positions of the main coalition partners, particularly the SDA and the HDZ BiH, are increasingly remote, which seriously hinders the entity's institutions in meeting their obligations. One indicator of the depth of the political crisis in the Federation is the fact that Mostar, a city whose Council is dominated by the SDA and the HDZ BiH, had no mayor for more than 14 months, because the two parties were incapable of agreeing on whom to select. This resulted in complete gridlock in the City Hall, where it proved impossible to pass the city budget and to finance city institutions. It was only in December 2009, after it had become entirely clear that the local politicians were in no position to resolve the crisis, that the High Representative decreed a change to the city statutes which allowed a mayor to be elected by a simple majority in the third round of voting. Following this the sitting mayor, the HDZ candidate, was re-elected. The institutions of Republika Srpska (RS) continued to operate with considerable coherence, largely due to the overwhelming predominance of one party in all government bodies: the SNSD. One of this party's most important coalition partners, the PDP, has withdrawn from government, but without any major impact on how entity institutions function. The difficulties that the Office of the High Representative has faced in its attempt to have a stabilising effect on domestic political processes are due to the fact that the representatives of the different ethnic groups have very different views on the work (and even the continued existence) of this institution, as can clearly be seen through our survey results. This has been the source of additional friction in political life. Moreover, it has long been clear that the countries represented on the Peace Implementation Council disagree significantly over the modus operandi of the Office of the High Representative in Bosnia and Herzegovina. The new High Representativeâ&#x20AC;&#x2122;s use of the Bonn authorities caused a powerful reaction in RS. Following his most recent decision, in December 2009, to impose a ruling on the extension of the mandates of foreign judges and prosecutors in state level judicial institutions, the Government of RS announced its intention to hold a referendum in that entity on these decisions and actually passed draft amendments to the relevant legislation to facilitate doing so. RS institutions also intend to conduct a census of the entity population, given the failure to reach agreement over a countrywide census.

European Commission 2009: Progress Report for 2009, available at http://www.delbih.ec.europa.eu/docs/ProgressReport20092.pdf. 25

Confidence in Government Institutions The High Representative and a number of other international officials have clearly described these decisions as antiDayton. Given the absence of a general consensus regarding the international community's role in Bosnia and Herzegovina, even amongst its own most senior representatives, it remains unclear as to how and indeed whether the international community will take serious action should the RS institutions actually carry out what they have announced.

2. Different Ethnic Groups' Confidence in Institutions Vary Greatly The differences between how the various ethnic samples rate the institutions of government widened even more significantly during 2009. On the one side there are the Bosniak respondents, whose distrust of institutions at all levels increased dramatically throughout 2009. Consequently, only some 15% of respondents from this group now approve of the job being done by state level and federal institutions, while as few as 9% expressed approval of the job being done by RS institutions. At the municipal level only 18% of respondents approved the performance (23% less than was registered in the last quarter of 2008). At the same time, respondents from this group showed growing approval of the international institutions active in Bosnia and Herzegovina, so that 65% of Bosniak respondents expressed confidence in the work of the EUPM (an increase of around 8%), while some 60% approved of the job being done by the European Union (up 6%) and 53% expressed their approval of the work being done by the institutions representing the United States (an increase of some 7%) (see Table 2 in annex). In line with these results there has also been an increase in the percentage of the Bosniak sample that thinks corruption is an issue in government bodies. With the exception of the Presidency of Bosnia and Herzegovina, where no change was noted, there has been an increase in the sampleâ&#x20AC;&#x2122;s belief that corruption is present in its most severe form ("very widespread") in all of the institutions of government, most particularly in entity level institutions. Thus, 66% of the Bosniak sample believed corruption to be very widespread in the Government of the Federation of Bosnia and Herzegovina, 63% considered this to be the case with regard to the Parliament of the FBiH, 76% with regard to the Government of RS (representing an increase of 12 percentage points) and 74% with regard to the National Assembly of RS (an increase of 10 percentage points). If one adds to this the significant number of respondents who believed that corruption is "present to some degree" at all of these levels of government then the views of this group of respondents becomes even more alarming. That is, taken together, more than 80% of the respondents from this group believed that corruption is either "very widespread" or "present to some degree" within state level institutions and in the institutions of the Federation, while more than 90% believed the same to be true of the institutions in RS (see Table 5 in annex). In contrast, the views of Serb respondents were practically the reverse. This group approved, to a very significant degree, of the job being done by institutions at all levels of government. Some 49% expressed their approval of the performance of state level institutions, while more than 40% did so for the institutions of the Federation. When it came to approval for the job being done by the institutions of RS we noted, despite a decline compared to the end of 2008, that this group of respondents was still more likely than not to express its approval of the Government and the National Assembly of RS. Thus, 67% supported the Government of RS (five points down on the previous reporting period) and 64% did so for the National Assembly of RS (down eight points). Compared with the previous reporting period there were no major changes in regard to international institutions in Bosnia and Herzegovina, with the level of confidence found amongst this group varying from 33% for institutions which represent the United States 18 to 44% for the OSCE (see Table 2 in annex). This group of respondents was, however, more convinced than in the previous reporting period that corruption is widespread. Thus, more than 70% of the respondents from this group believed that corruption is "present to some degree" or "very widespread" in state-level institutions, although the percentage of this group that believed that corruption is present in its most severe form was less than that of the Bosniak respondents. The situation is similar for entity institutions with around 76% of respondents believing that corruption is either "present to some degree" or "very widespread" in the institutions of the Federation of Bosnia and Herzegovina, while 65% believed it to be the case for the institutions of RS (see Table 5 in annex).

This represents a growth of some 6 points. 27

Confidence in Government Institutions As is already customary, the views of the Croat respondents were somewhere in between those of the Bosniak and Serb respondents. No change in opinion was noted with regard to state level institutions with 34% expressing their support for the Presidency of Bosnia and Herzegovina and around 31% doing so for the Parliamentary Assembly and the Council of Ministers of BiH. There was a moderate decline when it came to the entity institutions with between 27% and 28% of Croat respondents expressing their support for the job being done by the institutions of the Federation of Bosnia and Herzegovina, but just 11-12% did so for the institutions of RS and we noted a decline in support for municipal institutions of around 10 points (now at 26%). We noted a significant increase during the course of this reporting period in support amongst Croat respondents for the international institutions active in Bosnia and Herzegovina; it is now between 44% (an increase of 9 points) for the institutions of the United States and 51% for the EUPM (an increase of almost 15 points) (see Table 2 in annex). With this group we also noticed a modest decline in the belief that corruption is present in state level institutions at all levels. However, the majority continue to believe that corruption is either "present to some degree" or "very widespread" in state level institutions, as did 58% when it came to the institutions of the Federation and as much as 65% with regard to the institutions of RS (see Table 5 in annex). On the other hand, it is worth noting that the various ethnic samples had quite similar views as to whether the effectiveness of the state level and entity institutions had improved or deteriorated over the past five years. Thus, 51% of Croat respondents, 47% of Serb respondents and 41% of Bosniak respondents believed that there has been no change in the effectiveness of state level institutions over the past five years, while 26% of Bosniak respondents, 21% of Serb respondents and 19% Croat respondents believed that it has deteriorated (see Table 10 in annex). The picture was very similar with regard to the effectiveness of entity level institutions, with the exception that 28% of Serb respondents believed that the effectiveness of entity institutions has improved over the past five years, which is no doubt linked to the significantly greater level of general approval accorded to the performance of entity institutions by members of this ethnic group (see Table 11 in annex).

Graph 1: Approval ratings for institutions 19 I approve of the job being done by... 60 50

49 41

40 % 30

32 31

10 0

Presidency

BiH Parliament

Council of Ministers

FBiH Parliament

FBiH Government

Nov 08

RS National Assembly

RS Government

Municipial Authorities

Nov 09

Source: Table 1 in annex. 28

FBiH Cantonal Authorities

3. Support is Up for the Office of the High Representative We noted a moderate increase in the approval rating for the Office of the High Representative in 2009, up from 46% during the last reporting period to 51%; we also noticed that this support was a little higher amongst women (53%) than for men (50%). This increase in approval reflects the improved, albeit uneven, results for all of the ethnic groups. The largest increase in approval, of 13 points, was noted with regard to the group of Croat respondents where 48% expressed their support for the Office of the High Representative. The approval rating of the Serb respondents was 35%, an increase of 3 points, while the approval rating for the Bosniak respondents was almost double that at 68%, which is 7 points up on the previous reporting period (see tables 1 and 2 in the annex). There was also an increase in the percentage of respondents who gave positive marks to the various measures being implemented by the Office of the High Representative. Looking at all of the groups combined just under 50% took a positive view of the effectiveness of political, economic and public administration reform measures, while anticorruption measures were given a positive rating of 39%. The Office of the High Representative continued to receive by far the best rating from Bosniak respondents, 71% of whom gave positive marks for the political reforms (up 15 points on the previous reporting period), while 65% expressed their support for the economic reforms (also up 15 points) and 48% for anticorruption measures (up 4 points). Serb respondents were much more critical, though even for them we noted a modest increase in support for all of the Office of the High Representative's reforms during this reporting period: 26% had a positive view of the Office of the High Representative's measures in the area of political reform, as did some 30% with regard to economic reforms and anticorruption measures. The level of support amongst Croat respondents was around 39% for economic and political reform and around 31% for anticorruption measures (see tables 6 and 7 in annex). Very significant differences remain in the attitudes of respondents towards the authorities of the High Representative. Croat respondents were split fairly equally between believing that the High Representative's powers should be increased, reduced or left as they are. In contrast, there has been no increase in the percentage of Serb respondents who believe that the High Representative's powers should be reduced (now 75%), while just 3% believed that they should be increased. The attitude of Bosniak respondents was entirely the opposite with 61% of this group (that is 19 points more than in the previous reporting period) believing that the High Representative's powers should be increased, while 22% believed that they should be left as they are and just 8% believed that they should be reduced. It is interesting to note that 7% less women than men believed that the powers of the High Representative should be reduced. At the same time, almost the same percentage of women was unable to answer this question (see Table 9 in annex).

Confidence in Government Institutions Graph 2: Attitudes to the powers of the High Representative

Are you in favour of the High Representative in BiH's powers being reduced, increased or staying as the are? 80 70 60 50 % 40 30 20 10 0

74 61 Reduce Increase

33 24 25

22 8

Bosniak majority

3 Croat majority

Stay the same

Don't know / don't wish to answer

Serb majority

Source: Table 9 in annex. 30

4. Conclusion The crisis in how government institutions function reached dramatic proportions in 2009. This was a consequence of the absolute absence of institutional mechanisms which might be used to remove or at least mitigate the negative impact on institutional performance. These mechanisms would allow the work of the state level government institutions to work properly. In such a situation the international community was not able to stabilise the domestic political process. On the one hand, the expectations, primarily of representatives of the Bosniak parties, that the international community will solve the internal problems have not only been proven to be obviously unfounded, but actually presented an obstacle to finding solutions where they must originate from, namely the domestic political process. On the other hand, the calls from the representatives of RS for the full exclusion of international factor from the political process combined with obstruction within state level institutions left little room for optimism over what may be expected should that actually happen. Whatever the ultimate outcome of these various tendencies it is clear that at this moment in time they represent an additional strain on the political process and are having a negative impact on how state level institutions function. Our poll results are a reliable indicator of developments in politics. Differences between the views held by the respondents of the different ethnicities and how they rate the performance of government and international institutions are increasing, generally in line with the views of the respective political elites. This major divergence in opinion is an indicator of a deep political and institutional as well as social crisis.

III. The Economic Situation in BiH

By Adnan EfendiÄ&#x2021;

1. The Economic Stability Index Falls 2. Results for Industrial Production Differ by Entity 3. Increased Unemployment Still a Major Macroeconomic Problem 4. Retail Prices and Central Bank Foreign Currency Reserves both Modestly Down 5. Balance of Foreign Trade Moderately Improved 6. Public Opinion on the Economic Situation further Worsens 7. Conclusion

1. The Political Stability Index The Economic Stability Index has seen a downward trend over the last three waves of polling. More precisely, there has been a reduction in the value of the Economic Stability Index for Bosnia and Herzegovina since October 2008 (see Graph 1). Given the onset and development of the economic recession in the world and, with a minor time lag, in Bosnia and Herzegovina, these results came as no great surprise, because they simply confirmed for the umpteenth time that public opinion in the country is of considerable relevance when looking at economic trends here. The downward trend in the Economic Stability Index held for both the chain and the composite indices. We would not be surprised if this negative movement of the index were to continue in future surveys, as the impact of the recession in Bosnia and Herzegovina is still noteworthy. There will be more on this when we deal with official statistics later in the text.

Graph 1: The Economic Stability Index for Bosnia and Herzegovina 21 Economic stability index for Bosnia and Herzegovina 110 100 90 80 70 60 50 Chain index Composite index

May Aug Jan Apr Jun Aug Dec Mar Apr Jun Aug Oct Jan Jul Sep Nov Feb Jun Sep Nov Feb Jun Sep Nov Apr Jun Sep Nov Apr Sep Nov Mar Jun Oct Nov Nov 00 00 01 01 01 01 01 02 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 08 08 08 08 09 96.7 103 104 100 101 95.3 101 100 100 101 100 98.4 100 98.4 100 101 96.8 101 101 96.8 98.3 96.6 103 101 98.3 101 101 98.3 96.7 96.6 103 100 101 100 98.3 61

59 61

64 64

65 62

63 63

64 64

63 63

62 62

63 61

60 58

60 61

Survey

Source: Table 1 in annex. 33

61 59

57 59

59 60

60 59

2. Results for Industrial Production Differ by Entity In recent years industrial production has regularly recorded significant rates of increased production, both with regard to the economy of Bosnian and Herzegovinian as a whole and at the entity level; however, the impact of the global economic crisis during the reporting year of 2009 did not pass BiH industry by. Consequently, industrial production in the Federation of Bosnia and Herzegovina was down some 12% in the first nine months of 2009 compared to the same period the previous year, whereas industrial production continued to grow in Republika Srpska (RS), rising 19% (see Table 2). Ignoring other factors and indicators in our assessment, total industrial production in RS registered few negative consequences of the global crisis, which was primarily due to increased production of coke and petroleum derivatives in this Bosnian and Herzegovinian entity. We will have more to say on this later.

Table 2. Indices of the physical scale of industrial production in Bosnia and Herzegovina Results achieved during 2009 Entity

FEDERATION OF BOSNIA AND HERZEGOVINA

1-12 2008 1-12 2007

11 2009 2008

1-11 2009 1-11 2008

107.9

86.6

88.2

REPUBLIKA SRPSKA 116.8

129.6

Best performing sector Tobacco production Petrol production

118.8

Worst performing sector Car industry Production of technical equipment

Source: Federal Statistics Office DũĞƐĞēŶŝ ƐƚĂƚŝƐƚŝēŬŝ ƉƌĞŐůĞĚ No. 12, Year XIII, December 2009; Republika Srpska Statistics Office DũĞƐĞēŶŽ ƐĂŽƉƓƚĞŶũĞ No. 219/09: Indeksi industrijske proizvodnje, December 2009.

In the Federation of Bosnia and Herzegovina industrial production rose in only three sectors during the first 11 months of 2009 compared to the same period for the previous year. The production of tobacco products increased by 12% and the production of chemicals and chemical products was up by 1.8%. Publishing activities (printing) and the reproduction of recordings also saw a growth of 1.8%.22 While most branches of industry saw a significant reduction the following three sectors suffered the greatest negative consequences of the economic crisis: the production of motorised vehicles, trailers and semi-trailers (-73%); the production of office machinery and computers (-59%) and recycling (-36%).23 Clearly it was those sectors closely related to the automobile industry that recorded the highest relative fall in production, which is in line with trends worldwide. This also illustrates how the impact of global economic events spill over into the markets of smaller countries like Bosnian and Herzegovinian. Given that there has been a modest improvement in automobile industry-related production at the level of the world economy we expect the condition of this indicator to be somewhat better in the coming year.

22 23

Source: Federal Statistics Office Mjesečni statistički pregled No. 12, Year XIII, December 2009. Source: Ibid. 34

The Economic Situation in BiH The three most successful sectors in RS during the period under review in 2009, compared to 2008, were: the production of coke and petroleum derivatives (3,015), the production of other means of transport (1,227) and the production of chemicals and chemical products (258).24 The production of coke and petroleum derivatives rose by some 3,000% compared to the same period in 2008, which can be safely attributed to the start of operations at the Bosanski Brod oil refinery. Impressive rates of this sort are actually possible under conditions where production which was previously non-existent or producing minimal results is being started up. In any case, this impressive indicator, at least in relative terms, did result in good average figures for industrial production in RS, which helps to explain the difference between the entities with regard to their success in terms of industrial production. The least successful sectors in RS's industry appeared to be the production of radio, television and communications equipment; the production of base metals and the production of other electrical machinery and equipment. The value of the indices for the three sectors shows production of approximately 50% of the levels in 2008. 25

24 25

Source: Statistics Office of RS Monthly Statement No. 219/09, Indeksi industrijske proizvodnje, December 2009. Source: Statistics Office of RS Monthly Statement No. 219/09, Indeksi industrijske proizvodnje, December 2009. 35

3. Increased Unemployment still a Major Macroeconomic Problem The high rate of unemployment in Bosnia and Herzegovina must surely represent one of the country's greatest macroeconomic problems. It is true that the increase in the number of the registered unemployed noted over recent years came to a halt during 2008 and that the number of unemployed had begun to gradually reduce during the year. Unfortunately, in 2009 we again saw an increase in the number of the unemployed in Bosnia and Herzegovina compared to the previous year, no doubt as a consequence of global economic events. Thus, while some 480,000 people were unemployed at the end of 2008, the number had passed above 500,000 again by October 2009 (see Table 3).

Table 3. Unemployment in Bosnia and Herzegovina Bosnia and Herzegovina

2007

2008

January 2009

October 2009

Total Unemployment in BiH 520,432 480,313 488,496 503,979 Unemployed Women in BiH 247,279 254,274 Unemployed Men in BiH 241,217 249,705 Unemployed Highly Skilled in 12,516 16,083 BiH Federation of BiH 342,174 351,444 Republika Srpska 134,798 143,305 Sources: Statistics Agency of BiH Statement: Registrirana nezaposlenost u Oktobru 2009, No. 10, Year III; Federal Statistics Office Mjeseēni statistiēki pregled broj 12, Year XIII, December 2009; Statistics Office of Republika Srpska, (www.zzrs.org), December 2009.

We noted that the number of the unemployed rose by some 23,000, a high of 5%, during 2009 compared to the level in 2008. We also noted that women made up a higher percentage of the unemployed than men: 50.5% compared to 49.5% respectively. If we look at the breakdown in terms of qualifications we find that the unemployed are most likely to have VKV or KV (craftsman and master craftsman) qualifications (183,325) followed by the NK (semiskilled or unskilled labour) (160,827) and considerably fewer with any form of higher (Tertiary, but not University) education (16,083). 26 A look at unemployment by entity shows that the number of unemployed increased in both entities during the first 10 months of 2009 with 2.7% in the Federation and 6.3% in RS. It is worth noting that the percentage increase in the number of unemployed during 2009 was higher in RS than in the Federation, which is in sharp contrast to the results for industrial production in the entities. In other words, while industrial production in RS experienced growth over 2009 unemployment rose; this confirms our conclusions from the previous section that this was a matter of steep relative growth in production only in certain sectors which did not generate sufficient new jobs during 2009 to reduce unemployment or even maintain it at the then current levels. In any case, unemployment remains a major macroeconomic problem for Bosnia and Herzegovina and affects both entities; we may expect a further increase in the number of unemployed by the end of the year.

Sources: Statistics Agency of BiH Statement: Registrirana nezaposlenost u oktobru 2009, No 10, Year III, December 2009. 36

4. Retail Prices and Central Bank Foreign Currency Reserves both Modestly Down While we have witnessed the gradual growth of retail prices in Bosnia and Herzegovina over recent years, particularly following the introduction of VAT in 2006, it would seem that 2009 brought a structural change. There was no increase in prices during the first 11 months of 2009, compared to the same period for the previous year. In fact, a modest fall in prices was registered, which was the case in both entities (see Table 4). Table 4. Retail Price Index in Bosnia and Herzegovina Retail Price Index

Nov 2009

Jan- Nov 2009

0 2005

Nov 2008

Jan- Nov 2008

Retail Price Index in Bosnia and Herzegovina

116.0

99.3

99.6

Retail Price Index in the Federation of Bosnia and Herzegovina

116.2

98.9

99.7

Retail Price Index in Republika Srpska

115.9

99.7

99.5

Source: Data for BiH: Statistics Agency of BiH Statement: /ŶĚĞŬƐ ƉŽƚƌŽƓĂēŬŝŚ ĐŝũĞŶĂ Ƶ ŝ, Ƶ ŽŬƚŽďƌƵ 2009, Year III, No. 11. Data for FBiH source: Federal Statistics Institute DũĞƐĞēŶŝ ƐƚĂƚŝƐƚŝēŬŝ ƉƌĞŐůĞĚ ďƌŽũ 12, Year XIII, December 2009. Data for RS: Republic Statistics Institute Monthly Statement: Indeks potroƓĂēŬŝŚ ĐŝũĞŶĂ No. 217/09, December 2009.

The structural changes we clearly found in this indicator for 2009 only confirmed that the economy experienced recessionary tendencies during that year. That is to say that just as the essential characteristic of an economic expansion is a gradual increase in prices, so that expansion and rising prices are trends that go hand-in-hand, prices often fall during a recession. This is exactly what we are seeing in Bosnia and Herzegovina. While major price rises are not good for the economy the same applies to falling prices. However welcome they may be to the individual they are not an indicator of a healthy economy. In short, if prices are falling then this is generally due to an overall downtrend in consumption in the economy, which is why prices begin to fall. This then draws after it a whole chain of negative consequences, such as falling production, an increase in unemployment and problems with financing the budget, etc. Given that the Bosnian and Herzegovinian economy suffered all of the above during 2009 it is more than clear that Bosnia and Herzegovina was affected by the global recession during 2009 and that the modest fall in prices was simply additional confirmation in favour of this conclusion. The main decline in the price index was related to clothing and footwear as well as to transport. This was the case in both Bosnian and Herzegovinian entities. Thus, at the level of Bosnia and Herzegovina retail prices in the transport sector fell by some 10%, while prices in the clothing and footwear sector fell on average by 4%.27 On the other hand, the highest price rises were for alcoholic beverages and tobacco and restaurants and hotels. Again, this was the case in both entities. Higher alcohol and tobacco prices were certainly due to the introduction of additional excise duties on tobacco products, which occurred during the current year28 and again applied to both entities.

27 28

Source: Statistics Agency of BiH Statement: Indeks potrošačkih cijena u BiH u oktobru 2009, Year III, No. 11. Data for the FBiH: Federal Statistics Office Mjesečni statistički pregled broj 12, Year XIII, December 2009; Data for RS: Statistics Office of RS Monthly Statement: Indeks potrošačkih cijena, No. 217/09, December 2009. 37

The Economic Situation in BiH

Graph 2: Predicting retail price trends in Bosnia and Herzegovina, 2006-2009 29 Responses forecasting further price rises in BiH (as % of all responses)

100.0 90.0 87.6

80.0

87.5

83.8 81.1 74.9

% 70.0

71.8

60.0 50.0 40.0

62.8

63.0 60.2

54.7 Sep 2006

Dec 2006

April 2007

Sep 2007

Nov 2007

May 2008

Jun 2008

Sep 2008

Nov 2008

Nov 2009

And finally, a very important monetary indicator that we have consistently monitored is the total gross foreign currency reserves of the Central Bank of Bosnia and Herzegovina. In recent years the reserve has seen steady growth at the annual level, with a total value reaching 6.7 billion BAM in December 2007. However, as previously noted, there was a reduction in the foreign currency reserves during 2008 and in the final month of the year it was some 400 million BAM lower than it had been at the end of 2007. 30 With regard to 2009 we noted a modest reduction in the foreign currency reserves in the first six months, practically from month to month, but also that their level began to rise modestly in July 2009 and by October 2009 it was already a little higher than it had been in December 2008. There was a further modest fall in the value of the foreign currency reserves in November 2009.

Source: Public opinion polls conducted for this project by Prism Research, survey results for 2006-2009, please see Table V in annex. Source: Central Bank of BiH, www.cbbh.gov.ba, December, 2009 and Table 6 in annex. 38

The Economic Situation in BiH Graph 3: Central Bank of Bosnia and Herzegovina foreign currency reserves in 2009 31 Central Bank of Bosnia and Herzegovina Foreign Currency Reserves (in millions of KM) 8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000 0 Dec Dec Dec Dec Dec Dec Jan Feb 2003 2004 2005 2006 2007 2008 2009

Mart April May

Jun

Jul

Aug Sept Oct

In any event, it is not difficult to surmise the reason for the reduction recorded during and in particular at the end of 2008. The global financial crisis indirectly resulted in the withdrawal of deposits from the Bosnian and Herzegovinian banking system and this caused the foreign currency reserves of the Central Bank of BiH to be reduced. In our last Early Warning System annual report (2008), with regard to the reduction in the foreign currency reserves, we stated that it was a matter of a short-term reduction in deposits and that consequently there was no need to panic, as we did not expect any such fall to jeopardise the functions of the Central Bank's Currency Board. Trends throughout 2009 confirmed this, as the outflow of foreign currency reserves was effectively staunched and it can be expected that by the end of 2009 the foreign currency reserves will be at a level similar to that of late 2008. In any event, the global financial crisis is a reality and its indirect impact is clearly visible on the Central Bank indicators; however, nonetheless, we believe that we can make out signs of a softening. This may suggest that the worst may well have passed and that positive developments are to be expected in the coming period, if not of the intensity that we saw in previous years, and that there should certainly be no major negative trends regarding the level of the foreign currency reserves for this institution at the annual level.

Source: Ibid. 39

5. Balance of Foreign Trade Moderately Improved In recent years Bosnia and Herzegovina's balance of trade has been marked by negative trends, with a low importexport ratio on the one hand and the steady growth of the deficit on the other. During 2008 Bosnia and Herzegovina generated a deficit in foreign trade of more than 9.5 billion BAM, with an import-export ratio of 41%.32 In contrast to these trends in foreign trade from earlier years we found a major change in the movement of the foreign trade indicator during the nine month period in 2009 under review; this was primarily due to the reduction in the volume of trade, which affected imports, exports and the overall deficit. The total volume of Bosnia and Herzegovina's trade during the first nine months of 2009 was 14.6 billion BAM, of which nearly 10 billion BAM was for imports and just Table 7. The balance of foreign trade between Bosnia and Herzegovina and abroad (millions of BAM) for the periods of IͲX for 2008/09. JanͲOct 2008 JanͲOct 2009 Change in % Export 5,849 4,649 Ͳ 20.5 % Import

13,598

9,984

Ͳ 26.6 %

Volume

19,447

14,633

Ͳ 24.76

Balance

Ͳ 7,749

Ͳ 5,335

Ͳ 31.16

ImportͲExport ratio in %

43.0 %

46.6 %

+ 8.26

Source: Foreign Trade Chamber of BiH Pregled i analiza ostvarene razmjene za BiH for the period 01 to 10 2008/09, November 2009

4.6 billion BAM for exports. The resulting ratio of imports to exports produced a foreign trade deficit worth 5.3 billion BAM; the coverage of imports by exports was 47% (see Table 7). Comparing these indicators to those for the same period in the previous year we found that trade was down by some 5 billion BAM, with imports down by a little more (27%) than exports (21%). This led to an increase in the coverage of imports by exports from 43% for the first 10 months of 2008 to 46.6% for the same period in 2009. While the modest growth in the import-export ratio suggests improving trade conditions all of these changes may certainly be attributed to recessionary tendencies and reduced purchasing power, both on the part of consumers within Bosnia and Herzegovina and in other markets. In other words, the modest increase in the import-export ratio, in combination with a significant reduction in the volume of trade, can hardly be described as a positive development for the external sector of the Bosnian and Herzegovinian economy. Bosnia and Herzegovina's most important foreign trading partners have for some time been, in descending order, Croatia, Serbia, Germany, Italy and Slovenia. The country with which Bosnia and Herzegovina has the largest trade deficit is Croatia: the deficit for the period in question in 2009 being 1.1 billion BAM. When we look at groups of countries Bosnia and Herzegovina has the greatest volume of trade with the European Union, accounting for 51% of all foreign trade. A considerable percentage of the country's overall trade is also with the CEFTA countries (Croatia, Serbia, Montenegro, Macedonia, UNMIK/Kosovo, Albania and Moldova) amounting to around 35%, with the remaining 14% spread across other countries. 33

32 33

Source: Statistics Agency of BiH Statement: Statistika vanjske trgovine, Year IV, No. 12, January 2009. Source: Foreign Trade Chamber of BiH, Pregled i analiza ostvarene razmjene za BiH za period 01 do 10 mjesec 2008/09 godine, November, 2009. 40

The Economic Situation in BiH A breakdown of Bosnia and Herzegovina's foreign trade by product group shows that the agricultural sector still dominates imports, followed by fossil fuels. On the other hand, products from the ores, metals and related products sector lead when it comes to exports. Yet this sector was also the one to see the greatest relative fall in both exports and imports. 34

Source: Ibid. 41

6. Public Opinion on the Economic Situation Further Worsens Following an analysis of the statistical indicators of the condition of the Bosnian and Herzegovinian economy we regularly turn our attention to the public's assessment of the economic situation in the country, both for the immediately preceding period and for the one to come. In this way we can follow to what degree public perceptions reflect the actual economic changes and to a certain extent gain the public's prognosis of what the future holds. Without going into detail, we think that in previous surveys public opinion has proven highly consistent with what has actually been going on in the Bosnian and Herzegovinian economy. More than half of the sample in all surveys conducted during 2008 rated the economic situation as similar to that of the year before. Unfortunately, approximately one-third of the sample felt that the economic situation in the country had deteriorated, although answers in the third quarter of 2008 were somewhat more positive. Answers in the final quarter were amongst the worst, with the largest percentage of the respondent group describing a deteriorating economic situation and the smallest percentage describing the economic situation in the country as having improved. Looking at the results for November 2009 we must conclude that this is the worst assessment of the economic situation in Bosnia and Herzegovina to date. Some 46% of the overall sample expressed the view that the situation in the economy had worsened, while the percentage describing it as having improved was the lowest to date (5%) (see Graph 4). Naturally, keeping in mind the global events and the series of economic, financial, banking, social and other crises as well as the statistical indicators analysed in the first part of the report, there is little wonder that this was the response.

Graph 4: How the public viewed the economic situation in 2008 and 2009

Asessment of the economic situation over the previous year 60

57.1 51.5

47.0 45.9

34.3

34.5

33.7

% 30 20

27.0 13.5

14.0

15.5

10 0

53.8

51.5

10.8 5.4

Mar 2008

Jun 2008

Sep 2008

Nov 2008

Better The same Worse

Nov 2009

Source: Table 8 in annex. 42

The Economic Situation in BiH If we look at a breakdown of the answer to this question by entity we see that the answers from the Federation were more pessimistic, with a greater number of prognoses of economic deterioration. To be more precise, 48% of the sample rated the economic situation as having gotten worse, while 45% described the situation as unchanged.36 The most positive responses to this question came from the respondents in BrÄ?ko District. Moreover, the prognoses for the coming period were also not optimistic and were generally worse than the projections we received during 2008.

Graph 5: How the public view the economic situation in the coming year 37 Responses forecasting further price rises in BiH (as % of all responses)

100.0 90.0 87.6

80.0

87.5

83.8 81.1 74.9

% 70.0

71.8

60.0 50.0 40.0

62.8

63.0

60.2

54.7 Sep 2006

Dec 2006

April 2007

Sep 2007

Nov 2007

Maz 2008

Jun 2008

Sep 2008

Nov 2008

Nov 2009

As usual, the most common response from the sample during all of the surveys in 2008, as well as the November survey of 2009, was that the economic situation in the coming year would not change significantly. Yet in earlier surveys the number that predicted deterioration was normally insignificantly larger than those predicting an improvement in the economic situation. In this survey we found twice as many respondents giving pessimistic estimates as those that gave optimistic ones. More exactly, almost one in every three of the sample expected an economic deterioration, while just 15% of those asked actually expected better days, at least when it came to the economy in Bosnia and Herzegovina (see Graph 5). We did not identify any significant deviations in the obtained results after disaggregating the data in accordance to the gender of the respondents.

36 37

Source: Table 9 in annex. Source: Table 10 in annex.

7. Conclusion Industrial production fell by 12 % in the Federation during the first eleven months of 2009, whereas it rose by 19 % in RS. The rather high value of the index for the oil producing sector, thanks to the commencement of production at the Bosanski Brod refinery, throws considerable light on the reasons for the results in RS. The main percentage increase in the Federation was in the production of tobacco products. While the trends in the Index of Industrial Production differed by entity unemployment rose in both of the entities. The figure was up by some 23,000 in 2008, approximately 5 %. Unemployment grew more in RS (6.3 %) than in the Federation (2.7 %) during the first three quarters of 2009. Retail prices in Bosnia and Herzegovina fell moderately in both entities of the country during the first nine months of 2009 when compared to the same period in 2008. Such a result represents a structural change compared to the results for previous years, when we regularly recorded moderately rising retail prices. The cause of such trends was certainly the reduction in consumption caused by the global recession, which did not pass Bosnia and Herzegovina by. A fall in demand for goods and services as a rule leads to a fall in prices, such as has obviously happened in the Bosnian and Herzegovinian market. The Central Bank of BiH has for some time recorded positive trends regarding accumulated foreign currency reserves, which reached a level of 6.7 billion BAM. However, the Central Bank has not gone unscathed by the indirect negative impact of the global economic and financial crisis. The reason for stating this is the reduction in the foreign currency reserves during 2008 and the modest fall during the first six months of 2009. Yet during the second half of 2009 there was a moderate rise in the level of the foreign currency reserves at the Central Bank and we hoped that by the end of the year this trend would have generated a value of reserves at a level a little higher than the balance at the end of 2008. Looking at how the public viewed the economic situation over the past year, in our November poll we noted the highest percentage of our sample to date describing the economic situation in the country as having deteriorated. Nearly 50 % of the sample said that the economic situation had deteriorated, which is no doubt a â&#x20AC;&#x153;goodâ&#x20AC;? reflection of the actual conditions and the trends shown by the official indicators. When comparing the answers to this question between the entities the results from the Federation were less positive. Looking at the coming period most respondents did not expect significant changes, while just 15% thought that the economic situation in the country might improve.

IV. The Business Enviroment in BiH

By Adnan EfendiÄ&#x2021;

1. The Economic Situation in 2009 Better than the Previous Year 2. Increase in Bosnian and Herzegovinian Company Debt 3. Institutional Problems Hinder Business Sector Development 4. Domestic Institutions Cause High Direct and Indirect Costs 5. Conclusion

1. The Economic Situation in 2009 Better than the Previous Year The results of our surveys into the economic situation in Bosnia and Herzegovina during 2008 were not just poor, but they also showed a general deterioration from quarter to quarter. By reviewing the conducted quarterly surveys we found that the best relative results were for the third quarter, the worst being for the final quarter of the year. In the diagram (Graph 1) we see that nearly 70% of the sample in the final quarterly survey for 2008 described the economic situation in the country as having deteriorated, the highest sample percentage to date to take such a view. Given the recessionary tendencies, which did in fact appear in late 2008, and the level of insecurity, which industrialists in Bosnia and Herzegovina were encountering for the first time in recent memory, such results can hardly be considered as surprising. During 2009, unfortunately, the dynamic of quarterly polling was interrupted and as a result we only have answers from the very end of the year (November 2009) to analyse. But when we did analyse the results received in response to the question on the economic situation in Bosnia and Herzegovina in November 2009 we were positively surprised. What we found was a significant positive shift in business opinion, with nearly half the sample from the business sector taking the view that the economic situation had improved compared to the previous year. While this result was somewhat unexpected, it would appear that business people in Bosnia and Herzegovina are sending the message that the situation has improved, that the worst is over and that the economic situation in the country is better than it was a year ago. This shift can only be interpreted as an announcement of better days ahead for the Bosnian and Herzegovinian economy, given that exactly a year ago we recorded the largest drop in confidence in the economic situation in the country to date.

Graph 1 Expectations regarding the economic situation 38 The economic situation compared to the previous year

80 70 60 50 % 40 30 20 10 0

Better The same Worse April 2007

Sept 2007

Dec 2007

Mar 2008

Aug 2008

Sept 2008

Dec 2008

Nov 2009

Source: Table 1 in annex. 46

The Business Environment in BiH When we turn to look at our business sample's expectations for the coming six months we should remember from our previous report that expectations for the first six months of 2009 were quite poor. If we look at the official statistical indicators for the first half of 2009 it seems that they were justified, confirming for the umpteenth time the forecasts of our business sample. However, it appears that the deterioration of economic conditions that did take place during the first half of 2009 was less evident during the second half and, as we concluded in the economic section of this report, there may even be modest signs of recovery. Finally, when we came to business sector expectations for the first half of 2010, as with the previous question, we were again surprised by the positive shift which appeared in the answers to this question. It is true that the majority of the sample (57%) felt that the situation would be similar to what it was during 2009; however, given that in the final survey of 2008 most of the sample registered a deterioration of economic conditions in the country (62%) this result is surely a sign that business managers do not expect the economic situation in the country to deteriorate in the immediate future, which under the circumstances we may certainly consider as a positive development. Moreover, a considerable percentage (38%) of the sample actually expected the economic situation to improve. 39 All in all, it would appear that our business sample's response suggests that the period of economic downturn in Bosnia and Herzegovina is behind us and that recessionary tendencies should not be expected in the coming period.

Source: Table 2 in annex. 47

2. Increase in Bosnian and Herzegovinian Company Debt Business people in Bosnia and Herzegovina characterised the economic situation during 2009 as having improved in comparison to the previous year. With business people we can be sure that their opinion is largely based on the financial performance of the companies surveyed. In other words, we may expect some improvement in their financial performance, as the responses to our most recent survey confirms. Thus, an absolute majority of the sample (73%)40 said that they were, financially speaking, in a better position than the previous year, a response consistent with those of the previous section. Similarly, in the most recent survey we noted a considerably larger number of companies making full use of their production capacity than was the case in 2008.41 Here one should perhaps keep in mind that the sample's responses relate to a comparison of current economic conditions with those of a year ago, so that the relative improvement we are registering does not de facto have to mean that the state of the economy is good. We may recall that the responses at the end of 2008 on the financial performance of companies were the worst we had ever received. Accordingly, all we can conclude is that companies in Bosnia and Herzegovina were in a better financial position in November 2009 than they were at the end of 2008, which was the worst of the last several years during which we have been monitoring the business sector. Moving on to forecasts for 2010 we found that business people expected their financial situation to improve further, which is to say that they anticipated expansionary tendencies within the economy. According to the results of our November poll a high percentage (73%) 42 of the sample expected their companies' financial position to improve, which is certainly a noteworthy level of optimism. There were no major differences between the entities in this regard. While most of the respondents took the view that their financial position had improved their answers regarding changes to debt levels suggested that things are perhaps not as simple as they might seem. In fact, we have already mentioned that a relative improvement in their financial position in comparison to the previous year does not have to mean a de facto improvement, as the following table makes clear. In our November poll we noted the largest increase in recent years in the debt burden of Bosnian and Herzegovinian companies (see Table 4).

Table 4. ,Žǁ ǁŽƵůĚ ǇŽƵ ĚĞƐĐƌŝďĞ ǇŽƵƌ ĐŽŵƉĂŶǇ͛Ɛ ĚĞďƚ ĐŽŵƉĂƌĞĚ ƚŽ ƚŚĞ ƐĂŵĞ ƉĞƌŝŽĚ in the previous year? Greater (%)

The same (%)

Less (%)

N/A (%)

Sept 2008

Dec 2008

Nov 2009

Sept 2008

Dec 2008

Nov 2009

Sept 2008

Dec 2008

Nov 2009

BiH

30.6

FBIH

29.3

37.5

Sept 2008

Dec 2008

Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009.

Source: Table 3 in annex. Source: Table 3 in annex. 42 Source: Table 5 in annex. 41

Nov 2009

The Business Environment in BiH The sharp increase in debt for the absolute majority of companies in Bosnia and Herzegovina (67%) resulted in a very similar pattern of answers in both entities, which is sufficient indication of how business people have tried to mitigate the impact of the global economic crisis. Thus, the impact of the economic crisis last year, which resulted in a fall in production for both domestic and foreign markets, as we saw in the economic section of this report, was certainly one of the reasons why companies have sought a way out through increased debt. Of course, this increase in debt is also partly due to increased investment; however, the steepness of the increase is certainly not due to a sharp increase in capital investment at a time when production and consumption were falling; rather it represents an alternative source of business finance under conditions of economic stagnation. Finally, we may find some confirmation of our earlier comments in the sample's response as to how their companies performed during the second half of 2009. As can be seen from Graph 2, while a plurality of companies was still able to achieve positive trading we noticed that the percentage operating at a loss was the largest to date (33%). Moreover, we see that the negative trend has already been present for a number of quarters.

Graph 2: Company trading in Bosnia and Herzegovina 43 Company trading in BiH 90 80

78 72

67.3

60 50 40

30 20

32.7

Profit (%)

10 0

Loss (%) April 2007

Sept 2007

Dec 2007

Mar 2008

Aug 2008

Sept 2008

Dec 2008

Nov 2009

To round off our analysis we may conclude that the financial position of most companies did in fact deteriorate, due to increased debt and negative trading, but that when compared to the end of 2008 the financial position of businesses in Bosnia and Herzegovina was relatively better.

Source: Table 7 in annex. 49

3. Institutional Problems Hinder Business Sector Development Responses in regard to how helpful the various levels of government are to the business sector in overcoming obstacles have hardly been encouraging for many quarters now. During 2008 results varied from quarter to quarter, with the worst assessment recorded in December, particularly for state and entity levels.44 Yet the responses to our most recent survey showed that a majority of companies held the view that the authorities provide at least some help in dealing with business problems. We may interpret this change in mood as a reflection of an attempt at the different levels of government to take measures to mitigate the economic crisis and in particular the commitment of government at all levels to the budgetary reforms required for approval of the International Monetary Fund (IMF) Stand-by Arrangement.45 The state level authorities received the best rating (see Table 8), which is supported by our interpretation of the answers and given the fact that state level Government was rated as the most relatively successful in implementing reforms relevant for IMF approval. Unlike most previous surveys, this time it was the lower i.e., cantonal and municipal levels of government that received the worst rating.

Table 8. How helpful are the various levels of government to the business sector in dealing with obstacles to business?

Very

To some degree

Sept

Dec

Nov

Sept

Dec

State

Entity

Cantonal

Municipal

Nov

Neither help nor hinder

Sept

Dec

Nov

Generally unhelpful

Very unhelpful

Sept

Dec

Nov

Sept

Dec

Nov 09

Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009.

As well as our analysis of the Government's effectiveness in providing support to business people in Bosnia and Herzegovina, for a number of years we have been monitoring key obstacles to business in the country. Table 9 includes a list of potential obstacles that Bosnian and Herzegovinian companies face, as well as the results from the last three quarterly surveys.

44 45

Source: Table 8 in annex. The Stand-by Agreement was approved in July 2009, but 72 % of the quota followed the completion of the review in March 2010. 50

The Business Environment in BiH

Table 9. How big an obstacle to successful business are the following: Very Sept 08

Somewhat

Dec 08

Nov 09

Sept 08

Dec 08

Nov 09

Not much Sept 08

Dec 08

Not at all Nov 09

Sept 08

Dec 08

Nov 09

Customs procedures

Tax rates

Unfair competition

Corruption

How the courts work

Political instability

Labour market regulations

The Tax Administration

Procedures for work/trading permits

Environmental regulations

Safety regulations and standards

Lack of trained staff

Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009.

In most of the surveys carried out over recent years the sample identified high taxation rates, unfair competition, political instability and the courts as the main problems facing business. In our last survey, conducted in November 2009, this list changed so that the three most important obstacles to conducting business in Bosnia and Herzegovina (obstacles rated as either "very" or "somewhat") were customs procedures (76%), labour market regulations (72%) and the Tax Administration (72%) (see Table 9). This is the first time that customs procedures and labour market regulations have appeared as major obstacles to conducting business, but the Tax Administration has on occasion appeared high on the list in earlier surveys of the key obstacles to conducting business in Bosnia and Herzegovina. Yet if we take an average of the results for the last three years we find that the main obstacles have been unfair competition and corruption. These were identified as obstacles by an average of 70% of the business sector, which is a clear indicator of what the main barriers to business in Bosnia and Herzegovina are as well as what should be the priority when addressing the problems that face the private sector in this country.

4. Domestic Institutions Cause High Direct and Indirect Costs As has become evident from our business sector survey results, institutions determine how successful domestic companies are in the conduct of their business. We have also monitored the efficiency of the "relevant" institutions in Bosnia and Herzegovina from the beginning of 2008. Having identified the key economic and non-market institutions (or state organisations) of relevance for business performance, in the hunt for economic growth, we then wanted to see how well certain institutions were doing their jobs. The following table shows the results from the last three quarterly surveys.

Table 10. How well do the following institutions do their job?

Very well

Quite well

Quite poorly

Very poorly

Sept 08

Dec 08

Nov 09

Sept 08

Dec 08

Nov 09

Sept 08

Dec 08

Nov 09

Sept 08

Dec 08

Central Bank of BiH

Indirect Tax Authority

Entity tax administrations

The courts

Directorate for European Integration

FIPA

Privatisation Agency

Banking Agency

Employment Bureaux

Foreign Trade Chamber of BiH

Entity chambers of commerce

Social Funds

Nov 09

Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009.

When rating the institutions, which according to economic theory and practice are considered to be relevant for the business sector and economic growth, in November 2009 companies in Bosnia and Herzegovina ranked the following as the least effective: the legal system, the entity tax administrations, the Directorate for European Integration, the banking agencies and the Foreign Trade Chamber of Bosnia and Herzegovina. While the legal system was regularly ranked very poorly in previous surveys, our most recent research is interesting primarily because of the poor showing of the Directorate for European Integration (DEI) and the banking agencies. One possible explanation is that the business people of Bosnia and Herzegovina expected more from the DEI with regard to progress in the area of European integration. How far Bosnia and Herzegovina is lagging behind its neighbouring countries on the path towards European integration must certainly have influenced this climate of opinion. Let us not forget either the series of recent problems related to filling the most senior positions in this institution. Moreover, the banks, which had previously 52

The Business Environment in BiH received relatively good marks, are now in the category of those performing poorly. Again, we can only assume that one of the possible reasons for this view is the uncertainty in the banking sector (e.g., the increase in interest rates and credit conditions) that followed the global financial crisis as well as, perhaps, high expectations of the banks intervening in the sector. As usual, the Central Bank of BiH and the Indirect Taxation Authority were rated as the most effective institutions. They are the key state level institutions responsible for macroeconomic stability in the country and thus for monetary and fiscal policy. The Foreign Investment Promotion Agency also stood out due to its high rating. A relation can be seen between the informal institutions (that is informal connections and rules of behaviour) and day-to-day business. This is why we regularly monitor the answers to a question on how much people in the business sector use informal institutions.

Table 11. Please indicate to what extent you use various forms of informal connections and contacts e.g., family, friends and colleagues in the day-to-day conduct of your business. Mart 08

Jul 08

Sept 08

Dec 08

Nov 09

Very much Somewhat

Not much

Not at all

No answer

Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009.

certainly have influenced this climate of opinion. Let us not forget either the series of recent problems related to filling the most senior positions in this institution. Moreover, the banks, which had previously received relatively good marks, are now in the category of those performing poorly. Again, we can only assume that one of the possible reasons for this view is the uncertainty in the banking sector (e.g., the increase in interest rates and credit conditions) that followed the global financial crisis as well as, perhaps, high expectations of the banks intervening in the sector. As usual, the Central Bank of BiH and the Indirect Taxation Authority were rated as the most effective institutions. They are the key state level institutions responsible for macroeconomic stability in the country and thus for monetary and fiscal policy. The Foreign Investment Promotion Agency also stood out due to its high rating. A relation can be seen between the informal institutions (that is informal connections and rules of behaviour) and day-to-day business. This is why we regularly monitor the answers to a question on how much people in the business sector use informal institutions.

The Business Environment in BiH It is interesting to note that the results for all the quarterly polls in 2008 indicated that informal institutions are used extensively in Bosnia and Herzegovina. Informal connections and contacts are used to a greater or lesser extent by close to 70% of companies, a percentage that increased significantly in the November survey. 46 Thus, in the most recent survey more than 20% of the sample used informal institutions to a great extent, while more than 60% used informal connections and rules of behaviour to a somewhat lesser degree (see Table 11 and Table 12 in annex). The vast majority of the business sector sample used alternative informal institutions on an everyday basis and we noted a modest relative increase in the number of respondents that held this view in the last few surveys, most particularly in our most recent quarterly poll. Lastly, the efficacy of the institutional framework can also be looked at indirectly through the costs that such institutions cause to the private sector. These costs are known as transaction costs and include both direct monetary costs and indirect costs expressed for example in terms of the amount of time spent on various institutional procedures, obtaining required information, costs due to poor institutional performance and so forth. According to the results of the November survey, an absolute majority of the sample (more than 80%)47 thought that they face higher transaction costs than they should, both in terms of direct monetary costs and time consuming procedures.48 Of particular interest is the high percentage of the sample that considered the high indirect cost of institutions as a problem, which is certainly given little attention in official statistics, in spite of the clear hindrance this represents to local companies in the conduct of their business. Since 2008 we have also been monitoring our sample's estimates as to the actual level of direct and indirect costs incurred due to institutions, bearing in mind that these costs have been identified by the business sector as a major problem for the success of their business activities. According to the results of our November poll, direct payments to institutions in Bosnia and Herzegovina increased business costs from 0 - 10% in 80% of companies and by 5-10% in more than 40% of companies, while there was little difference between the entities in the results.49 With regard to indirect or opportunity costs incurred by the business sector, our attention was drawn to how high the estimates of these costs were, as can be seen in Table 6. Table 14. Please indicate how much higher your overall operating costs are due to the indirect impact of state level institutions.

Mart 08 0-5 % 5-10 % 10-20 % N/A

BiH 10 27 26 13

Sept 2008 FBiH 13 27 33 10

RS 23 5 23

BiH 15 25 21 14

Dec 2008 FBiH 18 21 24 13

RS 13 29 13 21

BiH 34 39 26 1

Nov 2009 FBiH 32 40 26 1

RS 44 31 25

Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009. Please note: The full table is available in the annex under Table XVI.

In 40% of companies the indirect costs of the business sector were between five and ten percent higher due to poor institutional performance, regardless of whether we were looking at the sample for Bosnia and Herzegovina or at the entity samples (the estimate for Republika Srpska was slightly lower). There were also a large number of forecasts in the 10 to 20% range (26% of companies), which is an exceptionally high level of costs. All in all, the estimates for institutional costs in Bosnia and Herzegovina suggest that the cost burden on the business sector is particularly problematic when it comes to the indirect costs companies encounter, but which are not published in the official statistics.

Source: See also Table 12 in annex. Source: Table 13 and 14 in annex. 48 Source: Ibid. 49 Source: Table 15 in annex. 47

The Business Environment in BiH And finally, amongst the results of our November poll we have estimates as to how the efficiency/efficacy of state level and entity institutions may have changed over the previous five year period. Even though Bosnia and Herzegovina's progress towards the European Union and towards Euro-Atlantic integration is primarily dependent upon progress in institutional terms it is equally interesting to approach these questions from the perspective of business people, who provide a qualitative assessment of any change in efficiency.

Table 17. Please indicate to what extent the important of the effectiveness of domestic institutions in your line of work has changed over the past five years Nov 2009 Nov 2009 STATE LEVEL INSTITUTIONS ENTITY INSTITUTIONS BiH FBiH RS BiH FBiH RS Significantly worse 26 26 25 20 20 25 Somewhat worse 37 37 38 33 33 31 No change 38 38 38 46 46 44 Somewhat better 1 1 Significantly better Do not know Source: The Business Environment Survey conducted for the UNDP Early Warning System by Prism Research: Business to Business Survey - top 150, November 2009.

As may be seen from the results for the responses to this question (Table 17), an absolute majority of the business people surveyed held the view that institutions in Bosnia and Herzegovina, both at the state level and at the entity level, were less functional than previously. Thus, 63% of the sample said that state institutions have become less effective, while 53% said the same for entity level institutions. The answers we received did not differ significantly between the entities. In any event, not one response was recorded to the effect that state level institutions had improved their performance, as was also the case for the responses for entity institutions. Such a pattern of responses must surely be of concern and not just because institutional efficiency in Bosnia and Herzegovina has not improved at either the state or entity level, but because such answers consistently suggest deterioration.

5. Conclusion In the surveys conducted during 2008 the economic situation in Bosnia and Herzegovina was assessed as deteriorating. Yet we saw a significant positive turnaround in our recent November poll assessment of the economic situation compared to the year before. While the answers received suggested that the economic situation in Bosnia and Herzegovina has improved we interpret this as the business sector saying that the situation is better than in 2008, but certainly not that there has been a major improvement in the economy. So, if just over a year ago we noted the greatest deterioration in economic confidence in recent years, then this turnaround is a sign that there has been some improvement in the eyes of the business sector. More simply, it would seem that the worst of the recession in Bosnia and Herzegovina has passed. In addition to this assessment of the current state of business there have also been more optimistic prognoses for the coming period, in so far as a large percentage of companies said that they expect the economic situation in the country to improve along with their own financial results. Despite the fact that most businesses described the economic situation as better, we noted a sharp rise in our survey in the level of corporate debt. We assume that during the recession that gripped the economy in 2008 and which we are monitoring to some extent in 2009 most companies sought a “way out” of the temporary pressures that lead to stagnation by increasing their levels of debt. Given such a course of events, it is no wonder that the percentage of business people who said that they made a loss was up on the previous year and in the quarterly surveys. Therefore, we may certainly conclude that the financial position of most companies has in reality deteriorated as a result of higher debt levels and negative trading, but also that the business sector’s financial position is nonetheless still better relative to late 2008. In assessing the effectiveness of the various levels of government in Bosnia and Herzegovina we have noted some progress, particularly at the state-level. We interpret these responses in light of the fact that the business sector would seem to have recognised the Government’s efforts to help overcome the current economic problems that are facing the country, with the state level government having taken a particular lead in regard to budgetary reforms. The cantonal and municipal authorities received the worst ratings. When assessing the performance of individual institutions it has already become standard for the state level institutions of monetary and fiscal policy, which are the Central Bank of Bosnia and Herzegovina and the Indirect Taxation Authority, to receive the best ratings. They have now been joined by the Foreign Investment Promotion Agency. The worst rated institutions include the courts, the entity tax administrations, the Directorate for European Integration, the banking agencies and the Chamber of Foreign Trade. We were particularly surprised by the poor rating received by the Directorate for European Integration; we assume that this is due to Bosnia and Herzegovina’s regression on the road to Europe, which has been evident for some time. We believe that the banking agencies received such a low rating because of a series of problems in the banking sector of Bosnia and Herzegovina, particularly related to questionable interest rate hikes and credit conditions at a time of global financial and banking crisis. In the context of our particular focus on where indirect costs arise in Bosnia and Herzegovina, most companies described the direct and indirect costs caused by institutions as hindering the conduct of business, principally as a result of the institutions’ poor efficiency. Institutional effectiveness is not merely rated as low, but an absolute majority of the respondents thought that it has declined over the past five years, particularly at the state level. Under such circumstances it is no wonder that most business people use their own “informal institutions” (i.e., their own connections and contacts) to makes things work. In November 2009 we registered a particular increase in the use of informal institutions.

V. Income and Social Welfare

By Aleksandar DraganiÄ&#x2021;

1. The Social Stability Index for Bosnia and Herzegovina 2. Number of Low-income Households Increasing 3. Crisis affects Public Expectations 4. Purchasing Power and Living Standards in Moderate Decline 5. Minimum Living Standards and Social Protection Require more Attention 6. Conclusion

1. The Social Stability Index for Bosnia and Herzegovina The Social Stability Index showed no change in November 2009 when compared to November 2008, in spite of the fact that 2009 was a year of economic crisis. In November 2009 the Social Stability Index was at 46 points above its lowest level. Graph 1 shows the movement of the Index by quarters since the beginning of 2005. Reasons for this lack of change since the previous period may be sought in the similar number of low income households and the public's unchanged expectations and purchasing power. The condition of the Social Stability Index is certainly also related to job losses in various branches of industry throughout the year, lower wages in some areas and correspondingly lower pensions.

Graph 1: The Social Stability Index for Bosnia and Herzegovina

The Social Stability Index for Bosnia and Herzegovina

120.00 110.00

Social Stability Index

100.00 90.00 80.00 70.00 60.00 50.00 40.00 Chain index Composite index

Feb 05 Jun 05 Sep 05 Nov 05 Apr 06 Jun 06 Sep 06 Nov 06 Apr 07 Sep 07 Nov 07 Mar 08 Jun 08 Oct 08 Nov 08 Nov 09 92.00

97.83

93.33

102.38 104.65 102.22 100.00 102.17 104.26 43

91.84

95.56

106.98

97.83

102.22 100.00 100.00 46

It should be mentioned that while the Social Stability Index continues to record a lower value than the other indices the economic and political stability indices are now only one point above it. We have mentioned the correlation between the Social Stability Index and the economic and political stability indices in previous reports. 51 50 51

Source: Table 18 in annex. The degree of correlation (on a scale of +1 to -1) between the social stability and the economic stability indices for the period May 2000 to November 2009 was 0.72, which indicates a strong positive connection between the two indices, without going into the reasons for these causally consequential relations. At the same time, the degree of correlation between the Social Stability Index and the Political Stability Index was 0.55, which also represents the existence of a significant link between the two indices. 58

Income and Social Welfare In the final quarter of 2009 the number of households with less than 500 BAM in income rose in both entities and in BrÄ?ko District. The only group for which this trend did not hold true was the "minority" populations in Bosniak and Croat majority areas. For all other demographic categories (urban/rural, male/female, etc.) covered by our survey we found an upward trend in the number of low-income households (income of less than 500 BAM monthly). It should be mentioned that there was an increase in the number of households without income in November 2009 when compared to November 2008, which not only reflects the consequences of the crisis but also the ineffectiveness of the current social security system when it comes to securing minimum living standards. The reporting period coincided with both the economic crisis and a drastic reduction in public revenue. It is particularly worrisome that some 45% of the total sample for Bosnia and Herzegovina expected the economic situation to worsen even further over the coming year, while some 40% expected household income to reduce and 15% of the employed thought that they might lose their job in the subsequent three months.

Graph 2: The number of people who expected their income to decrease 52 No of people who expect their household income to decrease 25.00 20.00

20.40

21.63 18.77

15.00 14.24 10.00

11.53 10.80

13.62 10.53

5.00 0.00

Urban Rural Nov 07

Jun 08

Nov 08

Nov 09

According to our data, purchasing power and living standards appear to have fallen moderately. Naturally, this is not immediately obvious from the official statistical data, as there was no change during 2009 in the average wage or price levels. According to the response to our public opinion poll, one may deduce a reduction in purchasing power from the fact that average household costs in November 2009 amounted to 767.5 BAM compared to 907.79 BAM in November 2008. This situation means that a given household is now allocating a higher percentage of its resources to food, clothing and footwear, while either reducing spending on other needs or simply doing without. At the same time, official statistics show no change in the average wage in either entity. 53 At the same time, when we look at the official statistical data 2009 appears to have been a period during which the Consumer Price Index fell overall, regardless of the trends with regard to individual goods and services. If we look at the data by the form of consumption for the first 10 months of 2009, in comparison with the first 10 months of 2008, we find that prices in Republika Srpska (RS) rose most for alcoholic beverages and tobacco, housing, fuel, restaurants and hotels, while there was a fall in the price of transport, clothing and footwear. During the same period prices in 52 53

Source: Table 7a in annex. Source: Table 12 in annex. 59

Income and Social Welfare the Federation of Bosnia and Herzegovina rose most for alcoholic beverages and tobacco, restaurants and hotels and for accommodation and fuel; there was also a fall in the price of transport, clothing and footwear. The most important factor in regard to the social security system relates to the dependence of existing funds (health insurance, child protection, pension and disability insurance and unemployment insurance) on the income and salaries of the employed population. As 2009 saw the number of those employed fall, along with salaries in certain branches, there was a reduction in the funds' income, with a concomitant increase in pressure on the resources available to the funds from new beneficiaries. The fact that in the preceding years only 1.9% of the unemployed had received some form of payment in the case of unemployment speaks volumes for the ineffectual nature of the current system and its capacity. With regard to the pension funds it was evident on the threshold of 2010 that the authorities were aware of the problems that lay ahead. The Government of RS draft budget for 2010 revealed their fear of a breakdown and an attempt to overcome the problems by increasing government transfers to the RS Pension and Disability Insurance Fund. No similar moves have yet been seen in the Federation, but the fact that the average pension in that entity fell by some 6% between November 2008 and November 2009 indicates the obvious problems. It will be very interesting to see how the authorities deal with the demands and needs of the beneficiaries of existing public funds, given the upcoming elections. 54

Source: Table 13 in annex. 60

2. Number of Low-income Households Increasing Graph 3: Number of households with an income of less than 500 BAM 55 Number of low income households (in %) 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0

86.3 71.4

66.5 59.4 47.0 38.1

37.6 38.6

28.1

FBiH RS BrÄ?ko District

Sept 08

Nov 08

Nov 09

According to our poll results for November 2009 the number of low-income households (less than 500 BAM per month) rose from 33% to 39% in Bosnia and Herzegovina as a whole (see table 1a in annex). The number of households with less than 500 BAM per month income in the Federation rose from 28% to 38%, while it rose from 38% to 39% in RS and from 66.5% to 71% in BrÄ?ko District. It should be noted that the number of households with a monthly income above 1,500 BAM was similar at the end of 2009 to what it had been at the end of 2008 (around 5% in the Federation and around 2.5% in RS). Generally speaking, salaries were highest in the financial sector, followed by public institutions and companies. With regard to income in what our methodology classifies as the majority areas the results of our poll in November 2009 revealed an increase in comparison to November 2008 in the number of households with less than 500 BAM per month income in Bosniak majority areas (from 31% to 40%) and in Croat majority areas (from 16% to 27%). These trends did not hold true for the "minority populations" in the areas where one of the constitutive peoples was in the majority. In fact, the number of low-income households amongst the minority populations actually fell in Bosniak majority areas (from 50% to 49.5%) and in Croat majority areas (from 30% to 29%), although in contrast the number of low-income households grew amongst the minority populations in Serb majority areas (from 56% to 59%). (For more detail see Table 2 in annex.) According to our November 2009 poll results there has been an increase in the number of low-income households compared to November of the previous year, both in urban areas (from 25% to 33%) and in rural areas (from 39% to 44%). The number of low-income households also increased regardless of whether one took gender or age as the criterion, with the evident exception of the over 50 age group (see Table 1).

Source: Table 1 in annex. 61

Income and Social Welfare

Table 1 Monthly household income, including the wages and earnings of all household members, child allowance, pensions and any other sources of income (in %) BiH Income in BAM Urban Rural Male Female 18-35 36-50 51+ Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov 08. 09. 08. 09. 08. 09. 08. 09. 08. 09. 08. 09. 08. 09. No income 2.0 3.9 4.4 5.0 2.8 5.7 3.9 3.4 3.3 4.7 2.9 4.7 3.8 4.3 <100 1.3 1.9 2.7 3.7 1.9 3.0 2.3 2.9 0.9 2.0 0.5 2.5 4.4 3.9 101 - 200 2.4 8.6 6.8 12.6 4.6 9.5 5.3 12.2 0.6 3.4 4.4 4.5 9.8 20.0 201 - 300 6.6 5.5 8.9 8.6 6.9 6.4 8.8 8.1 2.0 4.8 5.5 2.1 15.6 11.7 301 - 400 10.7 10.3 14.5 11.1 13.9 10.9 11.9 10.5 9.4 9.2 12.5 14.5 16.8 10.1 401 - 500 2.3 2.7 1.4 2.7 1.6 2.3 2.0 3.1 1.0 2.6 1.4 3.5 2.8 2.3 Sub-total up to 500 BAM 25.3 32.8 38.6 43.7 31.7 37.8 34.1 40.1 17.1 26.7 27.2 31.8 53.2 52.3 Source: Public opinion poll conducted by Prism Research

Before moving on, let us review the data from Table 1, which makes clear the increase in the number of households with no income whatsoever. Regardless of whether they lived in urban or rural areas or if the respondents belonged to younger or older age groups or were male or female it is clear that there was an increase in the number of incomeless households between November 2008 and November 2009. The ponderous, rigid and inappropriate social protection system, particularly when it comes to sudden unemployment or failure to receive salary, has most likely played a major role in this increase of some 4.5% of households in Bosnia and Herzegovina that are without income.

3. Crisis affects Public Expectations The reporting period saw continuous breaking news on the economic crisis, layoffs, civic protests and disturbances, social tension and the perception of an uncertain future. While domestic authorities are were looking for an answer to the question as to how the crisis was likely to affect Bosnian and Herzegovinian society and the economy the programmes for actually dealing with the problems either did not exist or were to be found in the requirement that action be taken to meet the International Monetary Fund's conditions and the obligations under the Stand-by Arrangement. Ad-hoc measures, an inflexible system and individual and institutional irresponsibility have aided the economic situation caused by the crisis to deepen even further, as could be seen from the daily media reports on layoffs, reduced salaries and worse to come. At the same time, as can be seen in the economic section of this report, the Bosnian and Herzegovinian public were of the view that the economic circumstances of their households have worsened. Such opinions, with the concomitant fall in the number who thought that their household’s economic circumstances had improved over the past year, were registered in our research in both entities as well as in Brčko District (see Table 2).

Table 2 ,ĂǀĞ ǇŽƵƌ ĨĂŵŝůǇ͛Ɛ ĞĐŽŶŽŵŝĐ ĐŝƌĐƵŵƐƚĂŶĐĞƐ ĐŚĂŶŐĞĚ ŽǀĞƌ ƚŚĞ ƉĂƐƚ ǇĞĂƌ ;ŝŶ йͿ͍ BiH Survey TOTAL BETTER The same TOTAL WORSE DK/NA Total

FBiH

ƌēŬŽ ŝƐƚƌŝĐƚ

Bosniak majority areas (BMA)

Croat majority areas (CMA)

Serb majority areas (SMA)

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

10.76 53.78

5.43 47.00

10.24 51.95

4.72 44.77

9.39 58.24

5.40 50.58

43.77 28.00

20.17 43.73

4.3 44.8

6.2 44.5

5.4 50.6

34.46 0.99 100.00

45.86 1.71 100.00

36.73 1.09 100.00

47.77 2.74 100.00

31.63 0.74 100.00

43.73 0.29 100.00

25.41 2.82 100.00

36.10

49.9 0.9 100.0

39.8 9.5 100.0

43.7 0.3 100.0

100.00

Source: Public opinion polls conducted by Prism Research

In regard to the expectations for the future, the number of optimists, that is the number of people who expected the economic situation to improve over the next twelve months, declined in both entities, while the number of pessimists, that is the number of people who expected the economic situation to get worse, increased throughout the country (for more detail see Table 5 in the annex and the economics section of this report). Similarly, a comparison of our November 2009 poll results with those of November 2008 shows that less people expected their household cash income to increase over the coming six months in the Federation (from 18% to 17%). In contrast, the number increased in RS (from 26% to 29%). This optimism on the part of some respondents in RS is interesting, especially at a time when salary cuts were announced in the public sector and difficulties were present in the other sectors. At the same time, in both entities there was an increased number of people who expected their household cash income to decrease over the coming six months, namely from 14% to 22% in the Federation and from 9% to 18% in RS (see Table 3 below). According to our sample, people in Serb majority areas were the most optimistic (as many as 29% said that they expected their cash income to rise). At the same time, the greatest concen63

Income and Social Welfare tration of pessimists was to be found in the Bosniak majority areas, with 23.5% of respondents in these areas expecting their cash income to be reduced. If we take respondent age as our criterion then one can note an increase in the number of people from all age categories that expect their income to fall.

Table 3 Do you expect any change in the level of your household cash income over the next six months (in %)? Bosniak Croat Serb FBiH RS majority majority majority 18-35 areas areas areas Quarter TOTAL REDUCE TOTAL INCREASE No change DK/NA Total

36-50

51+

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

14.2

22.2

8.9

18.0

13.6

23.5

16.6

17.2

8.9

18.0

13.4

17.7

9.0

22.1

12.3

20.9

18.4

17.1

25.6

28.7

14.6

14.8

33.3

25.5

25.6

28.7

24.1

24.4

18.6

23.1

19.4

17.6

62.8

56.8

60.6

46.4

67.7

59.3

43.4

47.5

60.6

46.4

57.2

54.9

68.2

50.0

64.1

54.6

4.6

3.9

4.9

6.9

4.1

2.4

6.8

9.7

4.9

6.9

5.3

3.1

4.2

4.8

4.2

6.9

100.0

Source: Public opinion polls conducted for this project by Prism Research

After an exceptionally turbulent period with regard to the price of goods and services between 2007 and 2008 the last year (2009) proved to be a year in which the economic crisis found expression through a levelling off of prices, their stability and a modest fall through the year. When comparing the results of our November 2009 public opinion poll with those of November 2007 and November 2008 we noted a fall in both entities as well as in BrÄ?ko District in the number of individuals who expected prices to continue to rise. Yet the announcement by the Bosnian and Herzegovinian telecom operators of price corrections at the beginning of 2010 and the perceived moderate increase in the price of fuel and electricity have probably affected public perceptions in regard to future price growth. This is evident in the fact that in November 2009 some 72% of people in the Federation and 54% of people in RS continued to expect further price increases. At the same time, the number of individuals in BrÄ?ko District who expected prices to rise remained low, at just 6% (see Table 8 in annex).

Graph 4: Number of people who expect prices to rise 56 No of people who expect prices to rise (in %) 100.00

100.00 89.51

83.87 78.08

80.00

71.58

74.92

60.00

54.43

40.00 FBiH RS Brcko District

20.00 0

6.00

0.43

Nov 07

Nov 08

Nov 09

Source: Table 8 in annex. 64

Income and Social Welfare When comparing the data from our November 2009 public opinion survey to that of November 2008 the number of people who thought that they might lose their job increased in the Federation, reduced in RS and remained unchanged in Brčko District (see Table 4). In November 2009 17% of the sample from the Federation and 13% of the RS sample thought that they might lose their jobs over the coming three months. Those most pessimistic about becoming jobless were in the 18 to 35 age group, 20% of them in fact. This situation is indicative of the problematic status of a large number of employees in the private sector, particularly younger ones, in the absence of unions or union organisation. Table 4 Expect to be jobless during the next three months (in %) FBiH

ƌēŬŽ ŝƐƚƌŝĐƚ

18-35

36-50

51+

Sept 08

Nov 08

Nov 09

Sept 08

Nov 08

Nov 09

Sept 08

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09

Nov 08

Nov 09.

14.97

15.41

17.09

8.98

22.28

12.91

11.39

0.00

22.62

19.90

14.46

11.56

12.63

13.84

Source: Public opinion polls conducted for this project by Prism Research

At the end of this section we will turn our attention to the number of people that supported the holding of public protests, strikes and demonstrations with regard to particular issues (job losses, low salaries, rights, etc). This is important information given the several dozen protests that took place in the preceding period. The most important of these were protests by war veterans, servicemen and the disabled in Sarajevo; teaching staff in the Una-Sana Canton, public sector employees in the Herzegovina-Neretva Canton, the employees of the company “Vranica”, etc. By comparing the November 2009 public opinion poll to that of November 2008, as discussed in Chapter 1, we found that the number of individuals that supported the holding of public protests, strikes and demonstrations had increased in both entities as well as in Brčko District (see Table 10 in annex). It should be of concern that nearly twothirds of the public in the Federation was prepared to engage in some form of protest, regardless of the issue in play (job losses, the inability to find a job, low salaries and pensions, recovery of property, etc). If we look at our sample the answers we received reveal the following: • the inhabitants of the Federation were still more inclined to support protests, strikes and demonstrations than those of RS or Brčko District (Graph 5); • urban populations were more likely than rural populations to offer support to organised forms of the expression of dissatisfaction regarding particular social problems. This represents a change in the trend for previous periods, when the rural population was more inclined to support protests than the urban population; • the 36 to 50 age group was the most ready to protest, which represents a change from the preceding reporting period when it was the 18 to 35 age group that was most prepared to protest; • the population of the Federation was most inclined to support protests, strikes and demonstrations related to job losses (67%), low salaries and pensions (66%) and their inability to find employment (62%); • at the same time, the inhabitants of RS were most inclined to support the holding of public protests, strikes and demonstrations related to low salaries and pensions (42%), job losses (40%) and ethnic or civil rights (40%). It is noteworthy that citizens in RS were beginning to turn more to economic issues that affect their lives at the expense of the political and institutional issues that were previously dominant; • in Brčko District people were most ready to support organised forms of an expression of discontent with regard to the issue of low salaries and pensions (55%), the recovery of property (51%) and in opposition to Government policy (49.5%).

Income and Social Welfare Graph 5: Number of individuals who support the expression of public protest 57 Percentage of people who would support public protest related to... (Nov. 09)

70.0 60.0 50.0 40.0 30.0 FBiH RS Brcko District

20.0 10.0 0.0 Job loss

Inability to find a job

Entity Policy

Poor Ethnic and civil salaries/pensions rights

Conduct of international community

Recovery of property

Source: Table 10 in annex 66

4. Purchasing Power and Living Standards in Moderate Decline A look at the entity statistics offices’ data on the movement of average salaries and the retail price indices allows us to conclude that there were no significant developments during 2009 (see Table 5).

Table 5 Trends of the average wage and the consumer price indices in RS and the FBiH (2009) RS 01/09 02/09 03/09 04/09 05/09 06/09 Month 771.00 813.00 781.00 786.00 773.00 794.00 Average wage (in BAM) 99.90 99.70 99.90 98.50 99.90 100.10 CPI (Consumer Price Index) FBiH Month 01/09 02/09 03/09 04/09 05/09 06/09 Average wage (in BAM) 790.55 785.21 795.20 797.97 792.26 792.88 CPI (Consumer Price Index) 99.90 100.10 99.90 99.00 99.90 100.00

07/09 792.00 101.00

08/09 790.00 99.79

09/09 786.00 100.30

10/09 789.00 100.90

07/09 792.94 100.30

08/09 782.76 99.90

09/09 784.86 99.90

10/09 789.83 100.60

Source: the entity statistics offices

The average monthly wage in October 2009 was 789 BAM in RS and 789.83 BAM in the Federation. On the basis of the data for the first 10 months of 2009 it was evident that there were no significant changes in the level of the average wage. By comparing data for September 2009 and October 2008 we found that the average wage in RS had increased by just 0.38% and that the average wage in the Federation had increased by just 0.56% (for more detail see Table 6). Table 6 Data on the average wage by sector for RS and the FBiH for December 2007, October 2008 and September 2009 RS FBiH

December 2007

October 2008

September 2009

537.00

659.00

573.00

555.00

683.00

609.00

672.00 446.00 697.00

903.00 510.00 871.00

922.00 518.00 922.00

Wage growth (Sep 09/ Oct 08) Ͳ 13.05% Ͳ 10.83% 2.10% 1.57% 5.86%

Agriculture

Fisheries Mining and quarries Manufacturing Electricity, gas and water Construction Wholesale and retail, motor vehicle repairs and personal or household goods Hotels and restaurants Transport, warehousing and communications Financial mediation Activities related to property, rental and business activities Government administration, defence and mandatory social insurance Education

533.00 442.00

567.00 536.00

551.00 546.00

400.00 763.00

450.00 752.00

1269.00 688.00

Healthcare and social work Other communal, social or personal services TOTAL on average

December 2007

October 2008

September 2009

607.03

727.30

680.05

Wage growth (Sep 09/ Oct 08) Ͳ6.50%

423.56

483.66

551.84

14.10%

645.98 507.04 1082.41

751.05 562.18 1235.22

758.40 560.77 1230.64

0.98% Ͳ0.25% Ͳ0.37%

Ͳ2.82% 1.87%

450.95 482.09

516.36 522.85

508.90 539.48

Ͳ1.44% 3.18%

475.00 833.00

5.56% 10.77%

460.88 871.36

517.32 977.26

528.32 957.58

2.13% Ͳ2.01%

1204.00 676.00

1256.00 625.00

4.32% Ͳ7.54%

1254.25 693.70

1257.11 757.62

1210.46 769.86

Ͳ3.71% 1.62%

910.00

1059.00

1071.00

1.13%

951.99

1099.49

1100.02

0.05%

552.00 664.00

890.00 1143.00

895.00 993.00

740.23 827.28

820.20 971.48

809.16 972.09

Ͳ1.35% 0.06%

530.00

620.00

632.00

0.56% Ͳ 13.12% 1.94%

702.45

744.77

761.56

2.25%

628.00

783.00

786.00

0.38%

696.74

780.51

784.86

0.56%

Source: the entity statistics offices

Income and Social Welfare Comparing the data for September 2009 to that of October 2008 we saw that in RS employee wages had increased the most in the areas of transport, warehousing and communications as well as in the generation and supply of electricity, gas and water. At the same time, wages in the Federation increased the most in the areas of fisheries, retail and wholesale trade and the provision of personal and communal services. Certain activities experienced a fall in wages, for example agriculture, fisheries and healthcare in RS and in agriculture, financial mediation, transport, warehousing, etc in the Federation. It is an interesting fact that in most cases, with the exception of financial mediation, the highest wages were in the public sector (administration, government offices, utilities, healthcare, etc). During 2009 the level of the average pension and the lowest pensions in both entities stagnated, but there was a surprising increase in the maximum pension. According to the data of the entity pension and disability insurance funds the average pensions paid out in November 2009 were 343 BAM in the Federation and 316 BAM in RS. This shows a decline of 6% in the Federation and of 1% in RS, compared to the average pension for November 2008. At the same time, the lowest pensions grew not a whit, remaining at 160 BAM in RS and 296 BAM in the Federation. With regard to the highest pensions, a growth of 11% was recorded in RS and as much as 40% in the Federation (see Table 12a in annex and Graph 6).

Graph 6: Average, minimum and maximum pensions by entity 58 Data on pensions in FBiH and RS - November 2008 and 2009

316.22 1.565

Nov 09 RS

160.00 319.41 1.409

Nov 08

160.00 343.00

Nov 09

1.977

FBiH

296.36

Max. pension Min. pension Aver. Pension

368.42 1.393

Nov 08

296.36 0

500

1000

1500

2000

2500

One thing that went in favour of the public of Bosnia and Herzegovina was the Consumer Price Index which stagnated during 2009 and even recorded modest deflation and a reduction in the cost of products and services. The entity statistics officesâ&#x20AC;&#x2122; data shows that the Consumer Price Index for October 2009 was around 1.1%, down on the index for October 2008 in RS and about 1.8% down in the Federation (see Table 7). If we compare the data for the first nine months of 2009 with that for the first nine months of 2008 we also find that average prices for goods and services were about 0.5% down in RS and 0.2% down in the Federation.

Source: Table 12a in annex. 68

Income and Social Welfare

Table 7 Consumer Price Index (CPI) by category (October 2009) RS FBiH 1-10 10 1-10 10 2009/ 2009 / 2009/ 2009 / 1-10 10 1-10 10 2008 2008 2008 2008 99.50 98.90 99.80 98.20 Total Food and non-alcoholic 98.60 96.40 100.50 96.50 beverages 109.30 119.50 106.80 114.60 Alcohol and tobacco 97.10 96.40 95.30 95.30 Clothes and footwear Accommodation, water, electricity, gas and other 104.70 103.60 104.40 101.20 fuels Furniture, household goods and regular 101.10 99.10 101.10 99.10 maintenance 100.80 101.90 100.40 100.90 Health 88.60 89.60 88.30 90.50 Transport 102.60 102.60 100.80 99.70 Communications 102.40 101.00 104.50 101.70 Recreation and culture 100.80 100.40 98.40 100.80 Education 104.00 101.70 106.50 105.80 Restaurants and hotels 103.10 102.30 101.90 100.30 Other goods and services Source: the entity statistics offices

What is particularly worrying here is the increase in prices for communications services and for accommodation and fuel. While there was, by definition, a reduction in the demand for certain goods and services, due to reduced purchasing power, prices in these areas have not shown a typical market reaction, which indicates the monopolistic position of those offering these products and services, with the knock-on effect on purchasing power and living standards. The November 2009 public opinion poll, in comparison to the November 2008 and November 2007 polls, reveals a relative increase in the amount of the household budget being spent on food (including coffee and drinks), as may be seen from Table 8. Table 8 Average household costs, itemised (in %)

Quarter Food (including coffee and drinks) Clothes and footwear Cigarettes/tobacco Personal hygiene items Fuel and car maintenance Public transport: bus and tram Kindergarten/child care Debt repayment Works and house repairs Medicine and treatment Recreation CŚŝůĚƌĞŶ͛Ɛ ĞĚƵĐĂƚŝŽŶ Power Water Telephone Gas

Nov 07 29.8 6.4 5.3 6.2 6.1 2.6 1.3 4.2 3.3 7.0 3.4 4.6 8.6 3.6 6.1 1.5

FBiH Nov 08 40.2 5.5 4.0 6.0 5.5 1.4 0.2 5.9 1.9 5.0 2.4 3.0 6.3 2.0 4.3 0.2

Nov 09 37.6 6.3 4.3 7.2 7.1 1.6 0.2 3.0 2.5 6.0 1.9 4.9 7.7 3.0 4.1 0.3

Nov 07 33.0 7.1 5.1 6.4 5.9 1.7 0.6 4.0 2.8 6.3 4.2 4.7 9.8 2.4 5.1 0.8

RS Nov 08 36.7 6.8 3.8 6.4 6.2 1.6 0.1 3.7 2.4 4.9 2.8 3.4 7.8 1.5 4.7 0.6

Nov 09 42.7 7.6 4.0 6.5 3.5 1.3 0.0 2.5 0.9 4.1 1.6 1.8 6.9 2.0 4.1 0.1

Source: Public opinion polls conducted for this project by Prism Research

Income and Social Welfare Interpretation of this data is rather challenging as it does not correspond well to the data from official statistics, which is the data on the Consumer Price Index, where the prices for these items have been reduced. It is also interesting to note that households in both entities were allocating less to repay debts, for works around the house and for recreation and childcare. The explanation for this is no doubt hidden in the reduced purchasing power of the average Bosnian and Herzegovinian household. Consequently, according to the response to our public opinion poll, this reduced purchasing power can be seen in the fact that average household spending in Bosnia and Herzegovina was 908 BAM in November 2008, but just 767 BAM in November 2009 (which in any case is not sufficient to satisfy all of the needs of the average household in Bosnian and Herzegovina. 59 On the basis of this data, we may more comfortably assert that absolute spending on food has not changed that much, but its relative share within the reduced household budget has.

Graph 7: Average spending by the household budget-line

Average spending by household budget line in BiH (in KM)- November 2008 and 2009.

Nov 09 Nov 08

GAS TELEPHONE

WATER ELECTRICITY CHILDREN'S EDUCATION RECREATION MEDICINES AND HEALTHCARE HOME MAINTENANCE PAYMENT OF DEBTS KINDERGARTEN/CHILD CARE TRANSPORT - BUS AND TRAM FUEL AND CAR MAINTENANCE PERSONAL HYGIENE CIGARETTES/TOBACCO CLOTHES AND SHOES

FOOD (INCLUDING COFFEE AND BEVERAGES0

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

If we look at average spending in accordance with the household budget-line in Bosnia and Herzegovina for November 2009 the respondents indicated that the major areas requiring allocation were food (265 BAM on average per household), clothing and footwear (67 BAM on average per household) and fuel and car maintenance (51 BAM on average per household).

It should be mentioned that the unions in Bosnia and Herzegovina have published the amount required to cover the unionsâ&#x20AC;&#x2122; consumer basket, which in October was around 1,600 BAM for a four member family, or twice the level of the annual salary/ average wage in either the Federation of Bosnia and Herzegovina or Republika Srpska. Source: Table 14a in annex. 70

5. Minimum Living Standards and Social Protection Require more Attention On a number of occasions during 2009 the authorities in RS paid advances, increased instalments and even tried to change legislation in order to free up resources to pay for pensions. While the situation in the Federation pension insurance fund was relatively stable, there were problems regarding payments for disabled veterans. Too little care was paid to the process of approving the right to make increased payments to the disabled veteran population, which put further pressure on the federal budget during 2009.61 By comparing the poll results for November 2009 to those of November 2008 we found that there was an increase in the number of people in Bosnia and Herzegovina who placed their household below the average (see Table 9). Thus, in November 2009 45% of the sample in the Federation, 53% in RS and 73.7% in Brčko District described themselves as being below the average with regard to their household economic situation. This pattern of opinion was probably to the result of the then current socio-economic position of almost of half the population in terms of the impact of the crisis on (un)employment and income levels and the absence of energetic measures to secure the minimum standard of living.

Table 9 Household status: self-described (in %) BiH Sept Nov 08 08 Barely surviving 9.5 8.1 Well below average 14.0 11.4 A bit below average 19.7 24.3 TOTAL below average 43.2 43.8

Nov 09 14.9 12.1 22.0 49.0

Sept 08 7.7 12.0 17.5 37.2

FBiH Nov 08 5.1 9.2 24.4 38.7

Nov 09 8.3 11.6 25.1 45.0

Sept 08 11.7 15.4 23.1 50.2

RS Nov 08 11.5 14.3 24.1 49.9

Nov 09 23.7 11.6 17.7 53.0

ƌēŬŽ ŝƐƚƌŝĐƚ Sept Nov Nov 08 08 09 13.7 25.7 28.5 44.4 17.3 27.7 19.7 24.4 17.6 77.8 67.4 73.7

Source: Public opinion polls conducted for this project by Prism Research

As it currently stands, the pension and disability insurance system is established so that contributions deducted from the wages of the employed are used to pay pensions. The system has proved unsustainable, because it allows only basic social security to be covered. Yet, given the situation and trends in Bosnia and Herzegovina, the situation is characterised as follows: poor demographic trends (falling birth-rate and longer life expectancy), poor labour relations, high unemployment, the consequences of the war, above average disability numbers and emigration by the younger generation. The system is financed on the basis of compulsory contributions for social insurance, which are proportional to the base wage. Attempts to introduce second and third pillars of pension insurance have been unsuccessful, and have remained in the form of lip-service; this is largely as a result of the problems facing the current system of financing and related legal and institutional problems. Coverage for the unemployed by some form of unemployment benefit is considerably lower than in the other countries of South Eastern Europe (average 12%). In fact, a meagre 1.9% of those registered as unemployed in Bosnia and 61 The

passing of the Law on the Rights of Demobilised Soldiers and their Family Members (SN FBiH No. 61/06) confirms, amongst other things, their rights to monetary compensation during extended periods of unemployment, incentives, positive discrimination with regard to employment, preferential status with regard to loans to stimulate employment and the right to healthcare. The entry into force of this Law means that some 60,114 demobilised veterans and 8,136 disabled veterans (whose rights to benefits are based on other legal provisions) have the right to such benefits. . 71

Income and Social Welfare Herzegovina receive benefits, with minor differences by entity (2.2% in RS and 1.5% in the Federation).62 The social welfare system is considered ineffectual and in no condition to ensure minimum social protection for the unemployed. Unemployment benefits are regulated differently in the two entities (the right to unemployment benefit lasts for a maximum of 24 months in the Federation and 12 months in RS). Approximately two-thirds of those registered as unemployed in Bosnia and Herzegovina have access to free health insurance. At the same time, about 20 million BAM is allocated annually in the Federation to finance health insurance for 200,000 beneficiaries who are registered as unemployed, which is half of all resources for the social welfare of the unemployed. Bosnia and Herzegovina spends 4% of GDP on cash payments through social security programmes that are not based on contributions. 63 With such a large part of GDP going on cash payments Bosnia and Herzegovina allocates more public spending for this purpose than most other countries in Europe or Central Asia: expenditures are far higher than the other countries of the region, which tend to average around 1.6%, and more than the countries of the OECD, whose spending is around 2.5%. Such a level of expenditure on cash payments through social welfare programmes that are not based on contributions is fiscally very difficult to sustain, particularly given the looming impact of the global financial and economic crisis on the national revenue. According to a World Bank analysis, in spite of this significant fiscal allocation for cash-based social protection payments, which are not based on contributions, the worst off amongst the population are still very poorly covered. One fact that is cited is that the lion's share of spending on this type of benefit is transferred to individuals who are, statistically speaking, amongst the wealthiest fifth of the population of Bosnia and Herzegovina. In contrast, those from the poorest quintile only receive 18% of all cash payments for social protection (not financed from contributions), which means that this covers less than their percentage in terms of the population of Bosnia and Herzegovina as a whole.

62 63

The BiH Labour Force Survey for 2006/2007; the draft Social Inclusion Strategy of BiH (Council of Ministers of BiH). The World Bank (2009), Bilješke o politici - socijalna davanja u Bosni i Hercegovini: kreiranje održivog sistema socijalne zaštite zasnovanog na stvarnim potrebama, Sarajevo, Pp. 3-8. 72

6. Conclusion Our November 2009 public opinion poll survey continues to indicate the very poor socio-economic circumstances in which the average household in the country lives. While the official statistical data does not show a fall in living standards or purchasing power the results of our quarterly poll show a clear reduction in spending within the framework of the household budget. As a consequence, the proportion of the household budget allocated to spending on food has increased, which leaves insufficient room for other needs to be met. A comparison of the results for November 2009 and those of November 2008 shows that the number of households in both entities and BrÄ?ko District living on an income of less than 500 BAM has increased. The reasons for these trends must surely lie in the consequences of the economic crisis: job losses that reduce the income of individual household members, lower salaries in certain areas or branches of industry and a reduction in pensions and benefit payments for certain categories of the population. In addition to its impact on the quality of life and living standards, the economic crisis has left its mark on expectations. The number of individuals that expected their household income to fall over the coming six months increased, while the number of those in employment who felt that they might lose their job over the subsequent three months also increased to 15%. The current situation and the uncertain future have moved large numbers to support public protests, strikes and demonstrations. The situation is particularly worrying in the Federation, where almost two-thirds of the citizen body are prepared to protest. Given how economic trends have resulted in reduced personal income and individual household consumption it is hardly surprising that government revenue also fell during 2009. This was particularly the case for the funds, the pension system, the health insurance system, unemployment benefits and child and maternity benefits, which are entirely dependent upon salaries and wages paid within Bosnia and Herzegovina. To avoid the collapse of the current budget system and the funds, in July 2009, Bosnia and Herzegovina activated a Stand-by Arrangement with the IMF: drawing down 1.057 billion US Dollars. This "injection" by the IMF allowed for a temporary bridging of the problem, but the fundamental challenges remain to be faced, especially given the need to reduce public expenditure, reform the social insurance system and prevent a further deterioration of the social protection system.

VI. Social Inclusion

By Aleksandar DraganiÄ&#x2021;

1. Social Inclusion: How High is it on the Governmentâ&#x20AC;&#x2122;s Agenda? 2. At the Last Count, more than Half the Population were Socially Excluded 3. Social Inclusion and Ethnic Division 4. Consociational Democracy: Cause or Consequence of Social Exclusion 5. Conclusion

1. Social Inclusion: How High is it on the Governmentâ&#x20AC;&#x2122;s Agenda? As Bosnia and Herzegovina's (BiH) long-term goal is that of EU membership it is hardly surprising that there has been a focus on social inclusion/exclusion issues over the past couple of years. Nonetheless, the concept has still not found its proper place within government policy and too often it is reduced to the analysis of problems, but without an appropriate government response. These claims are confirmed by the fact that work has been ongoing on the Social Inclusion Strategy of BiH for two years. In addition, the existing policies, on which political consensus has been reached, are not actually being implemented. The Disability Policy of Bosnia and Herzegovina, passed by the Council of Ministers of BiH in June 2008, and the BiH Romany Inclusion Strategy, passed in 2005, are obvious examples in support of this claim. The fact that certain types of documents (policies, strategies, plans, etc.) are being adopted in Bosnia and Herzegovina without the appropriate planning of resources to implement them is of particular concern. A glance at the state and entity draft budgets for 2010 clearly shows that there has been no increase in the resources allocated for the realisation of these strategic documents against 2009. Generally speaking, to be socially excluded means to be left out of the social mainstream and to be denied particular economic, social and political rights enjoyed by others. There are numerous sources of social exclusion in BiH. One derives from the territorial divisions that arose during the war and that were institutionalised after the corresponding separation of the "minorities" from the "majorities", which led to the creation of approximately 30 new local government units. The war, which ended in 1995, institutionalised these ethnic differences within the framework of the administrative organisation of the country. If it is the government institutions, within the framework of the current administrative boundaries, that bear the burden of responsibility for social policy within the territories that they cover then it is fair to identify them as generally responsible for the policy of social inclusion. The inequality that has appeared in certain areas of Bosnia and Herzegovina, behind which lies an ethnic background, continues to deny certain groups equal participation in social institutions and other spheres of social life. 64 Another source of exclusion is the fact that some individuals and groups live in poorly developed areas with â&#x20AC;&#x153;few prospectsâ&#x20AC;?. By reviewing the numerous local units it is evident that approximately 80% of councillors in local assemblies come from urban areas, while just 20% come from the rural parts of any given municipality; this is in spite of the fact that normally the geographical distribution of the population is the opposite. 65 The situation regarding higher level decision makers is similar and therefore the policies intended to improve the quality of life for the rural population tend to be ad-hoc and even bereft of any real intention to actually do something in these areas. It has been recognised that artificial barriers are created in backward areas and that these barriers limit the prospects for the inhabitants to fully participate in the social mainstream and reduces their inclusion within the broader community and the dominant system of values. In fact, individuals and or groups from backward regions are less likely to enter educational institutions (young people from such areas are less likely to attend school and tend to leave school earlier), suffer high unemployment and low-incomes, while part-time or temporary employment is the norm, as opposed to permanent employment.

Here one should mention that this aspect of social inclusion has been recognised within the UNDP integrated local planning methodology, where, alongside economic and ecological development, considerable attention has been paid to social development in local communities within Bosnia and Herzegovina. 65 Zlokapa. Z (Ed), Kocka do kocke - dobro je dobro graditi (modeli organizacije lokalne samouprave, EDA Banja Luka, 2007. 75

Social Inclusion Rural areas in Bosnia and Herzegovina also tend to suffer from very poor access to and the quality of public services. 66 Schools are poorly equipped and academic standards are generally very low, healthcare services are neither easily accessible nor of an acceptable standard, while public transport is either not available or insufficient to meet residents' needs; there is also practically no economic activity in such areas. Another source of social exclusion is certainly that of the life circumstances or phase in which an individual finds her/himself. Some phases of life certainly render an individual more vulnerable or more exposed to social exclusion due to circumstances, disease, disability or simply age. In this regard it is usual to mention two categories, namely the young and pensioners, although the group also comprises single parents and the disabled. On the basis of recent research, 67 one can note that youth unemployment is approximately twice the average rate for the country. Pensioner income is also many times lower, even though this group's costs can be many times higher due to their need for treatment and care. In the absence of appropriate policy in the areas of employment, healthcare and social protection many individuals from these groups may be considered as socially excluded. Ultimately one must look for the causes of social exclusion in the dynamic of social change that has overtaken Bosnian and Herzegovinian society since the beginning of the 1990s. Changes to the social system, the introduction of market principles and changes within the dominant social relations following on from the introduction of democratic pluralism, changes to property ownership and the processes of transition, transformation and liberalisation have all affected major parts of the population of Bosnia and Herzegovina. One of the most important causes of the appearance of a large number of socially excluded individuals is the economy and its collapse during the 1990s. Major structural changes have resulted in many people being unable to find a proper place in the labour market or to find employment after losing their jobs in the great conglomerates. While many analysts and theoreticians talk of the need to improve the education system so that Bosnia and Herzegovina can participate properly in the international division of labour, on the basis of competition, there has been little change conducive to this end in real life. These claims are backed up by data on the nature of the labour force, education policy and results, the use of information technology, emigration patterns and the general system of values.

World Bank (2009), Od stabilnosti ka funkcionisanju - lokalna uprava i isporuka usluga, Sarajevo, 2009. Agency of BiH: the BiH Labour Force Survey for 2007 and 2008.

67 Statistics

2. At the Last Count, more than Half of the Population were Socially Excluded As early as 2007, when the UNDP Human Development Report focused on social inclusion issues was presented,68 it was stated that more than half of the population of Bosnia and Herzegovina could be considered as socially excluded on one or other grounds. In fact, the General Social Exclusion Index, which measures the interdependence of living standards, health, education, inclusion in the social mainstream and access, showed that 50.32% of the population was socially excluded on some basis. In the meantime, there have been no major changes in social policy that might reduce this disheartening data, but there are indications that the crisis which marked 2009 may in fact have led to even more people becoming socially excluded. Comparison of the November 2009 and November 2008 opinion polls revealed no significant changes with regard to social exclusion; however, the economic crisis has increased the number of people who may, on the grounds of unemployment, be slowly becoming socially excluded individuals. While our surveys generally analyse the sample's expectations of job-losses, official statistics show that several tens of thousands of workers did in fact lose their jobs during 2009, which is discussed in more detail in the economic section of this report. For data on expectations related to losing one's job sometime in the coming three months by entity (see Table 1). Table 1 Those that think they may lose their job during next three months (in %) FBiH Sept 08 14.97

Nov 08 15.41

ƌēŬŽ ŝƐƚƌŝĐƚ

RS Nov 09 17.09

Sept 08 8.98

Nov 08 22.28

Nov 09 12.91

Sept 08 11.39

Nov 08 0.00

Nov 09 0.00

Source: Public opinion polls conducted by Prism Research

Different education levels can contribute to the level of exclusion. One of the main causes of unemployment in Bosnia and Herzegovina is the general level of education. According to official statistical data69 the number of illiterate people in Bosnia and Herzegovina is somewhere around 5.5%, while the number of people who did not finish primary school is around 12%. Around 31% of the population went no further than primary school, while only just over half have finished secondary school. Just 8% of the population make up the group of individuals with some form of tertiary education. While it is estimated that Bosnia and Herzegovina has more rural than urban inhabitants,70 development in recent decades has left its mark on the situation and population in rural areas. According to economic indicators, confirmed by our survey results,71 household income and the general economic conditions are much worse in rural areas than in urban ones (see Graph 1). The number of low-income households (income less than 500 BAM) increased during 2009 in both rural areas and towns. According to our November 2009 public opinion poll, the number of households with income less than 500 BAM in rural areas was 44%, while the number in urban areas was 33%. The unclear employment status of individuals engaged in agriculture, low and irregular income, inadequate pension and disability insurance policies for farmers and farm labourers and the low level of participation in decision making mean that a large numbers of rural dwellers can be considered as socially excluded.

68 UNDP

BiH 2007, “Social Inclusion in Bosnia and Herzegovina”, Human Development Report for 2007, Sarajevo. Data from the Statistics Agency of BiH draft Social Inclusion Strategy for Bosnia and Herzegovina, June 2009. 70 World Bank population break down estimates place the population of Bosnia and Herzegovina as being 53% rural and 47% urban. 71 See the section on Incomes and social Welfare. 69

Social Inclusion Graph 1: Number of low-income households in urban and rural areas 72 No. of households with less than 500 KM income

Urban

Rural

Nov 09

43.7

Nov 08

38.6

Nov 09

32.8 25.3

Nov 08 0.0

10.0

20.0

30.0

40.0

50.0

We found a similar situation when we looked at gender. Thus, the public opinion polls (see the section on Income and Social Welfare) revealed that women described their economic position as lower compared to men, while female-headed households reported less household cash income. A male/female breakdown is also possible for labour relations, with some employers not meeting their legal obligations on maternity leave. Looking at the age groups within the population we found a number of forms of social exclusion. Young people are the most vulnerable with regard to employment, as is evident from the Labour Force Survey data, which shows youth unemployment (15 to 25) as twice the average rate. Naturally, this is a major reason for young people, i.e., 18 to 35, wanting to leave Bosnia and Herzegovina in such large numbers (Graph 2).73

72 73

Source: Table 2 in annex. An additional reason for wanting to leave the country is the authoritiesâ&#x20AC;&#x2122; responsibility over visa liberalisation, which has yet to materialise. Bosnia and Herzegovina and Albania are the only countries in the Western Balkans whose citizens still require visas for EU countries, as of 19 December 2009. 78

Social Inclusion Graph 2: Number of people who would leave Bosnia and Herzegovina if the opportunity arose 74 Would leave BiH if opportunity arose (in %) 70.00 60.00 50.00 40.00 30.00 20.00 10.00

Nov 08 Nov 09

18 - 35

36 - 50

51+

At the same time, our quarterly survey results show that people from the 50+ age group are in a worse position than the rest when it comes to cash income. This group includes a lot of pensioners as well as people who lost their jobs during the privatisation process and the restructuring of the former major conglomerates, as well as any hope of finding employment due to their declining physical abilities and obsolete education (qualifications and skills).

Table 2 Monthly household income, including all salaries and payments received by all household members: child allowance, pensions and any other source of income (in %) 18Ͳ35 36Ͳ50 51+ Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 No income 3.3 4.7 2.9 4.7 3.8 4.3 <100 0.9 2.0 0.5 2.5 4.4 3.9 101 Ͳ 200 0.6 3.4 4.4 4.5 9.8 20.0 201 Ͳ 300 2.0 4.8 5.5 2.1 15.6 11.7 301 Ͳ 400 9.4 9.2 12.5 14.5 16.8 10.1 401 Ͳ 500 1.0 2.6 1.4 3.5 2.8 2.3 No. of households 17.1 26.7 27.2 31.8 53.2 52.3 Source: Public opinion polls conducted for the needs of this product by PRISM Research

It is an interesting fact that as many as 28% of the people who belong to the 51+ age group have incomes below 200 BAM, which adds to the large number of households with very low incomes that make this group an impoverished one. Households without income make up around 4.5%, representing an exceptionally large group of people living without any income at all. The older population (65+) comprise around 15% of the overall population in Bosnia and Herzegovina. On the basis of their income levels, health and participation in the community many of them may be considered as being socially excluded. The over 65s make up 18.5% of the population of Republika Srpska (RS) 74

Source: Table 3 in annex. 79

Social Inclusion and 13.3% of the Federation of Bosnia and Herzegovina75 (FBiH). Structural demographic indicators indicate that RS is one of the geographical areas with the oldest population profile, as the ratio between the older population (65+) and those younger than six is 3.9. This indicator for the Federation is 2.3. The steady increase in the elderly population and pensioners combined with a falling or, at best, unchanging number of employed places constant pressure on the existing pension and disability insurance systems and funds, straining their sustainability. In times of crisis, such as Bosnia and Herzegovina currently finds itself in, a sturdy and sustainable pension system is one of the most important topics of social policy.

Data of the Statistics Agency of Bosnia and Herzegovina: Draft Social Inclusion Strategy for Bosnia and Herzegovina, June 2009. 80

3. Social Inclusion and Ethnic Division Ethnic division is one factor that contributes to the level of social exclusion in Bosnia and Herzegovina and there are three ways in which this is the case. The effects of ethnic division are clearest in the process of return, while minorities, as a consequence of the very poor integration of returnees to their pre-war places of residence, are one of the most noticeable socially excluded groups. This can be seen not only through their limited political participation and access to services, but also in their alienation from regular social processes in the areas where they live. 76 It is also clear from the data obtained through the public opinion polls conducted in November 2008 and November 2009 (see Table 5) that cash income also varies on the basis of ethnicity. The number of low-income households (income less than 500 BAM) was greater for the minority population in areas in which one of the constituent peoples formed the majority than the number of such households belonging to the majority population group in those territories. Looking only at the data for November 2009 we found that the number of households who classified themselves as a minority in one or more of the territories was 49.5% in Bosniak majority areas (BMA), 29% in Croat majority areas (CMA) and 59% in Serb majority areas (SMA). At the same time, the number of low-income households belonging to the majority population in these areas was 40% in BMA, 27% in CMA and 39 % in SMA. The most important data contained in the table relates to the number of households that classified themselves as a minority and without income over the previous three months. In November 2009 the number of such households in Serb majority areas was 16%, up from 5% in November 2008. That so many households claimed to be without income is a clear consequence of the impact of economic crisis, as manifested in the income levels of the minority population in RS. The reduction in economic activity and consequent loss of opportunities to find temporary or part-time work, of the sort normally done by this category of the population, has had a major impact on incomes themselves, particularly given the fact that resources and programmes earmarked for returnee populations are less than adequate.

UNDP BiH (2007): Social Inclusion in Bosnia and Herzegovina, Human Development Report for 2007, Sarajevo.

Social Inclusion

Table 3 Monthly household income, including all salaries and payments received by all household members, including child allowance, pensions and any other source of income (in %) Bosniak majority areas Croat majority areas Serb majority areas Income in BAM (BMA) (CMA) (SMA) Quarter Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 No income 2.6 5.7 1.5 0.7 4.5 3.9 <100 1.2 2.1 1.6 1.3 3.1 4.5 101 ʹ 200 5.4 7.9 3.7 5.6 14.9 201 ʹ 300 6.0 7.3 5.0 10.8 10.4 6.0 301 ʹ 400 14.4 14.0 6.5 9.4 12.5 6.8 401 ʹ 500 1.6 3.3 1.2 1.3 2.0 2.6 Sub-total up to 500 BAM 31.3 40.4 15.7 27.2 38.1 38.6

Income in BAM Quarter No income <100 101 ʹ 200 201 ʹ 300 301 ʹ 400 401 ʹ 500 Sub-total up to 500 BAM

Minority populations in BMA Nov 08 Nov 09 4.3 2.0 6.2 9.3 9.1 20.5 14.2 13.7 17.2 3.8 7.0 57.7 49.5

Minority populations in CMA Nov 08 Nov 09 2.6 1.2 2.5 1.6 6.6 6.7 8.8 10.3 9.4 8.0 1.2 29.9 29.0

Minority populations in SMA Nov 08 Nov 09 4.6 16.1 3.8 8.6 7.7 11.7 13.9 4.9 23.3 10.2 2.7 7.7 56.0 59.2

Source: Public opinion polls conducted for the needs of this product by Prism Research

It is possible to draw some conclusions in regard to the poor material and financial circumstances of minorities compared to the majority on the basis of the data regarding possession of consumer durables. At the end of 2009 (November) a smaller percentage of the minority population had a mobile phone than did those belonging to the majority populations in Bosniak or Serb majority areas, just as a smaller number of minority population households were in possession of telephone connections or cars (see Table 6). The reasons can certainly to be sought in terms of the difficulties experienced by returnees in integrating, the prejudices that certain majority populations have against minorities and the corresponding reduction in opportunities for finding employment and securing the income necessary to purchase durable consumer goods.

Table 4 Possession of consumer durables Bosniak respondent - majority Nov 07 Nov 08 Nov 0 Telephone 83.3 85.7 80.7 Mobile phone 64.3 74.6 79.1 Car 47.9 49.2 49.9 Minorities in BMA Nov 07 Nov 08 Nov 09 Telephone 84.5 80.5 58.2 Mobile phone 60.5 47.6 67.5 Car 28.3 31.3 40.4

Croat respondent - majority Nov 07 Nov 08 Nov 09 75.1 73.4 73.2 61.2 61.4

73.1 66.0 68.2 61.8 Minorities in CMA Nov 07 Nov 08 Nov 09 76.5 62.5 76.1 56.3 54.3

53.1 36.9

71.3 52.1

Serbs respondent - majority Nov 07 Nov 08 Nov 09 63.8 71.4 65.9 64.9 65.2 74.9 48.7 54.6 46.5 Minorities in SMA Nov 07 Nov 08 Nov 09 63.8 51.2 76.4 64.9 48.7

62.2 24.5

64.9 34.3

Source: Public opinion polls conducted by Prism Research

People do not become excluded simply because they are currently without work or income, but because their future prospects are poor.77 That the minorities are "more sceptical" than the majorities in Bosnia and Herzegovina is clear from the data on the sample's expectations in regard to their household economic circumstances over the coming year. That is to say, according to our November 2009 public opinion poll the number of individuals that expected 77

Šporer, Željka, 2003: “Koncept društvene isključenosti”, Časopis “Društvena istraživanja”, No. 69-70, 2004, Zagreb, Institut društvenih znanosti. . 82

Social Inclusion their economic situation to deteriorate was larger amongst the minority populations in Bosniak and Croat majority areas. At the same time, the number of individuals that expected their economic circumstances to deteriorate was less amongst the minority populations in Serb majority areas. The reason for such a situation is certainly not that there are a larger number of optimists amongst the minority groups in Serb majority areas, but because a greater number of them expected their circumstances to remain unchanged (see Table 5).

Table 5 Expectations regarding changes to their household economic situation over the coming year (in %) Bosniak Croat Serb respondent respondent respondent majority areas majority areas majority areas (BMA) (CMA) (SMA) Nov Nov Nov Nov Nov Nov Quarter 08 09 08 09 08 09 TOTAL DETERIORATION 30.2 30.4 15.0 14.5 21.8 33.7 Remain the same 56.7 55.5 65.8 54.4 52.2 45.1 TOTAL IMPROVEMENT 8.2 11.0 14.7 18.8 20.2 18.2 DK/NA 4.8 3.0 4.5 12.4 5.8 3.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 Minorities in Minorities in Minorities in BMA CMA SMA Nov Nov Nov Nov Nov Quarter Nov 08 09 08 09 08 09 TOTAL DETERIORATION 26.7 31.1 20.7 17.1 24.1 22.9 Remain the same 64.5 47.5 59.9 51.9 60.5 61.3 TOTAL IMPROVEMENT 8.1 15.3 18.6 17.0 13.0 14.0 DK/NA 0.7 6.0 0.7 14.0 2.4 1.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Public opinion polls conducted for the needs of this product by Prism Research

4. Consociational Democracy: 78 Cause or Consequence of Social Exclusion Social exclusion can take on various forms due to different social and cultural activities. Regardless of the differences, what is common to all forms of exclusion is a lack of individual participation in social institutions and access to services. Individuals may participate in the local community and neighbourhood or in group activities while remaining excluded from key economic, political and other social institutions. It is not necessary that they feel isolated or excluded, but if they are not participating in the institutions of the wider society in which they live and if they have no or only difficult access to the services that society provides then they are marginalised in the least certain parts of the broad spectrum of social activities. Consider, for example, 2009 and the Bosnian and Herzegovinian team's performance in the qualifying round for the football World Cup in South Africa. While it is normal throughout the world for football teams to be supported regardless of differences over individual players or the clubs they come from the divisions in Bosnia and Herzegovina go so deep that they affect this area of life. Thus, given the large numbers of members of the Serb and Croat populations who identify themselves with the corps nationaux of their patron states of Serbia and Croatia the level of their support for the football teams of Serbia and Croatia is also considerable. One should also distinguish participation in group activities and the possession of a sense of belonging to a group or community from that of taking action within social institutions. The low level of participation in social institutions differs fundamentally from having a sense of belonging to a group or community.79 Social interaction creates a collective consciousness, collective spirit and or a collective system of values which holds a group together. That there is a lack of harmony in Bosnia and Herzegovina when it comes to group and civic identity, as a reflection of participation within a group compared to participation in social institutions, is clear from our public opinion poll data (Table 6).

Table 6 Pride in membership of one's own people (%) - November 2009 Bosniak respondents Croat respondents Majority Minority Majority Minority Very proud 73.4 65.5 82.4 79.2 Somewhat 14.4 18.4 11.5 10.8 Not particularly 4.3 5.2 1.6 0.9 Not at all 3.3 5.1 0.2 1.4 Of no importance 3.6 3.0 2.2 6.3 Do not know/Cannot decide 1.0 2.0 0.7 DK/NA 0.8 1.3 1.4 Total 100.0 100.0 100.0 100.0

Serb respondents Majority Minority 72.3 75.1 13.0 12.9 7.7 5.7 4.3 2.4 4.9 0.1 0.3 1.5 100.0 100.0

Source: public opinion polls conducted by Prism Research

78 79

Arend Lijphart, “Constitutional design for divided societies”, Journal of Democracy Volume 15, No. 2, April 2004. This is largely a consequence of the situation regarding social capital in Bosnia and Herzegovina. According to the most recent Human Development Report for Bosnia and Herzegovina – UNDP BiH 2009, “Ties That Bind: Social Capital in Bosnia and Herzegovina”, Human Development Report for Bosnia and Herzegovina 2009, Sarajevo – Bosnia and Herzegovina is a country where the linking of social capital predominates, but there is a low level of bridging and connecting of social capital, which confirms the views of Robert Putnam with insight into the situation in Bosnia and Herzegovina. The dominant role played by so-called exclusive social capital, at the expense of inclusive social capital, is an important factor in social exclusion processes. 84

Social Inclusion According to the November 2009 public opinion poll, in the areas where they represent the majority population the Croat respondents were most likely to feel a strong sense of pride in belonging to their ethnic group/people (82%). A somewhat smaller percentage of Bosniak respondents and Serb respondents (73% and 72% respectively) felt a similarly strong sense of pride in belonging to their respective peoples. If we looked at the minority populations in those areas where one of the constitutive peoples was in the majority then we found little or no difference in the number of individuals that felt a strong sense of pride in belonging to their ethnic group/people. Thus, 79% of individuals from the minority population in Croat majority areas, 75% in Serb majority areas and 65.5% in Bosniak majority areas expressed a strong sense of pride in belonging to their respective ethnic group or people. During the reporting period the poll results regarding pride in civic identity/citizenship of Bosnia and Herzegovina made it clear that ethnic/national and civic identities are in tune only for the members of the Bosniak national group, while civic identity is considerably less marked among members of the Croat and Serb populations (Table 7).

Table 7 Pride in Bosnian and Herzegovinian citizenship (in %) Bosniak respondents Croats respondents Nov 08 Nov 09 Nov 08 Nov 09 Maj Maj Major Minor Majo Min orit Min orit Min ity ity rity ority y ority y ority Very proud 80.7 87.0 61.7 52.4 32.5 75.4 52.4 69.3 Somewhat 11.2 8.7 18.7 17.4 33.8 12.5 25.1 13.6 Not particularly 5.4 2.7 6.5 12.3 13.8 3.0 7.7 1.3 Not at all 0.4 8.5 9.6 4.7 1.1 6.5 7.1 Of no importance 0.8 3.3 3.2 14.0 6.7 6.7 6.5 Do not know/Cannot decide 0.9 0.8 1.0 2.0 0.3 0.7 DK/NA 0.6 0.8 0.2 3.2 0.9 1.4 0.9 2.2 100. 100. 100. 100. 100. 100. Total 100.0 100.0 0 0 0 0 0 0

Serbs respondents Nov 08 Nov 09 Maj Maj orit Min orit Min y ority y ority 23.7 72.9 17.9 46.4 20.1 9.8 16.5 16.7 15.7 1.1 22.7 21.6 20.8 5.3 20.7 3.0 17.7

10.2

18.0

8.0

1.2 0.9 100. 0

0.7 100. 0

1.0 3.2 100. 0

4.3 100. 0

Source: public opinion polls conducted by Prism Research

If one compares the data on ethnic/national pride with the data on pride in being a citizen of Bosnia and Herzegovina we are led to reiterate our earlier conclusion, namely that Bosniak respondents tended to equate identity based on membership of a national or ethnic group and civic identity in accordance with citizenship of Bosnia and Herzegovina, but that this was not the case with the Serb and Croat ethno-national groups, who felt considerably more pride in their ethnic membership of their ethno-national group. Comparing the data for November 2009 to that of November 2008 showed that the number of people who expressed a strong pride in their citizenship of Bosnia and Herzegovina had declined for the populations living in both Bosniak and Serb majority areas, while the number actually rose in Croat majority areas. These trends also held true for the minority populations in those areas where one of the constituent peoples was in the majority. An explanation for this decline in the number of the â&#x20AC;&#x153;very proudâ&#x20AC;? may be sought in the current economic and political situation, as well as in the unfulfilled expectations (particularly with regard to association with the European Union and visa liberalisation).

Social Inclusion While public discussion continues regarding the relationship between ethnicity/nationality and citizenship and on problems related to polarisation of the different sides around these issues and constitutional changes there is very little actual engagement in these issues. The lack of any consensus regarding the concept of multi-ethnicity and how it may be reflected in Bosnian and Herzegovinian society and the State, as well as the constant conflicts over the current model of consociative democracy and the Westminster Model of Civil Society, will continue not only to be a cause but also a consequence of the social exclusion of a large number of individuals. In the absence of a common approach to society and the State it would appear that those who profit most care least for the problems and effects of social exclusion, but are nonetheless responsible for creating policy in this area. Aside from the fact that they represent the human rights of another generation the problems of employment, education, healthcare and social protection remain subordinate to the politicisation of ethnic relations within Bosnia and Herzegovina.

5. Conclusion Social inclusion still does not appear to be high on the agenda of government representatives, in spite of the fact that more than half the general population consider themselves to be socially excluded on some grounds (ethnicity, geographic location, life situation/phase and or the dynamic of social change). This impression receives confirmation from the fact that work on the Social Inclusion Strategy of Bosnia and Herzegovina has been ongoing already for two years, with no indication as yet as to when the document will be adopted and become binding for decision makers. The November 2009 public opinion poll showed no major changes with regard to social exclusion, although the economic crisis has increased the number of people who are gradually becoming socially excluded on the basis of unemployment. The current system of unemployment protection allows benefit payments for only 2% of the unemployed, while the basic role of the employment bureaux is limited to securing the right to healthcare. Generally speaking, the economic situation is worse in rural than in urban areas, as a result of low and irregular income, the unregulated employment status of people working in agriculture and the current pension and disability insurance policy. The situation is similar when we look at our sample by gender, where we found disparities between men and women with regard to levels of cash income (favouring men) and the enjoyment of rights under employment-related legal obligations. Systematic policies which do not provide enough support for a decent life continue to be one of the main reasons behind the desire of nearly two-thirds of the population aged between 18 and 35 to leave the country. In addition, the level of inequality that is evident in certain areas of Bosnia and Herzegovina, the basis of which is ethnic background, denies certain groups equal participation in formal institutions and other spheres of social life. Therefore, it is hardly surprising that in certain areas where one or the other of the constituent peoples is in the majority there are examples where members of the minority population tend to have lower income, experience higher levels of unemployment and are generally financially worse off. The current political situation, like forecasts of the political situation during the upcoming election period, is unlikely to be conducive to significant change in the policies that deal with socially excluded individuals and groups. This is not unrelated to how the public views the job being done by the institutions of Bosnian and Herzegovinian, which is clearly with a massive lack of confidence in their performance and the policies for which they are responsible, including social inclusion policy, employment, education, healthcare and social protection.

VII. Ethnic Relations and Stability By Eldar SarajliÄ&#x2021;

1. The Interethnic Stability Index and the Political Context in Bosnia and Herzegovina 2. Ethnic Division and Discrimination on the Rise 3. Declining Support for Refugee Return 4. Social Distance: Party Politics and the Ethnic Affect 5. Ethnic Pride and the State of Bosnia and Herzegovina 6. Conclusion

1. The Interethnic Stability Index and the Political Context in Bosnia and Herzegovina Graph 2: Predicting retail price trends in Bosnia and Herzegovina, 2006-2009 80 The Interethnic Stability Index for Bosnia and Herzegovina 110

Interethnic Stability Index

100

60 Chain index

May Aug Jan Apr Jun Aug Dec Mar Apr Jun Aug Oct Jan Jul Sep Nov Feb Jun Sep Nov Feb Jun Sep Nov Apr Jun Sep Nov Apr Sep Nov Mar Jun Oct Nov Nov 00 00 01 01 01 01 01 02 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 08 08 08 08 09 94 10 98 10 10 10 10 98 10 10 10 98 10 10 97 10 98 10 10 10 96 97 10 10 10 10 10 10 10 98 10 10 10 98 96

Composite index 73 69 73 72 73 74 76 76 75 75 75 76 75 76 76 74 76 75 76 77 77 74 72 75 76 76 76 79 76 77 72 74 78 78 77 74

As shown in Graph 1, the Interethnic Stability Index has fallen by five points compared to the last report: from 77 to 72. This decline represents the first break in the upward movement of the index in the past two years, from November 2007 to the present. In November 2009 the index returned to the same level as it had held in March 2008. The fluctuation of the index over the reporting periods was, naturally, caused by the specific dynamic of political and social relations in BiH; therefore, this fall in the Interethnic Stability Index was not entirely unexpected, bearing in mind the political events that occurred during the reporting period. Yet we can say that the fall in the index was due to both the local and to the regional political situation as well as to the global situation, which has left its mark on Bosnian and Herzegovinian society. The global recession and the regional political context have also had an impact on the stability of relations between ethnic groups in BiH. As a specific dimension of social relations ethnicity very largely reflects rather than determines social trends, as is particularly evident in the Balkan or Bosnian and Herzegovinian context. Beginning with the experience of the collapse of Yugoslavia within the context of the dissolution of international socialism and the social reaction in the form of a growth in the importance of ethnic identity, it is evident that relations between different ethnic groups reflect wider geopolitical and geo-social forces. In other words, ethnic relations between individuals and groups depend directly on the wider social and political context in which they occur. However, ethnicity has exceptional power to 80

Source: research conducted by Prism Research for the purposes of this project, November 2009. 89

Ethnic Relations and Stability influence all spheres of social life, as well as to guide its political and social development. Relations between ethnic groups within the country are under the direct impact of politically, socially and culturally more dominant regions, as well as of the conditioning global context, which already represents the country's historical condition. However, as such, ethnic relations are also the means of extensive political manipulation. Behind every heightening of community relations in BiH there is, practically as a rule, a particular political strategy, presented through a concrete political relationship or the action of the mass media. Every decline in the Interethnic Stability Index in the run-up to an election testifies precisely to the political and contextually determined nature of ethnic relations in BiH.

2. Ethnic Divisions and Discrimination on the Rise Evidently, the most recent reporting period was largely determined by the political nature of many events. We assume that a number of key elements of the Bosnian and Herzegovinian political situation contributed directly to the heightening of relations and the consequent fall in the Interethnic Stability Index. After the agreement on police reform, which did open the doors of the European Union to BiH through the signing of the Stabilisation and Association Agreement, there has been no further major progress in mutual agreement between the political leaders of Bosnian and Herzegovina. The failure of the process of negotiations begun last year in Prud and conflict, not simply between but within ethnic camps, have raised the perception of the ethnic situation and deflated public confidence in the prospect for an improvement in the overall political situation. This is particularly clear from the responses regarding perceptions of where BiH is headed politically. Compared to November 2008, when a little more than half of the sample (58%) said that they thought the situation in BiH was deteriorating, the situation today is much worse: more than 70% of the sample is now of this opinion, with just 19% (compared to 30% last year) of the view that the situation is improving (for more detail see Table 15 in annex). Turning to the political positions of the ethno-political leaders in BiH they remain largely unchanged. Bosniak politicians continue to insist upon the most comprehensive constitutional reforms possible, in order to secure the maximum level of centralisation of political decision making and strengthen the position of the State against the entities. Under the current agreement both entities political systems are doing their best to ensure the maximum degree of political and cultural autonomy for the ethno-national community in BiH. elations between the ethno-political communities and the international community are also difficult. This is particularly true of the already traditionally poor relations between politicians from RS and the Office of the High Representative (OHR). In October 2007 Serb representatives walked out of state level institutions and threatened the functioning of the State of BiH itself, which raised tension between the ethnic groups to a new high. The disagreement between RS and the OHR had the potential to raise tension between Serb respondents and Bosniak respondents in particular, because the nature of the conflict is highly complementary to the ideological differences and strategic priorities of Serb and Bosniak ethno-politics in BiH. Quite certainly, this and similar cases during the reporting period, which have been accompanied by quite sharp ethno-nationalist rhetoric, have led to an increase in the number of cases of verbal harassment and physical attack on the basis of ethnic or national identity. The number of the sample that said they had been subject to harassment or physical attack once on the basis of their ethnic or national identity in November 2009 was double what it had been in November 2008: 3.5 % compared to 1.6% the year before. The percentage that said they had never been attacked was down by five percentage points, from nearly 95% to 90%. The increase was similar for all three of the dominant ethnic groups in BiH, which bears witness to a widespread trend. The situation was somewhat more serious in urban areas than in rural ones: the responses recorded a certain increase in the number of attacks in urban areas. A similar pattern of trends was found with regard to majority versus minority areas and in the gender breakdown: in each case the number of responses indicated that ethnic discrimination in BiH is slowly rising, which confirms the lower value of the Interethnic Stability Index during the reporting period (Graph 2; Table 1a in annex).

Ethnic Relations and Stability Graph 2: Responses regarding verbal harassment and physical attack

Have you or anyone you live with been subjected to verbal harassment or physical attack solelydue to your ethnicity/nationality?

100 90 80 70 60 50 40 30

Sep 2008

Nov 2008

10 0

Nov 2009

No - Never

Yes - Once

Yes - On a number of occasions

Yes - Often

Source:Table 1a in annex 92

3. Declining Support for Refugee Return The worsening of ethnic relations during the reporting period was also evident through the indicators regarding support for minority refugee return. Support has fallen by six full points from last year's 90% full or partial support in towns to just 84% (see Graph 3). Support has declined in all surveyed categories: down four points in rural areas and five points amongst men and women. There has also been a reduction in support for minority return in all age groups, averaging 6% (Table 2a in annex).

Graph 3: Questions related to return in Bosnia and Herzegovina 82 To what extent do you agree or disagree that members of minority peoples, who lived in this municipality before the war, should return to their homes? 90 80 70 60 50 40 30 20 Agree 10

Disagree

BiH

FBiH

The question arises as to what could have caused such a significant fall in support for minority return. First, the overall political situation is certainly not encouraging for the integration of minority returnees into a society determined by majority ethnic norms. However, the trend of increased support for minority return registered in the previous two reporting periods was positively refreshing. This trend was even to be expected, in the wider historical context, given the years that have passed since the preceding conflict and the cumulatively greater level of individual freedoms. In this regard, in comparison with the previous two reporting periods, when support increased by nearly 7 points, there has been a reduction in support for minority return. There does, however, appear to be a perfectly rational and politically determined reason for these changes in perception. Yet the inherent difficulties of achieving a political consensus on the future constitutional organisation of the country (which had become more than obvious after a series of failed negotiations ranging from Prud to Butmir) 82

Source:Table 2a in annex. 93

Ethnic Relations and Stability represented, in this context, the main contribution to the decline in support for minority return. We may assume that the continuous failure to reach political consensus reintroduced to the public discouraging the already fragile confidence in the possibility of coexistence. Similar sentiments were also encouraged by media discourse. The reassurances of representatives of the international community and by certain domestic leaders 83 that it would not come to conflict were, nonetheless, insufficient to maintain the trend of support for minority return in BiH. This was also reflected in the moderate increase (up 3%) in the percentage of respondents that believed that if EUFOR withdraws from BiH war might once again be possible. What is of most concern in this respect and that will certainly have an impact on future perceptions and the acceptance of minority return is the fact that the percentage of respondents that believe war could break out after the withdrawal of EUFOR has been constantly growing over the past two years. In September 2008 the number was 17%, whereas in November 2009 it had risen to 25%. This belief in the hypothesis of the coming of new conflicts is one of the key causes for the publicâ&#x20AC;&#x2122;s lack of confidence in safe minority return. This fear was greatest among Bosniak respondents and it is amongst them that the largest rise in the trend was noticed: rising from last year's 27% to the current 35%, amongst Serb respondents the increase was more modest from 20% to 21%, while it was only amongst Croat respondents that the trend was down, from 20% in November 2008 to 18% in November 2009 (see Table 10 in annex).

See BH Dani, No. 645, 23 October 2009. 94

4. Social Distance: Party Politics and the Ethnic Affect Reflecting the overall situation, vis-Ă -vis ethnic relations, the reporting period saw a lower degree of acceptance of coexistence with members of other ethnic or national groups. The percentage for which it was unacceptable to live in the same state as Bosniak respondents grew by more than five points compared to last year, reaching 15% in November 2009. This increase in the unacceptability of coexistence with Bosniak respondents was particularly evident among respondents who identified themselves as Croat by ethno-nationality and for whom such unacceptability has risen a full 10 points on last year, from 12% in November 2008 to 22% in November 2009. This change may be largely explained by a shift in the political scene and a certain increased tension in relations between the Bosniak and Croat ethno-political blocks on a number of grounds, such as the radicalised debates on the establishment of a public Croat language television channel and the so-called third entity. At the same time, there occurred a process of limited strategic rapprochement between the Croat and Serb ethnic parties, with concomitant activities by the print media. With regard to the Serb sample, the level of unacceptability of living with Bosniaks was similar to that of the previous survey, with a moderate increase on last year. In November 2009 the number of Serb respondents who considered it unacceptable to live in the same state as Bosniaks was 20%. The acceptability of living together with Croats has risen modestly, particularly in majority Bosniak areas (in contrast to minority ones, see annex), which in 98% of cases accept the idea of a common life with Croats. In majority Serb areas the situation was more or less unchanged (88% considered it acceptable to live in the same state as Croats), while in minority ones the number was somewhat larger (96% compared to 88% last year). The acceptability of living with Serbs was also in modest decline, from a total of 92% in the last reporting period to 88% in this one. This decline was low for Bosniak respondents, 93% of whom accepted the idea of coexistence with Serbs (a 0.7% difference from last year). The same was for Croat respondents, 70% of whom approved the same idea with only a 2% difference from last year. There were no major discrepancies between the answers of men and women to these questions, any more than with regard to the questions regarding the desirability of living in the same neighbourhood as people of a different ethno-national profile. Such an option was considered approximately as acceptable as living in the same country as the others or children from one set of ethnic parents sharing a school bench with children of another set of ethnic parents. The situation was naturally quite different when it came to the matter of how acceptable it was for family members to marry someone from a different ethno-national group. This option was not considered acceptable by more than 50% of any of the various groups (give or take a few percentage points) and the indicators were in fact on average some 3 or 4 points lower for this reporting period compared to those collected last year (see annex for more detail). Generally, even though the acceptability of coexistence is an idea that is accepted by the majority of all three Bosnian and Herzegovinian communities the level of acceptability is a little down on last year. It is to be expected that the trend will continue to be determined by the dominant party-based ethnic politics, the political context and the burning political issues and problems. Turning to the acceptability of the option of moving to a town where another ethnic group is in the majority on the basis of better employment prospects we found a somewhat more optimistic situation. Overall, 42% of both male and female respondents replied in the affirmative to this question, which represents a significant increase on the previous reporting period when the number of such answers was 33%. The main change was with the Bosniak ethno-national group, whose readiness passed the 50% threshold and was up by nearly 20 points on the previous reporting period. Compared to November 2008, when just 39% of Bosniak respondents replied affirmatively, in November 2009 the number was up to 59%. The percentage of like answers from members of the Croat group was up by just one point standing at 35%, while the percentage for the Serb ethno-national group was 33% (approximately 6 points up on the previous reporting period). 95

Ethnic Relations and Stability Graph 4: Response rates for labour force mobility by ethnic groups 84 Would you move to town where the majority are of an ethnic group you do not belong to for better job prospects?

120 100 80 60 40

No answer No

20 0

Yes

Bosniak

Croat

Serb

One might expect that the indicator of willingness to move to a town where another ethnic group is in the majority due to better job prospects to be explainable (that is, complementary to) the data on economic circumstances, given that it is directly related to the respondent's economic circumstances, but this does not seem to be the case. While the percentage of Bosniak respondents who described their situation as generally poor 85 was quite high (around 82%), which can in principle explain their willingness to move to a town where another ethnic group is in the majority. The situation was entirely the reverse with the Serb ethnic group, where 94% described their situation as generally poor, but also indicated in large numbers that they were not prepared to move to another "ethnic" town for better job prospects. It would appear that in this case the ethno-nationalist bonds are much stronger than the potential for changing one's economic circumstances, which at least partially refutes the theory 86 of the rigid dependence of ethnic expression on individual socio-economic circumstances. It is interesting that there were no major differences in the gender or urban/rural splits: rural respondents were just 4% more willing to take such a step than those in urban areas. The variations were greater when it came to age groups. More than half (54%) of the respondents in the 18-35 age group replied affirmatively to the question. This indicator could be explained by high youth unemployment and their inability to find work where they live. The conclusion imposed by these indicators is that ethnic distance amongst the young could be reduced by the development of a labour market that transcends ethnic and entity boundaries and brings the younger population into an environment of closer business and economic cooperation. Moving on to the questions that considered the support for ethno-national parties, which frequently serves as the basic reference for ethnic distance and stability in the political situation, we found little change in the answers from the previous reporting period, with just a moderate decline in support of a couple of percentage points. This means that, like last year, more than two-thirds of respondents (71%) believed that the ethno-national parties cannot ensure the protection of the vital national (ethnic) interests that they so strongly advocate. As expected, this percentage was highest in Brčko District (94%), while the difference between the Federation and RS was just 3% (70% versus 73%). Turning to the different ethnic groups, we found the greatest level of support shown by Croat respondents with 25% of respondents taking the view that the ethno-national parties can ensure their vital national interests. The lowest level was amongst Bosniak respondents (12%). Some 20% of Serb respondents also took this view. These differences can no doubt be explained by the nature of political events over the past number of months in 2009. 84 Source:

Research conducted for the purposes of this project by Prism Research in November 2009. For more details see the sections on economic stability and income. 86 Daniel Bell, “Ethnicity and Social Change“, in the Moynihan edition of Nathan Glazer and P. Daniel “Ethnicity: Theory and Experience“. Harvard University Press, 1975, Pp. 141-177. 96 85

Ethnic Relations and Stability Graph 5: Respondent answers on the protection of national (ethnic) interests

Some people say that only the ethnic or ethnically affiliated parties in BiH can protect the vital ethnic/national interests of the ethnic group thay represent. Do you agree or disagree with this opinion? 100 90 80 70 60 50 40 30 20 Disagree

10 0

Agree

BiH

FBiH

BrÄ?ko

Bosniaks

Serbs

Croats

Nonetheless, if elections had been held the week following the interview questionnaire the balance of political forces on the Bosnian and Herzegovinian scene would probably look as follows: If elections were held this week, who would you probably vote for?

12%

2% 4% 2%

10% SNSD, 12% Radom za Boljitak, 2%

18%

HDZ, 10% Won't vote, 16% 16%

None, 23% Don't know, 18%

23%

SBiH, 2% SDA, 4% SDP, 7%

Source: research conducted for the purposes of this project by Prism Research in November 2009. 97

Ethnic Relations and Stability We see that nearly half of the sample was undecided with regard to their party of preference, while the other half was basically divided between the main ethnic parties (excluding the 7% who said they would vote for the SDP). A change in preferences by Bosniak respondents for parties of their own ethnic provenance can be highlighted. Bosniak support for the Party for BiH (SBiH) has fallen from 6% last year to 1% this year, SDA support fell from 15% to 13%, while the newly established Alliance for a Better Future, appearing now for the first time in these surveys, recorded 3% of respondents saying that they would vote for them (see annex). Moving on from party politics, the religious communities have also exerted a powerful influence in public life in BiH over the recent past. This is clear from the indicators of what the respondents thought about the influence of the religious communities on political life in the country. Here we noted a definite increase compared to last year, whereas 29% of the sample said that they thought the religious communities had a "strong" influence over political events, the current figure is 34%.

Graph 6: The involvement of the religious communities in political events

How much influence do you think religious communities have on political events in BiH?

7% 34%

22%

None Not much

30%

Some A lot

Source: research conducted for the purposes of this project by Prism Research in November 2009. 98

5. Ethnic Pride and the State of Bosnia and Herzegovina The fact that the situation regarding ethnic relations was somewhat worse during this reporting period compared to the preceding one would suggest an increase in the level of ethnic pride, but the data shows that this was not the case. The number of respondents saying that they were "very proudâ&#x20AC;? of their personal ethnic identity decreased from 83% in the last reporting period to 76% in this one.

Graph 7: Levels of ethnic pride in Bosnia and Herzegovina 89 How proud are you of belonging to your ethnic group?

13%

Very proud Somewhat Not very Not at all 76%

Not important

The fall of this indicator was most obvious for Bosniak and Serbs respondents, where the numbers who expressed such strong pride has decreased on last year by seven and nine percentage points respectively (from 85% to 72% for Bosniak respondents and from 81% to 72% for Serb respondents). The level of ethnic pride recorded amongst Croat respondents was insignificantly lower than before, by 0.1 of a percentage point and currently stands at 82%. There were no major differences between the various gender, urban/rural and age categories. In each of these cases the level of ethnic pride was a number of percentage points lower than last year. However, there has been an interesting inversion in the levels of ethnic pride with regard to the minority and majority areas of each for the three peoples. Compared to the previous reporting period, when a larger percentage was recorded within minority environments as expressing strong pride in belonging to their people (which is understandable, having in mind the contextual and reactive nature of ethnic expression) there was an inversion in November 2009: that percentage is now somewhat lower in minority than in majority ethnic areas. Nonetheless, the explanation for the general fall in the level of ethnic pride should be sought in the nature of recent political events within each of the Bosnian and Herzegovinian ethnopolities. That this left its greatest mark on the responses of the Bosniak respondents is shown precisely by the responses on ethnic pride: compared to the previous reporting period the level of strong ethnic pride in minority Bosniak areas fell from 91% to 65%, while in majority areas it fell from 85% to 73%.

Source: research conducted for the purposes of this project by Prism Research in November 2009. 99

Ethnic Relations and Stability The overall level of pride in being a citizen of BiH has also been falling. During the previous reporting period the number who said that they felt "very proudâ&#x20AC;? of being a citizen of BiH was 54%, while today the number is 47%. The most significant change was to be found in the Bosniak sample where the indicator fell by more than 20 points over the course of the year, from 82% in November 2008 to 60% in November 2009. There was also a decline in the percentage of Serb respondents who said that they were especially proud of their identity as citizens of BiH: from 36% to 23%. It is interesting to note that the percentage of Croat respondents who were â&#x20AC;&#x153;proudâ&#x20AC;? of their identity as Bosnian and Herzegovinian citizens was up, from 40% last year to 55% this year. It would appear that in this case the major change is to be seen in the Bosniak context, which may be largely explained in terms of not just the overall political situation in BiH but the constant failure to strengthen the position of BiH in the international and regional context. The slow process of liberalisation of the visa regime and European integration process has affected all Bosnian Herzegovinian ethno-national groups. All of this has had an impact on the degree of civic identification with the State of BiH, as well as on the level of pride in civic identity.

Graph 8: Levels of civic pride in Bosnia and Herzegovina 90 How proud are you of being a citizen of Bosnia and Herzegovina? 9% 11%

48% 12% Very proud Somewhat Not very Not at all 20%

Not important

Source: research conducted for the purposes of this project by Prism Research in November 2009. 100

6. Conclusion We may conclude from the indicators for the last reporting period that relations between the various ethnic groups in BiH have deteriorated moderately. This was evident from a number of indicators. The Interethnic Stability Index was down on the previous reporting period and one may presume that the worsening political situation in the country and the long-standing failure of political negotiations between the ethnic leaders, principally on constitutional change, were largely responsible for this fall. As well as the ethno-political rhetoric and the regional and global situations which have affected the trends within Bosnian and Herzegovinian society, tighter economic living conditions, the global recession and the regional political context have also affected the stability of ethnic relations in BiH. There was a fall in support for refugee return in the November survey along with an increase in concern that, were EUFOR to withdraw, war might break out again as well as an increase in ethnic distance (particularly between Croats and Bosniaks) and a modest increase in the willingness to move to a town where another ethnicity is in the majority because of better job prospects. This was particularly marked amongst the younger generation, obviously due to of the burning problem of unemployment. The people of BiH continue, to a considerable degree, to believe that the ethnic nationalist parties are not the answer to their political problems. Unlike the Bosniak respondents, who appear to be disappointed by their ethnic political representatives, the support for the main ethnic parties of Serb or Croat affiliation was somewhat more marked, as can be seen from the continued support of Croat respondents for the HDZ and even somewhat increased support among Serb respondents for the SNSD. However, most respondents seemed apolitical, at least with regard to party affiliation. A very large number expressed no desire to vote or were unsure as to which of the parties on offer to give their vote. As a result of poor political relations in Bosnia and Herzegovina the people's identification with both their ethnic communities and the State has declined to some degree. This was most true of the Bosniak respondents, whose level of pride in both ethnicity and the State has fallen more significantly during the recent reporting period than was the case for those who identify themselves as Serbs or Croats.

101

VIII. Public and Personal Security

By Eldar SarajliÄ&#x2021;

1. The Security Stability Index: a Gentle but Steady Fall 2. Collective Security: what after EUFOR? 3. The Global Economic Crisis and the Potential for Social Unrest 4. Personal Safety and Criminal Activity 5. Confidence and Perceived Corruption within the Police and Judiciary 6. Conclusion

1. The Security Stability Index: a Gentle but Steady Fall Graph 1: The Security Stability Index for Bosnia and Herzegovina 91 The Security Stability Index for Bosnia and Herzegovina

Security Stability Index

110

100

80 Chain index Composite index

May Aug Jan Apr Jun Aug Dec Mar Apr Jun Aug Oct Jan Jul Sep Nov Feb Jun Sep Nov Feb Jun Sep Nov Apr Jun Sep Nov Apr Sep Nov Mar Jun Oct Nov Nov 00 00 01 01 01 01 01 02 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 08 08 08 08 09 10 10 98 10 10 98 98 10 98 98 10 10 10 97 10 10 10 97 10 10 97 10 98 10 98 10 97 10 97 10 96 10 10 10 98 89 89 89 88 88 89 88 87 89 88 87 88 88 88 86 86 87 88 86 87 88 86 87 86 86 85 88 86 88 86 88 85 86 88 88 87

Following the two earlier reporting periods during which the Security Stability Index did not change we saw it fall modestly in the most recent poll. Compared to last year, when stability was indicated by the index at 88 points, it lies one degree lower this year, at 87 points on the index scale. There are a number of fundamental parameters whose influence on the condition of the Security Stability Index of Bosnia and Herzegovina are important to recognise. The first is that the general security situation has hardly changed compared to the previous two reporting periods (during 2008), which were under the strong influence of lamentable events related to juvenile delinquency and crime. While local and state level authorities have taken limited action in this area (principally related to defining strategic steps at the local level and passing the proposed police reform Law at the state level) the public impact of these measures seems to have been at best tepid. Further incidents involving underage individuals took place in Sarajevo, including one killing. Like the earlier killing of Denis Mrnjavac in 2008, the killing of Amar MistriÄ&#x2021; in August 2009 provoked a reaction, albeit rather milder, that expressed the publicâ&#x20AC;&#x2122;s extreme dissatisfaction with the level of public safety in the capital city of BiH. 92

91 92

Source: research conducted for the purposes of this project by Prism Research in November 2009. See news archive at http://www.oslobodjenje.ba/index.php/flash/index.php?id=2043 103

Public and Personal Security The security situation was not much better in the other parts of BiH. According to data carried by news agencies in November 2009,93 there were 44 murders in Bosnia and Herzegovina during the first nine months of the year. Twenty four of them were committed in the territory of the Federation of BiH and 20 on that of Republika Srpska (RS). Of the total number of victims seven were women; the remaining victims were men. A major problem that feeds the public’s sense of a general lack of safety in BiH would appear to derive more from the inability of the law enforcement agencies to prevent such events in advance than from a lack of responsibility on their part for taking action after a criminal act has taken place. This would seem clear from the fact that of the 44 above mentioned murders during the first nine months of 2009, only one remains unsolved, while the other 43 have been completely resolved. This was evident even in the case of Denis Mrnjavac: the cantonal court in Sarajevo delivered its verdict on the Mrnjavac case in June 2009, sentencing the perpetrators of the act to 15, 10 and 4 years in prison. 94 The effectiveness of police and judiciary action after the fact was in this case, no doubt due in part to the strength of the public reaction. One may assume that this was also the reason for the similar response of the security forces in the other cases. Nonetheless, it would appear that what most concerns the public is the relatively high level of criminal activity throughout the country in the first place, which the police evidently have difficulty keeping a proper lid on. This includes the large number of cases involving weapons. According to UNDP data reported in the main print media, there was a 403% increase in the use of weapons in such incidents over the nine month period in BiH. 95 This would appear to be the main problem feeding into the public's sense of personal vulnerability.

See news archives at http://www.intermezzo.ba/latn/?page=9&kat=2&vijest=31426. See news archives at http://www.24sata.info/vijesti/bosna-i-hercegovina/sarajevo/9778-Ubistvo-Denisa-MrnjavcaAdemiru-Lelovicu-Berinu-Talicu-cetiri-godine-zatvora.html 95 See Dnevni Avaz, “U BiH porast oružanih incidenata za 403 posto”, 9 December 2009, p. 11. 104 94

2. Collective Security: what after EUFOR? According to recent information EUFOR will remain in BiH until the general elections in October 2010, after which they will withdraw from the country. While this decision remains a subject of discussion at the European Union foreign policy level, the fact that this information has for some time already been a matter of discussion 96 in the media and in the public sphere in BiH has had a direct impact on the assertions of long-term security and stability in BiH. This is also clear from the Early Warning System's data for 2009. In this year (2009) the number of people who thought that war might be a possibility in BiH, were EUFOR to withdraw, increased by some three points, from 22% to 25% (see the discussion in the section on ethnic relations).

Graph 2: Responses regarding the possibility of a new outbreak of conﬂict in Bosnia and Herzegovina 97 Do you think war might break out if EUFOR withdraw?

11%

25%

Yes No Don't know

64%

Given the political aspect of this question certain differences were certainly to be expected in how the different ethnic groups would approach it. The largest increase in concern that there might be a new war, once EUFOR withdraw, was found amongst Bosniak respondents (from 27% to 35% over the year), with a smaller increase amongst Serb respondents (from 20% to 21%) and none at all amongst Croat respondents, where the trend was in the opposite direction (from 20% to 19%). Given the role of the international community in maintaining overall stability in BiH such trends are very understandable. EUFOR has a marked stabilising and political function in the country and so any change in circumstances will produce, at least at the rhetorical level, a significant reaction. This is particularly true for the Bosniak sample who are evidently more susceptible to geopolitical security concerns, given that the regional political situation, which is based on ethno-national kinship, at least in so far as it determines the support of Serbia and Croatia, hardly favours them. It is interesting that in the most recent reporting period the 18-35 age group amongst respondents was more concerned than their elders about the withdrawal of EUFOR: the number expressing such an opinion increased by seven points, from 19% to 25% during 2009, but no particular deviations from the general trend were noted with regard to the gender or urban-rural categorisations. 96 97

See Dnevni Avaz, “EUFOR ostaje do izbora”, 8 December 2009, p. 5. Source: research conducted for the purposes of this project by Prism Research in November 2009. 105

Public and Personal Security The visa liberalisation process is adding to the concern of certain population groups within the general public and is directly related to the possibility of EUFOR withdrawal from BiH. While perhaps not directly contributing to the public's sense of insecurity, the strict visa regime certainly gives cause for thought in regard to the long-term stability, as it is directly related to the integration of BiH into the security structures of the European Union and NATO. It is precisely because of the visa regime that certain population groups have reacted more forcefully to the announcement of the withdrawal of EUFOR from BiH. Two examples being the Bosniak sample, who, we assume, must feel rather under protected in the regional context and the respondents aged between 18 and 35, whose desire to travel and emigrate is significantly hampered under the visa regime, thus deepening the sense of concern over the situation if EUFOR were to withdraw from BiH. As indicated in earlier United Nations reports in BiH, as well as by the Early Warning System, 64% aged 18-35 would emigrate if the opportunity arose.

106

3. The Global Economic Crisis and the Potential for Social Unrest The social situation in BiH during the reporting period was made even worse by the development of the global economic crisis and its consequences for the country. The short-term consequences, directly related to the increase in unemployment, were particularly worrisome because of the consequences of the financial crisis.98 The unemployment rate, according to the most recent data, has peaked (see the section on economic stability). All this feeds into the potential for social unrest in BiH, a country already considerably weakened by a difficult transitional period, a complex privatisation process and an increase in social inequality and ethnic tension. The very process of integrating BiH into the global and regional economy presents an additional burden. The potential that this represents for the development of social dissatisfaction was clear to see throughout 2009, when particular categories of the population (veterans, disabled veterans and similar categories of social welfare beneficiaries) in the Federation displayed their high level of dissatisfaction with the conditions for the entity Government's credit arrangement with the International Monetary Fund, which resulted in the organisation of a series of minor protests. There were no major social disturbances, but the current pattern of relations between the federal authorities and these population groups suggests that the possibility for complications and more significant protests remains. While these structural relations gave some indications that social unrest might become a threat to the security of (the Federation of ) BiH over the forthcoming period the data does not appear to reveal any significant changes with regard to the public pulse. The percentage of the sample willing to take part in public protests, for a given social or political cause, averaged 50% or below during the reporting period. The major change during the period related to the context of protests over job losses, where the percentage of the sample ready to protest in this case has increased from 48% to 52% over the past year. It is interesting to note that social reasons seem somewhat more important than the political or ethnic ones that have generally been dominant within Bosnian and Herzegovinian society: the percentage who would engage in protests to protect ethnic rights was 49%, with an insignificant increase of 1.7% on the previous year. Hence this data, to a certain extent, confirms the primacy of individual (financial) status over group or political rights in BiH. Looking at the breakdown by entity one of the most interesting indicators was that the sample from the Federation expressed considerably greater readiness to protest over job losses than the respondents from RS: 60% compared to 38%. The latter suggests that the citizens of the Federation are rather more sensitive to the problem of unemployment than those in RS. The sample from the Federation was generally more ready to protest against the entity authorities (47%) than the respondents from RS (34%); however, the trend in the Federation has been downward since November 2008 (when it was 49%) and runs counter, at least to some degree, to the media picture of conditions in this part of BiH that suggests the possibility of an outbreak of social unrest.

See data on http://www.poslovni.hr/130124.aspx 107

Public and Personal Security Graph 3: Responses regarding public protests, strikes and demonstrations in Bosnia and Herzegovina

Do you think war might break out if EUFOR withdraw?

11%

25%

Yes No Don't know

64%

Turning to civil and ethnic rights, it is only among the Bosniak respondents that we can speak in terms of a majority prepared to protest in their defence: 64% of the Bosniak ethno-national group would protest to protect such rights, compared to just 42% of Croat respondents and 40% of Serb respondents. This data would also appear to run counter, at least to a certain degree, to the official ethno-political discourse of the main parties. This applies in particular to those with a Croat affiliation who argue that citizens from the Croat ethno-national group in BiH are extremely dissatisfied with the level of political inequality. Yet in fact, this trend has been in significant decline, when it comes to the Bosnian and Herzegovinian Croat respondents, down from last year's 54% to 42% today. There has been a particular increase in this trend among Bosniak respondents and to a lesser extent among Serb respondents (see Table 8 in annex). With regard to gender disaggregation, it is worth noting that men were more likely than women to protest against job losses (55% compared to 50%), while the age group 36-50 was the sample group most likely to engage in such activities (63%). While the generally accepted opinion in contemporary culture is that the younger generation are more ready to protest for various social, economic and political causes this does not appear to be the case in BiH: in every question of this section it was the middle generation (from 36 to 50) that took the lead, while the youth and the over 50s showed less willingness to participate in public protests (see Table 8 in annex). It would seem that this data confirms the claim of sociologists regarding the inertness of young people in BiH as both a cause and a consequence of their difficult socio-economic circumstances.

Source: Table 8 in annex. 108

4. Personal Safety and Criminal Activity Compared to last year there has been a modest increase in the trends of criminal acts including burglary, car theft and the theft of other valuables. Burglary of houses and apartments has increased overall from 1% in the previous reporting period to 3% in this reporting period. The rate of car theft has increased from 0.6% to 1.7%, while the theft of other valuables increased from 2% to 3% in 2009. There is an interesting difference between the entities with regard to car theft: while the percentage was somewhat higher in the Federation (4% when compared to 2008) it was practically negligible in RS where 0.8% of the sample said that they or a family member had been the victim of such a crime during 2009. Only in the territory of BrÄ?ko District was the level higher than in the Federation of BiH, by just 0.7% (thus totalling 5%). In general terms, the level of recorded criminal activity in any of the categories was lower in RS than in the Federation (see Table 1 in annex). There could be many reasons for such a situation, ranging from the effectiveness of the police to the different levels of economic development and thus the opportunity for theft in the first place. Similar differences were noted between rural and urban areas; the theft rates were practically double in all categories in urban areas. Similarly, men were much more exposed to theft than women (see Table 1a in annex). The number who sought police assistance on some grounds doubled from 4% in the previous reporting period to 9% in the current one. While this doubling was recorded in both entities the resulting rate was considerably higher in the Federation where the number of those who sought police intervention rose from 5% to 10%, compared to an increase from 3% to 6% in RS. As in the previous case, more calls were made to the police in towns than in rural areas (12% compared to 7%) with more made by men than by women (9% compared to 8%), although the increase for women was 5 points up on the previous period, when it was 4%. Looking at minority and majority ethnic areas, it was only in the Serb ethnic sample that we found a higher percentage of calls for police assistance in minority areas. Unlike the Serb respondents, both Bosniak and Croat respondents were more likely to call for police assistance in ethnic majority areas.

109

Public and Personal Security Graph 4: Responses by the general public on the frequency of seeking police assistance

100

During the past three months, have you or a member of your close family sought police assistance for any reason? 100 90 80 70 60 50 40 30 20 Nov 08

10 0

Nov 09

Yes

Don't know / no answer

The increase in the number of calls for police assistance was accompanied by an increase in the level of dissatisfaction with what the police actually did when called. Compared to the previous year, when just over 48% expressed dissatisfaction with police assistance, the percentage has increased this year to 53%. The data for the individual entities was interesting. While a higher level of criminal activity was recorded for almost all categories in the Federation the level of satisfaction with the police assistance received fell, down from 58% last year to 48% this year.

How satisfied or unsatisfied were you what the police did? 60

10 Yes No 0 Not at all satisfied

100

Quite dissatisfied

Quite satisfied

Entirely satisfied

Source: research conducted for the purposes of this project by Prism Research in November 2009. 110

Public and Personal Security This data would appear to suggest that the different rates of criminal activity in the Federation and RS cannot be written off to different levels of police effectiveness. In fact, the only general conclusion that one can draw is that the police in the Federation seem to be more effective in providing assistance after a given criminal act has taken place (as confirmed by the previously mentioned fact of a virtual 100% success rate in dealing with murder cases), while the police in RS may be, to some extent, more successful in preventing criminal activities from happening in the first place. Turning to the reports of police exceeding their authority during the reporting period, the data indicated a certain increase in the number of respondents who witnessed such excesses. During the previous reporting period just 8% of the sample witnessed some form of abuse of police authority, whereas this year the number has risen to 12%. In this case we also noticed a major difference between the entities. The percentage in the Federation increased by three points (from 8% to 11%), but by nine points in RS (from 7% to 16%). We saw similar trends in the other various respondent categories: urban-rural, gender and majority-minority (see Table 5a in annex).

111

5. Confidence and Perceived Corruption within the Police and Judiciary One of the causes of dissatisfaction with police assistance, as well as the generally poor perception of the role of the police forces in society, was that these institutions were generally perceived to be corrupt. Earlier UNDP reports drew attention to this fact, 101 which has received additional confirmation from the most recent Early Warning System data. Thus, 61% of the overall sample for BiH said that they believed that abuse of office, bribery and corruption were factors in police operations. It is interesting that the situation was so similar in both entities, within 2 points, and in line with the general picture, although the trend in the Federation was downward while in RS it had increased a by couple of points.

Graph 5: Perception of the extent of police corruption 102 How widespread do you think corruption, that is bribery or abuse of office for private purposes, is in the police? 3% 15%

34%

20%

Not at all Not much To some degree Fairly

27%

Very

No doubt as a result of the perceived level of police corruption, the approval of police performance has been falling. The percentage that approved of how the law enforcement agencies were doing their job was down on the 2008 figure of 61% to 53% this year. In the Federation the percentage was up by 8 points (from 42% to 50%), while it was down by three points in RS (from 76% to 73%).

101

102

E.g., the Human Development Report on â&#x20AC;&#x153;The Ties that Bind: Social Capital in Bosnia and Herzegovinaâ&#x20AC;?, UNDP, Sarajevo, 2009, p. 81. Source: research conducted for the purposes of this project by Prism Research in November 2009. 112

Public and Personal Security Graph 5a: Approval levels for the work of the police Do you approve of the work of the police?

80 70 60 50 40 30 20 Yes

FBiH

One should note that according to the data from the reports the approval rating for the police in RS was undeniably higher than that of the Federation, even though other indicators, namely the data on the level of satisfaction with the police assistance received and the data on perceived police corruption, suggests otherwise. The data also shows a decline in the level of support for the courts in BiH. While last year 54% of the sample responded in the affirmative when asked whether they approved of the performance of the courts in BiH this year just over 48% of the sample did so. Support in the Federation fell from 46% to 39%, while support in RS fell from 65% to 63%. As in the case of the approval of how the police were doing their job, the respondents from RS were much more appreciative of the job the judicial bodies in the entity were doing than the sample in the Federation.

113

6. Conclusion Concerns over public and personal safety in Bosnia and Herzegovina are increasing, as is evident from the downward trend of the Security Stability Index. The reasons behind this modest fall can be guessed at with a fair degree of certainty by just looking at the registered increase in break-ins into privately owned property and in the number of serious crimes (e.g., murders) in both entities of BiH. Public attitudes still appear to be influenced by last year's debacle over public safety and a number of unfortunate events involving minors. In addition to the poor general sense of public safety, public perceptions in this regard have been significantly influenced by the global recession and the economic problems that have appeared in BiH as a reflection of the global context. This is connected in particular to the prospect for social unrest and dissatisfaction amongst certain categories of the population with state and entity government economic policy. The data in this regard shows that the social and financial causes of public dissatisfaction that are likely to cause public unrest are more important, at least to some degree, than the political i.e., ethnic factors that are normally considered to play the dominant role in Bosnian and Herzegovinian society. The percentage of the public who would take to the streets over their national rights was considerably smaller than the percentage that would do so over job losses. The data from the reporting period thus confirms the primacy for the individual of social/financial status over political rights in BiH. Similarly, there is interesting data which indicates that those most prepared to protest come from the 36-50 age group; one might have expected, as a general principle, that the younger generation would generally be more ready to resort to such a form and expression of public discontent. While the rates for almost all categories of criminal activity were up in the Federation there was actually less dissatisfaction with the quality of police assistance received. The reverse was the case in RS, where there has been a significant change in respect to public disapproval of special police actions: rising from last yearâ&#x20AC;&#x2122;s very low level of dissatisfaction with the level of police assistance of 18% up to 75% this year. Similarly, more than half of the sample said that they thought corruption was a factor in the police force, which has had a considerable impact on the overall perception of the police's role within society.

114

Special Insert on the Environment

By Igor Palandžić

Public Awareness of Environmental Protection as an Issue in Bosnia and Herzegovina Bosnia and Herzegovina, as a country in transition, is faced with numerous social and economic problems and amongst the most pressing are the problems related to environmental protection and the use of natural resources. The pressures on the environment are evident, not least because BiH is still being used largely as a source of natural resources (timber, energy, etc.) and a supply base for the immediate and wider surrounding area. In recent years there has been some progress towards improving environmental protection and the better management of natural resources, but not enough. For sustainable development to be reached, as advocated by the EU, there must first be better links between the social and economic aspects and those of the environment. For this to happen the relevant institutions must pay more attention to activities that will produce progress on this issue. The wider public has an important role to play in this process, as it can and should put more pressure on decision makers. A public that is well informed on environmental protection issues is a key factor for the measures needed to integrate the environment into other social and economic sectors. In order to arrive at a better picture of public opinion in BiH three questions related to environmental protection were included in the public opinion poll conducted for the Early Warning System Report. From the results received (Graph 1) it is possible to conclude that the public is well informed about the main environmental issues facing BiH today. They agree to a considerable extent with the strategic documents prepared on this theme in BiH, which single out air and water pollution and the problems related to the creation of waste as the main problems. Public opinion in BiH on climate change (Graph 2) is also in line with expert opinion, which stresses that climate change has been recognised as one of the main threats to future development at both the global level and in BiH itself. Of particular interest is the data on the publicâ&#x20AC;&#x2122;s readiness to pay more for environmentally acceptable products i.e., to change their own behaviour in order to protect the environment. According to the survey, nearly 80% of the people surveyed would change their behaviour to benefit the environment in BiH. These indicators offer some guidance for the political parties and leaders in BiH regarding the publicâ&#x20AC;&#x2122;s increasing level of awareness on environmental issues and how they relate to sustainable development. Naturally, there is a need to do more on additional education and programmes to stimulate environmentally responsible behaviour and this approach should be used to encourage the public to engage in environmental protection issues and increase pressure on decision makers.

116

Special Insert on the Environment Graph 1: Perceptions of the ecological problems in BiH

103

To what extent is the environment in BiH subject to climate change?

3% 7%

11% 37%

Considerably Somewhat Not much Not at all

42%

Don't know / don't wish to answer

Graph 2: Perceptions of the eďŹ&#x20AC;ects of climate change in BiH 104 What is the main ecological problem facing BiH today?

36%

21%

Air pollution Water pollution Toxic substances in the environment

17%

Watste creation / insufficient recycling 19%

103 104

Don't know / don't wish to answer

Source: research conducted for the purposes of this project by Prism Research in November 2009. Source: research conducted for the purposes of this project by Prism Research in November 2009.

117

Special Insert on the Environment Graph 3: Support for environmental protection in BiH 105 Would you be prepared to pay more for more ecologically sound product (eg. recycled paper, organic food) or to change your behaviour (eg. recycled bottles, save energy at home) to protect the environment?

13% 4% 30%

Definitely, yes Probably, yes Probably not Definitely not 47%

105

Don't know / don't wish to answer

Source: research conducted for the purposes of this project by Prism Research in November 2009. 118

ANNEX

I. POLITICAL STABILITY

Table 1

In which direction would you say Bosnia and Herzegovina is headed, given the current political situation? Sample

Gender All March June Sept Nov Nov 08 08 08 08 09 % % % % % 67.0 50.0 50.9 63.4 75.0 23.8 35.9 36.0 25.0 16.5 9.2 14.1 13.1 11.7 8.5 100.0 100.0 100.0 100.0 100.0

Worse Better DK/NA Total

March June 08 08 % % 70.3 48.3 21.8 40.4 7.8 11.3 100.0 100.0

Male Sept 08 % 51.8 36.3 11.9 100.0

Nov 08 % 63.8 26.9 9.3 100.0

Female Nov March June Sept Nov Nov 09 08 08 08 08 09 % % % % % % 76.8 63.8 51.7 50.1 63.0 73.1 15.1 25.8 31.5 35.7 23.1 17.9 8.1 10.5 16.8 14.3 13.9 8.9 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

100

Total sample %

Graph 2 - With regard to current political conditions, things in BiH are getting worse

67.0 %

50.0 %

50.9 %

63.4 %

75.0 %

20 0 Mach 08

June 08

Sept 08

Nov 08

Nov 09

120

Table 2

In which direction would you say Bosnia and Herzegovina is headed, given the current political situation? Sample March 08 % 78.8 16.1 5.1 100.0

Worse Better DK/NA Total

Bosniak majority Croat majority Serb majority June Sept Nov Nov March June Sept Nov Nov March June Sept Nov Nov 08 08 08 09 08 08 08 08 09 08 08 08 08 09 % % % % % % % % % % % % % % 54.4 57.2 79.7 90.5 57.7 57.5 61.5 52.9 70.5 57.3 42.5 42.5 50.3 62.9 31.7 31.8 13.5 6.0 26.5 27.9 23.3 24.7 15.9 30.6 43.0 42.0 34.6 24.2 13.9 11.0 6.8 3.4 15.8 14.6 15.1 22.4 13.5 12.2 14.5 15.5 15.1 12.9 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

Table 3 How would you describe the economic situation Bosnia and Herzegovina is in? Sample Very poor Generally poor Neither good nor bad Generally good Very good DK/NA Total TOTAL POOR Neither good nor bad TOTAL GOOD DK/NA Total

All Nov 08 Nov 09 % % 29.1 42.2 36.6 38.3 29.8 17.7 2.9 1.1 0.4 1.3 0.8 100.0 100.0 65.7 80.5 29.8 17.7 3.3 1.1 1.3 0.8 100.0 100.0

Bosniak majority Nov 08 Nov 09 % % 37.3 47.0 40.3 36.4 21.3 15.4 1.2 0.2 0.9 100.0 100.0 77.6 83.5 21.3 15.4 0.2 1.2 0.9 100.0 100.0

Croat majority Nov 08 Nov 09 % % 12.0 27.8 23.1 47.1 46.8 20.6 16.2 0.7 0.4 1.6 3.7 100.0 100.0 35.0 74.9 46.8 20.6 16.6 0.7 1.6 3.7 100.0 100.0

Serb majority Nov 08 Nov 09 % % 14.6 24.4 46.8 37.9 32.9 35.4 3.1 0.6 2.5 1.6 100.0 100.0 61.4 62.3 32.9 35.4 3.1 0.6 2.5 1.6 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

121

Table 4

Would you leave Bosnia and Herzegovina to live in another country, if opportunity arose? Age group Responses March June 08 08 % % 42.2 38.2 47.5 50.3 10.3 11.4 100.0 100.0

Yes No DK/NA TOTAL

All 18 35 36 50 Sept Nov March June Sept Nov Nov March June Sept Nov Nov 08 Nov 08 09 08 08 08 08 09 08 08 08 08 09 % % % % % % % % % % % % % 41.6 40.4 44.0 64.7 61.3 64.5 63.3 66.5 51.1 46.1 45.6 39.4 51.9 47.9 46.3 49.4 23.6 27.7 24.3 19.2 27.7 35.9 39.7 41.6 48.9 39.0 10.6 13.3 6.6 11.7 11.0 11.2 17.5 5.7 13.0 14.3 12.7 11.7 9.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

Table 5 Would you leave Bosnia and Herzegovina to live in another country, if opportunity arose? Sample

Bosniak majority Croat majority March June Sept Nov Nov March June Sept Nov Nov 08 08 08 08 09 08 08 08 08 09 % % % % % % % % % % 48.7 36.8 48.2 39.2 56.3 41.4 43.5 48.8 43.4 36.4 44.2 52.4 41.2 44.8 36.4 44.7 40.4 44.0 43.2 51.1 7.2 10.8 10.6 15.9 7.3 14.0 16.2 7.2 13.5 12.5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Yes No DK/NA TOTAL

Serb majority March June Sept Nov Nov 08 08 08 08 09 % % % % % 34.7 38.0 31.5 41.6 32.7 52.0 50.8 56.3 47.6 63.2 13.3 11.2 12.1 10.8 4.1 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

122

Table 6

To what degree do you support the process of Bosnia and Herzegovina joining the European Union? All Sept Nov Nov 08 08 09 % % % Strongly support 50.9 48.5 54.7 Somewhat support 24.7 27.4 28.4 Neither support. nor oppose 14.4 13.8 10.5 Somewhat oppose 2.5 1.9 2.2 Strongly oppose 3.9 5.0 2.4 DK/NA 3.6 3.4 1.8 Total 100.0 100.0 100.0 TOTAL SUPPORT 75.6 75.9 83.0 Neither support nor oppose 14.4 13.8 10.5 TOTAL OPPOSE 6.4 7.0 4.6 DK/NA 3.6 3.4 1.8 Total 100.0 100.0 100.0

Bosniak majority Croat majority Serb majority Sept Nov Nov Sept Nov Nov Sept Nov Nov 08 08 09 08 08 09 08 08 09 % % % % % % % % % 72.2 74.5 82.6 45.6 34.3 38.7 29.3 20.2 29.4 15.8 15.2 11.8 19.4 44.0 31.8 34.9 36.7 43.8 7.6 6.0 3.9 27.4 13.3 17.1 18.3 24.1 16.5 1.0 0.4 0.2 1.4 1.9 2.7 4.7 4.0 4.6 0.1 0.7 0.8 1.9 1.1 2.0 8.8 11.7 4.5 3.3 3.1 0.7 4.2 5.4 7.8 4.0 3.3 1.3 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 88.0 89.7 94.4 65.0 78.3 70.5 64.2 56.9 73.2 7.6 6.0 3.9 27.4 13.3 17.1 18.3 24.1 16.5 1.2 1.1 1.1 3.4 3.0 4.6 13.5 15.7 9.1 3.3 3.1 0.7 4.2 5.4 7.8 4.0 3.3 1.3 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

Tabela 7 All things considered, would you say that Bosnia and Herzegovina will benefit from membership of the European Union? Sample Yes No ! & 10 & TOTAL &

answer

Source: Public opinion polls &

Bosniak majority Nov 09 % 86.7 5.2 8.1 100.0

Croat majority Nov 09 % 67.6 15.3 17.0 100.0

Serb majority Nov 09 % 74.5 12.5 12.9 100.0

Br ko District Nov 09 % 77.7 10.2 12.1 100.0

1 by PRISM Research

123

Table 8 Generally speaking, is your image of the European Union strongly positive, generally positive, generally negative, or strongly negative? Sample Strongly positive Generally positive Generally negative Strongly negative ! & 10 & & answer TOTAL

Bosniak majority Nov 09 % 70.0 22.8 2.1 1.5 3.6 100.0

Croat majority Nov 09 % 37.5 41.0 6.6 1.8 13.0 100.0

Serb majority Nov 09 % 26.3 52.9 9.9 4.2 6.7 100.0

Br ko District Nov 09 % 47.8 50.1 0.3 1.9 100.0

Source: Public opinion polls conducted by PRISM Research

Table 9

If a general election were held this week,what party would you be most likely to vote for, regardless of the level of government in question? All Bosniak majority Croat majority Serb majority Sept Nov Nov Sept Nov Nov Sept Nov Nov Sept Nov Nov 08 08 09 08 08 09 08 08 09 08 08 09 % % % % % % % % % % % %

Sample

DNZ BiH Demokratska narodna zajednica BiH Stranka za Bosnu i Hercegovinu SDA Stranka demokratske akcije Stranka penzionera umirovljenika BiH

4.3 6.9 0.1

0.2 0.2 0.5 0.2 1.2 9.4 6.8 1.7 7.2 15.2 17.6 15.2 0.3 3.5 2.0 0.5

2.8

SPD Socijaldemokratska partija BiH Socijaldemokrati

7.1 11.9 9.2 13.7 23.6 18.9 0.6 1.0

0.7

0.2

0.5

Liberalno demokratska stranka Bosne i Hercegovine Penzionerska stranka RS DNS Demokratski narodni savez

0.0 1.3

0.1 0.9

0.1 3.2 8.8 1.0

0.1 0.1

0.2 3.2 2.4 0.2 124

SDS Srpska demokratska stranka

4.6

4.1

1.7

Srpska radikalna stranka dr. Vojislav . . #

0.5

0.2

PDP RS Partija demokratskog progresa Republike Srpske

0.7

0.6

0.1

Savez nezavisnih socijaldemokrata SNSD Milorad Dodik Socijalisti ka partija Narodna stranka "Radom za boljitak"

13.7 12.7 14.3 0.6 0.3 1.1 0.7 0.3

HDZ Hrvatska demokratska zajednica BiH SBBBiH Savez za bolju budu nost BiH Fahrudin Radon i DP Demokratska partija Dragan avi

Some other party " 9/ ! 5 vote None = 9; 4/ ! 5 8/ 9 6/ ! 5 decide No 6/ 4 ; 7 " 9/ ! 5 answer Nasa stranka

4.1

4.3

3.9

16.5 9.8 15.3 10.4

0.1 25.0 7.0 17.2 0.4

1.2 0.9 0.3 16.5 22.5 19.4 0.2 0.0

15.2 14.0 18.1 8.0

Srpska radikalna stranka Republike Srpske

0.1

0.2

Gra anska demokratska stranka Bosne i Hercegovine

0.1

0.3

BSP Bosansko hercegova ka stranka prava Evropska ; 89 9 86 stranka E 5 Hrvatska stranka prava Bosne i Hercegovine api

dr. 72 2

Hrvatska demokratska zajednica 1990 Nezavisna demokratska stranka Narodna 9 / 16 ka stranka BOSS Bosanska stranka

0.0

0.1

0.3 0.7 0.0 0.1 0.8

0.3 0.6 0.2

0.1 0.1 0.1 0.1 1.7

0.4

0.2

1.0

SDU BiH Socijaldemokratska Unija Bosne i Hercegovine BPS Sefer Halilovi

TOTAL

0.3

10.8 10.1 3.6

1.4

0.6

1.8

1.5 0.4

1.7

0.4 0.6

1.1 3.1

3.7

0.7 31.6 33.0 28.7

2.6 0.2 1.1 12.3 31.7 28.5 29.7 6.8 36.5 6.1 16.3 10.8 6.2 11.7 0.4 9.4 7.6 0.7 0.8

2.1 2.2 5.1 4.8

0.1 0.0 0.3 1.5 0.1 3.3 0.2 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

34.5 31.6 34.8 1.4

0.2

2.2 0.8 0.2 20.2 12.5 19.6 23.8 6.7 16.2 14.6 17.7 13.6 8.8 24.5 0.2 13.8 27.9 0.3

100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

125

Table 10

How much do you agree or disagree with the following statements? Sample

Strongly agree Somewhat agree The parties currently in Neither agree nor disagree government are relatively Absolutely disagree successful at defining and DK/NA implementing key reforms Total TOTAL AGREE Neither agree nor disagree TOTAL DISAGREE DK/NA Total Strongly agree Somewhat agree The parties currently in Neither agree nor disagree government show a sufficient Absolutely disagree sense of responsibility towards DK/NA the public Total TOTAL AGREE Neither agree nor disagree TOTAL DISAGREE DK/NA Total Strongly agree The parties currently in Somewhat agree government are capable of Neither agree nor disagree meeting the conditions for Absolutely disagree progress towards European

Bosniak majority Sept Nov Nov 08 08 09 % % % 3.5 2.6 1.5 6.7 2.7 1.4 19.9 18.9 10.8 61.2 68.3 83.2 8.7 7.5 3.1 100.0 100.0 100.0 10.2 5.3 2.9 19.9 18.9 10.8 61.2 68.3 83.2 8.7 7.5 3.1 100.0 100.0 100.0 2.3 1.3 0.4 5.9 3.3 0.5 22.3 20.3 6.6 61.2 67.6 90.2 8.3 7.5 2.2 100.0 100.0 100.0 8.2 4.6 0.9 22.3 20.3 6.6 61.2 67.6 90.2 8.3 7.5 2.2 100.0 100.0 100.0 3.2 1.0 0.4 5.6 3.2 0.5 20.3 21.2 9.4 62.5 67.2 87.6

Croat majority Sept Nov Nov 08 08 09 % % % 1.3 1.3 1.1 7.0 9.8 6.5 42.5 36.4 27.8 35.3 24.8 51.2 14.0 27.7 13.5 100.0 100.0 100.0 8.3 11.1 7.6 42.5 36.4 27.8 35.3 24.8 51.2 14.0 27.7 13.5 100.0 100.0 100.0 1.1 1.9 0.9 6.8 8.1 3.9 38.4 34.5 26.9 39.8 27.8 56.1 14.0 27.7 12.3 100.0 100.0 100.0 7.8 9.9 4.8 38.4 34.5 26.9 39.8 27.8 56.1 14.0 27.7 12.3 100.0 100.0 100.0 0.4 1.3 0.6 5.0 8.7 3.9 41.3 35.1 27.1 39.3 26.8 54.5

Serb majority Sept Nov Nov 08 08 09 % % % 11.4 9.3 4.3 28.9 33.1 30.3 28.7 30.1 37.5 21.7 19.1 24.7 9.4 8.3 3.2 100.0 100.0 100.0 40.3 42.4 34.5 28.7 30.1 37.5 21.7 19.1 24.7 9.4 8.3 3.2 100.0 100.0 100.0 9.3 7.0 4.3 22.3 22.8 22.9 29.1 31.7 36.4 30.0 28.9 32.7 9.4 9.5 3.8 100.0 100.0 100.0 31.5 29.8 27.2 29.1 31.7 36.4 30.0 28.9 32.7 9.4 9.5 3.8 100.0 100.0 100.0 10.6 8.6 4.8 25.3 24.7 24.3 30.4 36.7 43.1 23.8 20.7 24.2

126

integration on time

DK/NA Total TOTAL AGREE Neither agree nor disagree TOTAL DISAGREE DK/NA Total Strongly agree Somewhat agree The parties currently in Neither agree nor disagree government deserve to remain Absolutely disagree in office DK/NA Total TOTAL AGREE Neither agree nor disagree TOTAL DISAGREE DK/NA Total Strongly agree Replacing the parties currently Somewhat agree in government would help Neither agree nor disagree accelerate the implementation Absolutely disagree of reforms and the economic DK/NA recovery of the country Total TOTAL AGREE Neither agree nor disagree TOTAL DISAGREE DK/NA Total

8.4 7.5 100.0 100.0 8.7 4.1 20.3 21.2 62.5 67.2 8.4 7.5 100.0 100.0 3.3 1.4 4.3 1.4 22.8 20.1 61.3 68.8 8.2 8.3 100.0 100.0 7.6 2.8 22.8 20.1 61.3 68.8 8.2 8.3 100.0 100.0 34.2 45.7 21.4 14.1 18.4 15.9 16.6 15.6 9.3 8.6 100.0 100.0 55.6 59.8 18.4 15.9 16.6 15.6 9.3 8.6 100.0 100.0

2.2 100.0 0.9 9.4 87.6 2.2 100.0 0.6 1.7 5.9 89.4 2.4 100.0 2.2 5.9 89.4 2.4 100.0 49.7 16.0 12.2 16.7 5.5 100.0 65.6 12.2 16.7 5.5 100.0

14.0 100.0 5.4 41.3 39.3 14.0 100.0 1.2 5.4 39.0 40.4 14.0 100.0 6.6 39.0 40.4 14.0 100.0 19.8 15.8 35.5 13.8 15.2 100.0 35.5 35.5 13.8 15.2 100.0

28.0 100.0 10.1 35.1 26.8 28.0 100.0 1.3 9.4 34.4 27.2 27.7 100.0 10.7 34.4 27.2 27.7 100.0 12.4 14.3 33.4 9.5 30.4 100.0 26.7 33.4 9.5 30.4 100.0

13.8 100.0 4.6 27.1 54.5 13.8 100.0 3.2 4.0 27.2 51.6 14.0 100.0 7.2 27.2 51.6 14.0 100.0 20.2 24.6 22.2 17.8 15.2 100.0 44.8 22.2 17.8 15.2 100.0

10.0 100.0 35.9 30.4 23.8 10.0 100.0 12.4 21.3 31.6 24.0 10.7 100.0 33.7 31.6 24.0 10.7 100.0 9.3 15.9 40.6 20.7 13.5 100.0 25.1 40.6 20.7 13.5 100.0

9.4 3.5 100.0 100.0 33.2 29.2 36.7 43.1 20.7 24.2 9.4 3.5 100.0 100.0 9.3 9.2 25.9 20.5 35.8 45.3 19.8 21.3 9.3 3.8 100.0 100.0 35.2 29.6 35.8 45.3 19.8 21.3 9.3 3.8 100.0 100.0 6.5 6.7 15.0 13.6 41.8 46.3 25.3 26.7 11.4 6.8 100.0 100.0 21.5 20.3 41.8 46.3 25.3 26.7 11.4 6.8 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

127

Table 1

II. INSTITUTIONAL CONFIDENCE Do you approve of the job being done by...?

BiH Presidency

BiH Parliamentary Assembly

BiH Council of Ministers

FBiH Parliam m en t

FBiH Government

Gender

All

Sample

Yes No Not applicable Neither ap a prove nor disapprove DK/N A Total Yes No Not applic i ab ble l Neither ap a prove nor disapprove DK/N A Total Yes No Not applicable Neither ap a prove nor disapprove DK/N A Total Yes No Not applicable Neither ap a prove nor disapprove DK/N A Total Yes No Not applicable Neither ap a prove nor disapprove DK/N A Total

Male

Female

Sept 0 08

Nov 08

Nov 09

Sept 08

Nov 08

Nov 09

Sept 08

Nov 08

Nov 09

% 38.5 39.7 1.4 12.1 8.3 1000.0 37.6 40.0 15 1. 11.8 9.0 1000.0 38.4 39.9 1.4 11.7 8.6 1000.0 00 37.3 39.9 2.0 11.9 9.0 1000.0 36.3 40.8 21 2. 11.6 9.2 1000.0

% 40.4 39.1

% 32.5 50.2 1.5 13.5 2.4 100.0 31.3 51.7 06 0.6 13.8 2.6 100.0 32.0 50.6 0.8 14.2 2.4 100 0 100.0 28.7 53.4 0.6 14.5 2.7 100.0 29.5 53.2 06 0.6 13.8 2.8 100.0

% 35.0 45.1 1.9 9.7 8.3 1 100.0 34.4 45.2 20 2.0 9.4 8.9 1 100.0 35.8 44.4 2.0 9.3 8.4 1100 0 100.0 33.5 45.5 2.5 9.8 8.8 1 100.0 32.9 46.3 27 2.7 9.3 8.8 1 100.0

% 42.7 36.7

% 33.1 50.5 1.4 13.1 1.9 100.0 32.1 51.7 06 0.6 13.3 2.2 100.0 32.6 50.4 1.1 13.7 2.3 100 0 100.0 29.0 53.0 0.7 15.2 2.1 100.0 30.8 52.2 09 0.9 14.3 1.9 100.0

% 41.9 34.5 1.0 14.3 8.3 100.0 40.7 35.1 09 0.9 14.2 9.1 100.0 40.9 35.6 0.7 14.0 8.8 100 0 100.0 41.0 34.6 1.5 13.9 9.1 100.0 39.6 35.5 15 1.5 13.9 9.6 100.0

% 38.2 41.4

% 31.9 49.8 1.6 13.9 2.8 100.0 30.5 51.7 06 0.6 14.3 3.0 100.0 31.4 50.8 0.5 14.8 2.5 100 0 100.0 28.5 53.8 0.5 13.9 3.3 100.0 28.2 54.3 04 0.4 13.3 3.7 100.0

8.4 12.0 100.0 41.2 38.1 8.5 12.2 100.0 41.3 38.2 8.5 12.0 100 0 100.0 37.8 41.0 9.0 12.2 100.0 39.1 40.2 8.7 12.0 100.0

8.9 11.6 100.0 42.8 36.4 8.8 12.0 100.0 43.6 36.0 8.7 11.7 100 0 100.0 39.8 39.4 9.1 11.7 100.0 42.1 37.6 8.8 11.6 100.0

8.0 12.4 100.0 39.7 39.7 8.2 12.4 100.0 39.1 40.3 8.2 12.3 100 0 100.0 35.9 42.5 8.9 12.7 100.0 36.2 42.6 8.7 12.4 100.0 128

RS National Assembly

RS Government

Municipal authorities

Cantonal authorities in FBiH

OSCE

Yes No Not applicable Neither approve nor disapprove

37.8 38.7 1.5 11.3

40.2 39.7

32.4 52.8 0.4 11.7

36.2 41.8 2.2 9.4

44.6 35.0

DK/NA Total Yes No Not applicable Neither approve nor disapprove

10.7 100.0 38.1 39.1 1.6 11.4

11.9 100.0 40.3 39.6

2.6 100.0 33.7 52.1 0.4 11.3

10.4 100.0 36.5 42.4 2.4 9.3

10.7 100.0 44.5 34.7

DK/NA Total Yes No Not applicable Neither approve nor disapprove

9.9 100.0 46.5 32.2 1.6 11.0

11.9 100.0 55.5 25.0

2.5 100.0 39.1 45.3 0.2 12.9

9.3 100.0 43.5 36.7 2.4 8.8

11.1 100.0 59.0 21.1

DK/NA Total Yes No Not applicable Neither approve nor disapprove

8.7 100.0 34.6 43.5 1.2 10.7

12.3 100.0 38.6 38.3

2.4 100.0 19.3 63.9 0.2 13.6

8.6 100.0 31.8 48.9 1.8 9.1

12.2 100.0 42.0 35.0

DK/NA Total Yes No Not applicable Neither approve nor disapprove

10.0 100.0 44.1 32.4 1.6 11.2

17.0 100.0 48.0 26.3

8.4 100.0 41.8 36.3 1.7 9.4

16.3 100.0 52.2 24.3

10.4

3.0 100.0 51.0 29.9 0.6 14.7

DK/NA Total

10.7 100.0

15.4 100.0

3.7 100.0

10.8 100.0

8.2

8.1

7.2

6.1

35.0 51.3 0.4 11.1

39.4 35.7 0.9 13.1

36.1 44.1

2.2 100.0 37.0 50.3 0.4 10.3

11.0 100.0 39.6 35.9 0.9 13.3

13.0 100.0 36.3 44.3

2.0 100.0 41.2 43.1 0.3 12.9

10.4 100.0 49.4 27.8 0.9 13.0

12.7 100.0 52.2 28.7

2.5 100.0 19.6 64.0 0.1 13.4

8.9 100.0 37.3 38.3 0.7 12.2

12.4 100.0 35.4 41.3

11.5 100.0 46.3 28.7 1.5 13.0

17.7 100.0 43.9 28.1

9.8

2.9 100.0 49.6 30.8 0.6 15.2

11.0

3.1 100.0 52.4 29.1 0.5 14.3

13.7 100.0

3.9 100.0

10.5 100.0

16.9 100.0

3.6 100.0

9.7

7.7

6.7

6.8

6.7

5.6

129

29.8 54.3 0.5 12.4 3.0 100.0 30.5 53.8 0.5 12.2 2.9 100.0 37.1 47.4 0.2 13.0 2.4 100.0 19.0 63.7 0.3 13.9

Yes 42.9 No 33.4 Not applicable 1.5 Neither approve nor disapprove 11.2 DK/NA 11.0 Total 100.0 Yes 43.8 UNDP No 29.5 Not applicable 1.5 Neither approve nor disapprove 11.6 DK/NA 13.5 Total 100.0 Yes 42.1 No 32.9 Not applicable 1.4 EUPM Neither approve nor disapprove 11.1 DK/NA 12.5 Total 100.0 Yes 42.3 No 29.4 Not applicable 1.7 EU Neither approve nor disapprove 11.6 DK/NA 15.1 Total 100.0 Yes 36.7 US No 37.1 Not applicable 2.2 Neither approve nor disapprove 11.5 12.4 DK/NA Total 100.0 Yes 42.1 No 30.1 Directorate for European Not applicable 1.6 Integration Neither approve nor disapprove 11.2 DK/NA 14.9 Total 100.0 *Source: Public opinion polls conducted for this project by PRISM Research OHR

45.6 29.6 11.2 13.6 100.0 50.5 22.9 10.7 15.9 100.0 47.2 27.5 10.7 14.6 100.0 47.7 24.5 10.4 17.4 100.0 38.7 35.2 11.2 14.9 100.0 47.7 23.4 10.8 18.0 100.0

51.3 31.6 0.8 12.8 3.5 100.0 52.4 27.5 0.6 14.6 4.9 100.0 53.8 28.5 0.6 13.2 4.0 100.0 50.6 29.3 0.8 12.9 6.3 100.0 45.3 35.7 0.9 14.2 3.8 100.0 48.5 28.2 0.7 14.9 7.6 100.0

40.5 37.2 1.7 9.8 10.8 100.0 41.9 32.8 1.7 9.7 13.9 100.0 39.9 35.9 1.7 9.7 12.8 100.0 40.1 33.1 1.7 10.0 15.1 100.0 33.3 41.4 2.8 9.8 12.7 100.0 40.0 34.0 1.7 9.3 15.0 100.0

47.7 28.9 10.4 13.0 100.0 55.0 21.2 9.5 14.3 100.0 49.8 27.1 9.9 13.3 100.0 53.3 22.5 9.5 14.7 100.0 41.9 35.2 9.7 13.2 100.0 53.2 21.3 9.8 15.7 100.0

49.6 32.9 1.0 12.5 4.0 100.0 51.5 28.0 0.9 14.3 5.3 100.0 51.7 30.2 0.7 12.5 4.9 100.0 52.0 30.1 0.8 11.8 5.3 100.0 45.9 36.5 1.0 12.4 4.3 100.0 50.2 28.8 0.9 13.2 7.0 100.0

45.2 29.8 1.3 12.5 11.1 100.0 45.7 26.3 1.4 13.4 13.2 100.0 44.2 30.0 1.1 12.6 12.1 100.0 44.3 25.9 1.6 13.2 15.1 100.0 40.0 33.1 1.7 13.1 12.2 100.0 44.1 26.4 1.5 13.1 14.8 100.0

43.6 30.4 11.9 14.1 100.0 46.2 24.5 11.9 17.4 100.0 44.7 28.0 11.5 15.9 100.0 42.4 26.5 11.2 19.9 100.0 35.7 35.1 12.8 16.5 100.0 42.5 25.4 11.9 20.2 100.0

130

53.0 30.4 0.5 13.0 3.0 100.0 53.3 27.0 0.4 14.9 4.4 100.0 55.7 26.8 0.4 13.9 3.2 100.0 49.2 28.6 0.8 14.0 7.4 100.0 44.8 35.0 0.9 16.1 3.2 100.0 46.8 27.6 0.6 16.7 8.2 100.0

Table 2 Do you approve of the job being done by...? Sample

BiH Presidency

BiH Parliamentary Assembly

BiH Council of Ministers

FBiH Parliament

FBiH Government

Croat majority

Bosniak majority

Yes No Not applicable Neither approve nor disapprove DK/NA Total Yes No Not applicable Neither approve nor disapprove DK/NA Total Yes No Not applicable Neither approve nor disapprove DK/NA Total Yes No Not applicable Neither approve nor disapprove DK/NA Total Yes No Not applicable Neither approve nor disapprove DK/NA Total

Sept 08 % 31.8 50.7 1.0 8.7 7.8 100.0 30.5 50.7 0.9 8.8 9.1 100.0 30.8 51.8 0.9 8.8 7.8 100.0 31.5 50.8 0.9 8.5 8.4 100.0 29.8 53.1 0.9 8.2 8.1 100.0

Nov 08 % 31.4 52.1 5.0 11.5 100.0 32.1 51.7 4.4 11.8 100.0 31.4 52.5 4.3 11.8 100.0 28.9 55.3 4.4 11.4 100.0 30.5 54.2 3.9 11.4 100.0

Nov 09 % 14.8 68.9 2.7 12.1 1.5 100.0 14.8 71.6 0.8 11.5 1.3 100.0 15.3 69.3 1.2 12.9 1.3 100.0 15.7 70.0 0.7 11.8 1.8 100.0 14.6 71.3 0.7 11.8 1.6 100.0

Sept 08 % 32.4 33.4 3.2 18.2 12.8 100.0 33.4 33.6 2.0 17.5 13.5 100.0 35.0 32.0 2.0 17.5 13.5 100.0 33.9 32.6 2.2 17.8 13.5 100.0 33.4 33.1 2.2 17.8 13.5 100.0

Nov 08 % 34.5 22.6 16.7 26.2 100.0 33.5 23.7 17.4 25.4 100.0 33.2 23.8 18.2 24.7 100.0 31.8 25.2 18.3 24.7 100.0 32.4 25.0 19.0 23.6 100.0

Serb majority Nov 09 % 34.1 40.6 1.4 17.3 6.5 100.0 30.8 41.5 1.4 18.4 7.9 100.0 31.0 42.0 1.4 18.1 7.5 100.0 28.0 45.6 1.4 17.6 7.4 100.0 26.9 46.9 1.2 17.8 7.2 100.0

Sept 08 % 45.7 30.3 1.4 14.6 7.9 100.0 44.7 31.2 2.1 14.1 7.9 100.0 45.9 30.1 1.8 13.8 8.4 100.0 42.6 31.1 3.3 14.4 8.6 100.0 42.0 30.6 3.6 14.2 9.5 100.0

Nov 08 % 49.5 30.8 10.6 9.1 100.0 51.2 28.3 11.1 9.4 100.0 52.4 27.4 11.1 9.1 100.0 47.8 29.9 12.2 10.1 100.0 48.8 29.2 12.0 9.9 100.0 131

Nov 09 % 48.9 33.8 0.2 14.9 2.1 100.0 47.7 33.9 0.2 15.7 2.4 100.0 49.2 33.2 0.2 15.4 2.0 100.0 42.3 37.5 0.3 17.5 2.4 100.0 45.1 35.6 0.5 15.9 2.9 100.0

RS National Assembly

RS Government

Municipal authorities

Cantonal authorities in FBiH

OSCE

OHR

22.2 56.9 0.9 7.5 12.5 100.0 23.2 57.7 0.9 7.5 10.7 100.0 37.9 45.2 1.0 7.7 8.2 100.0 34.4 47.8 1.0 8.2 8.6 100.0 49.7 31.1 1.3 7.0 10.9 100.0 51.4 28.8 1.3 7.7 10.8 100.0

19.1 62.4

4.6 13.4 100.0 47.1 36.3

9.0 79.0 0.8 9.7 1.6 100.0 9.0 78.9 0.8 9.5 1.8 100.0 18.2 67.5

3.8 12.8 100.0 40.1 42.2

12.7 1.6 100.0 17.1 69.1

3.2 14.5 100.0 54.7 23.1

12.1 1.7 100.0 56.2 24.2 0.8 15.5 3.3 100.0 63.4 20.5 1.1 11.7 3.2 100.0

4.6 13.9 100.0 18.9 63.0

7.2 15.0 100.0 56.5 20.8 9.0 13.7 100.0

18.3 38.3 3.7 23.7 16.0 100.0 16.9 39.7 3.7 23.7 16.0 100.0 34.1 28.0 2.6 20.7 14.7 100.0 35.3 28.1 2.1 19.6 14.9 100.0 32.5 30.2 2.3 20.3 14.7 100.0 31.5 30.0 2.2 21.6 14.7 100.0

16.9 38.1 20.8 24.3 100.0 17.3 37.4 19.8 25.5 100.0 35.6 21.6 18.5 24.4 100.0 32.7 23.0 17.4 26.8 100.0 38.2 18.1 20.6 23.1 100.0 35.0 19.6 21.5 23.8 100.0

11.1 62.7 0.4 17.9 7.8 100.0 12.3 61.6 0.4 17.9 7.8 100.0 25.8 45.7 1.0 20.1 7.5 100.0 27.3 44.3 0.8 19.4 8.2 100.0 46.2 29.3 1.0 14.3 9.3 100.0 47.8 26.6 0.7 16.1 8.8 100.0

61.6 17.1 1.6 12.3 7.4 100.0 61.6 16.7 1.9 12.4 7.4 100.0 58.6 19.4 2.1 12.1 7.8 100.0

39.8 35.7 1.6 13.3 9.7 100.0 35.2 41.0 1.4 11.8 10.6 100.0

71.6 12.8 9.2 6.4 100.0 71.9 12.1 9.3 6.7 100.0 69.0 13.9 8.2 8.8 100.0

39.8 34.2 11.9 14.1 100.0 32.5 45.1 11.4 11.0 100.0 132

63.6 21.3 0.1 12.8 2.1 100.0 66.7 19.8 0.1 11.8 1.6 100.0 64.7 21.6 0.3 11.9 1.5 100.0

43.7 38.8 0.2 14.8 2.5 100.0 35.4 48.5 0.4 13.5 2.2 100.0

UNDP

EUPM

Yes No Not applicable Neither approve nor disapprove DK/NA Total Yes No Not applicable Neither approve nor disapprove DK/NA Total Yes No Not applicable Neither approve nor disapprove DK/NA

49.9 26.1 1.3 7.4 15.4 100.0 50.4 27.9 1.3 7.2 13.1 100.0 46.7 27.4 1.4 7.4 17.1

58.4 17.9 7.4 16.3 100.0 56.6 20.5 7.5 15.4 100.0 53.8 19.0 7.5 19.8

Total 100.0 100.0 Yes 42.7 46.7 No 33.6 29.3 US Not applicable 2.9 Neither approve nor disapprove 7.9 7.9 DK/NA 12.9 16.1 Total 100.0 100.0 Yes 47.4 53.5 No 27.4 18.9 Directorate for European Not applicable 1.4 Integration Neither approve nor disapprove 7.0 7.5 DK/NA 16.8 20.1 Total 100.0 100.0 *Source: Public opinion polls conducted for this project by PRISM Research

60.9 19.3 0.9 13.7 5.1 100.0 64.9 20.2 0.6 10.9 3.3 100.0 59.5 21.0 1.4 10.9 7.3

35.1 26.3 2.0 21.4 15.1 100.0 32.3 29.8 1.7 21.6 14.7 100.0 35.9 24.7 2.0 20.3 17.1

100.0 53.3 28.2 1.7 13.4 3.5 100.0 53.1 22.0 1.2 14.0 9.7 100.0

100.0 32.2 27.9 1.4 21.7 16.8 100.0 35.0 24.7 2.4 20.7 17.2 100.0

37.8 17.8 19.0 25.3 100.0 36.4 18.8 20.9 23.8 100.0 37.1 17.8 19.4 25.7 100.0 34.4 19.0 21.6 25.0 100.0 35.7 17.7 20.8 25.8 100.0

44.2 29.3 1.0 14.3 11.1 100.0 51.2 25.3 0.7 13.7 9.0 100.0 49.5 25.4 0.7 14.1 10.2

38.2 35.4 1.6 13.3 11.6 100.0 34.2 40.8 1.2 12.2 11.6 100.0 37.6 34.2 1.8 13.6 12.9

100.0 43.8 28.9 0.8 17.9 8.6 100.0 47.1 25.6 1.0 14.4 11.8 100.0

100.0 29.4 45.6 1.6 12.3 11.1 100.0 36.6 36.1 1.6 13.0 12.8 100.0

41.8 31.9 12.9 13.4 100.0 36.0 40.3 12.1 11.6 100.0 40.6 34.7 11.8 12.9 100.0 27.2 48.9 12.8 11.1 100.0 41.6 31.8 12.5 14.1 100.0

133

42.3 38.3 0.2 16.4 2.8 100.0 38.9 41.0 0.4 16.3 3.4 100.0 37.9 42.1 0.2 15.6 4.2 100.0 33.4 48.7 0.2 15.0 2.7 100.0 40.7 37.7 0.2 17.1 4.2 100.0

Table 5 How widespread do you think corruption, understood as bribery or abuse of oďŹ&#x192;ce for private gain is in the following institutions? Sample

BiH Presidency

BiH Parliamentary Assembly

BiH Council of Ministers

FBiH Parliament

Bosniak majority

Not at all Not much To some degree Fairly Very Total Not at all Not much To some degree Fairly Very Total Not at all Not much To some degree Fairly Very Total Not at all Not much To some degree Fairly Very Total

Sept 08 % 4.1 15.6 11.6 15.7 53.0 100.0 2.2 12.9 11.8 16.4 56.8 100.0 1.9 12.5 10.4 18.4 56.8 100.0 2.7 11.1 11.0 17.4 57.8 100.0

Nov 08 % 4.0 12.6 12.8 20.9 49.7 100.0 1.8 9.3 13.4 22.6 52.8 100.0 1.8 7.6 12.6 22.8 55.2 100.0 0.9 7.8 10.7 21.1 59.5 100.0

Croat majority Nov 09 % 1.9 15.2 18.1 26.2 38.6 100.0 8.7 10.8 22.0 58.5 100.0 0.8 6.8 8.6 20.5 63.3 100.0 1.1 7.3 8.8 19.4 63.4 100.0

Sept 08 % 2.9 20.8 27.2 28.0 21.2 100.0 1.3 17.2 30.7 24.2 26.6 100.0 1.9 15.0 30.2 28.1 24.8 100.0 1.3 15.7 27.3 28.4 27.3 100.0

Nov 08 % 0.4 18.3 14.8 34.5 32.1 100.0 1.1 16.3 16.2 35.6 30.7 100.0 0.4 11.3 21.6 34.2 32.6 100.0 0.8 12.2 19.9 33.5 33.7 100.0

Serb majority Nov 09 % 1.6 20.0 26.2 30.7 21.5 100.0 1.1 15.7 29.0 27.6 26.6 100.0 0.5 16.0 26.6 30.5 26.4 100.0 0.9 16.1 25.2 30.7 27.2 100.0

Sept 08 % 0.8 28.7 17.0 22.2 31.3 100.0 0.8 27.9 16.4 22.8 32.1 100.0 0.8 27.6 16.4 22.4 32.9 100.0 0.6 28.4 16.7 22.3 31.9 100.0

Nov 08 % 0.9 20.7 15.1 28.7 34.7 100.0 0.7 19.2 15.6 29.9 34.7 100.0 0.7 19.5 14.7 30.6 34.5 100.0 0.4 18.3 16.5 29.8 35.0 100.0

134

Nov 09 % 3.2 12.7 12.9 34.9 36.3 100.0 1.5 12.7 14.1 36.3 35.4 100.0 1.2 12.2 14.9 35.7 36.1 100.0 0.7 9.7 14.2 36.8 38.6 100.0

Not at all 2.5 Not much 9.1 FBiH Government To some degree 11.3 Fairly 16.4 Very 60.8 Total 100.0 Not at all 2.3 Not much 5.1 RS National Assembly To some degree 11.6 Fairly 18.0 Very 63.0 Total 100.0 Not at all 1.9 Not much 5.1 RS Government To some degree 9.1 Fairly 19.1 Very 64.8 Total 100.0 Not at all 3.5 Not much 8.9 Municipal authorities To some degree 13.3 Fairly 17.6 Very 56.7 Total 100.0 *Source: Public opinion polls conducted for this project by PRISM Research

0.9 7.5 11.1 19.6 60.9 100.0 0.5 6.6 9.9 18.4 64.6 100.0 0.5 7.2 9.6 18.6 64.1 100.0 1.0 10.6 16.4 21.4 50.6 100.0

1.1 7.0 7.8 18.0 66.1 100.0 1.1 2.8 6.0 16.0 74.1 100.0 1.4 1.7 5.5 15.3 76.2 100.0 2.0 2.7 15.4 21.5 58.4 100.0

1.4 14.5 28.0 30.2 25.9 100.0 1.4 14.2 21.8 31.3 31.4 100.0 1.4 13.7 23.9 29.6 31.4 100.0 2.2 14.1 23.5 29.0 31.1 100.0

1.2 10.8 22.3 32.5 33.2 100.0 0.8 6.3 16.5 34.9 41.5 100.0 0.8 6.8 15.1 34.3 43.0 100.0 0.4 8.6 21.8 36.1 33.1 100.0

0.7 14.3 26.4 28.7 29.8 100.0 0.5 9.3 24.7 35.1 30.4 100.0 0.8 7.0 24.2 36.5 31.6 100.0 0.7 11.8 30.3 29.2 27.9 100.0

0.6 27.5 17.3 21.6 33.0 100.0 3.0 30.3 14.9 20.6 31.3 100.0 3.3 29.5 13.7 21.1 32.5 100.0 2.3 23.9 17.6 25.0 31.2 100.0

0.7 17.3 17.4 29.6 35.0 100.0 2.2 19.3 17.5 31.3 29.7 100.0 1.5 20.2 16.8 32.0 29.5 100.0 1.8 19.7 16.6 30.5 31.4 100.0

135

1.4 8.4 13.4 36.0 40.9 100.0 6.5 11.4 16.3 34.1 31.6 100.0 6.3 12.1 16.6 35.0 30.1 100.0 4.4 11.7 16.4 36.7 30.8 100.0

Table 6 How would you rate the measures taken by the OďŹ&#x192;ce of the High Representative in the following areas? Gender Sample

Political reforms

Economic reforms

Anti-corruption

Very positively Generally positively Generally negative Very negatively DK/NA Total TOTAL POSITIVE TOTAL NEGATIVE DK/NA Total Very positively Generally positively Generally negative Very negatively DK/NA Total TOTAL POSITIVE TOTAL NEGATIVE DK/NA Total Very positively Generally positively Generally negative Very negatively DK/NA Total

Sept 08 % 4.7 32.1 29.5 16.9 16.8 100.0 36.7 46.4 16.8 100.0 4.5 29.6 32.8 16.9 16.2 100.0 34.0 49.8 16.2 100.0 4.8 27.1 33.0 19.9 15.3 100.0

All Nov 08 % 4.9 35.8 28.9 11.8 18.7 100.0 40.6 40.6 18.7 100.0 4.1 32.8 31.8 12.3 19.1 100.0 36.9 44.0 19.1 100.0 4.1 29.6 29.0 19.0 18.4 100.0

Nov 09 % 13.0 36.5 25.6 16.7 8.1 100.0 49.5 42.4 8.1 100.0 11.3 37.3 26.3 16.6 8.5 100.0 48.6 42.9 8.5 100.0 9.7 29.5 28.4 23.3 9.1 100.0

Sept 08 % 5.5 31.2 30.9 17.2 15.3 100.0 36.7 48.0 15.3 100.0 4.8 28.6 34.4 17.5 14.7 100.0 33.4 51.9 14.7 100.0 5.1 26.5 34.6 19.6 14.1 100.0

Male Nov 08 % 4.1 38.9 26.5 13.0 17.5 100.0 42.9 39.5 17.5 100.0 3.5 34.1 30.6 13.8 17.9 100.0 37.6 44.5 17.9 100.0 4.3 30.2 29.4 18.6 17.4 100.0

Nov 09 % 13.8 31.0 31.3 16.7 7.2 100.0 44.8 48.1 7.2 100.0 11.2 33.2 30.5 17.1 8.0 100.0 44.4 47.6 8.0 100.0 10.0 24.7 32.1 23.5 9.7 100.0

Sept 08 % 3.9 32.9 28.2 16.7 18.3 100.0 36.8 44.9 18.3 100.0 4.2 30.5 31.4 16.4 17.6 100.0 34.7 47.8 17.6 100.0 4.4 27.6 31.4 20.1 16.4 100.0

Female Nov 08 % 5.7 32.8 31.1 10.5 19.9 100.0 38.4 41.6 19.9 100.0 4.7 31.5 32.8 10.8 20.1 100.0 36.2 43.7 20.1 100.0 4.0 29.0 28.5 19.2 19.3 100.0

136

Nov 09 % 12.3 41.9 20.0 16.8 9.0 100.0 54.2 36.8 9.0 100.0 11.4 41.4 22.3 16.0 8.9 100.0 52.8 38.3 8.9 100.0 9.5 34.2 24.8 23.1 8.4 100.0

TOTAL POSITIVE 31.8 TOTAL NEGATIVE 52.9 DK/NA 15.3 Anti-corruption Total 100.0 Very positively 3.7 Generally positively 32.9 Public administration reforms Generally negative 28.8 Very negatively 17.1 DK/NA 17.5 Total 100.0 TOTAL POSITIVE 36.7 45.9 Public administration reforms TOTAL NEGATIVE DK/NA 17.5 Total 100.0 *Source: Public opinion polls conducted for this project by PRISM Research

33.7 47.9 18.4 100.0 4.9 36.9 26.7 12.5 19.0 100.0 41.7 39.3 19.0 100.0

39.2 51.7 9.1 100.0 12.1 37.6 22.9 17.4 10.0 100.0 49.6 40.3 10.0 100.0

31.6 54.3 14.1 100.0 3.6 31.1 31.0 18.3 16.1 100.0 34.7 49.2 16.1 100.0

34.5 48.1 17.4 100.0 4.5 36.8 26.2 14.6 17.9 100.0 41.3 40.8 17.9 100.0

34.7 55.5 9.7 100.0 12.5 32.7 26.7 17.4 10.7 100.0 45.2 44.1 10.7 100.0

32.0 51.5 16.4 100.0 3.9 34.7 26.7 16.0 18.7 100.0 38.6 42.7 18.7 100.0

33.0 47.7 19.3 100.0 5.2 36.9 27.3 10.6 20.0 100.0 42.2 37.9 20.0 100.0

137

43.7 47.9 8.4 100.0 11.7 42.4 19.2 17.4 9.4 100.0 54.0 36.6 9.4 100.0

Table 7 How would you rate the measures taken by the OďŹ&#x192;ce of the High Representative in the following areas? Sample

Political reforms

Economic reforms

Anti-corruption

Bosniak majority

Sept 08 % 9.2 38.9 24.3 12.4 15.2 100.0 48.1 36.7 15.2 100.0 8.9 35.1 28.1 12.7 15.2 100.0 44.1 40.8 15.2 100.0 6.8 29.8 34.2 14.0 15.3 100.0

Nov 08 % 8.2 48.1 22.2 8.4 13.1 100.0 56.3 30.6 13.1 100.0 6.7 42.9 27.0 9.3 14.1 100.0 49.6 36.3 14.1 100.0 6.7 37.1 27.2 15.9 13.1 100.0

Croat majority Nov 09 % 23.2 47.8 16.5 7.8 4.7 100.0 71.1 24.2 4.7 100.0 20.8 44.2 19.9 10.4 4.7 100.0 65.0 30.3 4.7 100.0 17.6 30.4 24.0 21.5 6.5 100.0

Sept 08 % 0.7 29.5 33.1 14.0 22.7 100.0 30.2 47.1 22.7 100.0 0.7 29.9 33.5 14.6 21.2 100.0 30.6 48.1 21.2 100.0 1.5 24.9 30.6 24.0 19.0 100.0

Nov 08 % 3.4 30.0 28.7 5.0 32.9 100.0 33.4 33.6 32.9 100.0 3.0 27.5 30.0 6.6 32.9 100.0 30.5 36.6 32.9 100.0 2.8 24.5 25.2 15.0 32.4 100.0

Serb majority Nov 09 % 9.2 29.1 27.7 14.4 19.7 100.0 38.2 42.0 19.7 100.0 7.5 31.9 21.4 19.9 19.3 100.0 39.4 41.3 19.3 100.0 7.2 23.5 25.0 24.7 19.6 100.0

Sept 08 % 1.1 25.6 31.9 23.7 17.7 100.0 26.7 55.6 17.7 100.0 0.9 24.0 36.6 22.0 16.6 100.0 24.8 58.6 16.6 100.0 3.7 26.0 30.9 24.4 15.0 100.0

Nov 08 % 0.6 21.1 37.4 18.4 22.4 100.0 21.7 55.9 22.4 100.0 0.9 21.4 37.8 17.9 22.1 100.0 22.3 55.7 22.1 100.0 0.9 22.0 31.9 23.5 21.6 100.0

138

Nov 09 % 2.3 23.8 36.1 28.8 8.9 100.0 26.1 64.9 8.9 100.0 1.0 29.7 35.9 23.3 10.0 100.0 30.7 59.3 10.0 100.0 0.7 29.2 35.0 25.8 9.4 100.0

TOTAL POSITIVE 36.6 43.8 TOTAL NEGATIVE 48.1 43.1 DK/NA 15.3 13.1 Anti-corruption Total 100.0 100.0 Very positively 6.9 7.4 Public administration Generally positively 37.5 49.0 reforms Generally negative 26.0 21.2 Very negatively 14.1 9.0 DK/NA 15.4 13.4 Total 100.0 100.0 TOTAL POSITIVE 44.5 56.4 Public administration TOTAL NEGATIVE 40.1 30.2 reforms DK/NA 15.4 13.4 Total 100.0 100.0 *Source: Public opinion polls conducted for this project by PRISM Research

48.0 45.5 6.5 100.0 20.3 42.8 17.0 13.6 6.3 100.0 63.1 30.6 6.3 100.0

26.5 54.6 19.0 100.0 0.9 27.2 34.3 16.1 21.6 100.0 28.0 50.4 21.6 100.0

27.3 40.3 32.4 100.0 3.3 24.5 31.1 8.2 32.9 100.0 27.8 39.3 32.9 100.0

30.7 49.7 19.6 100.0 7.6 27.1 22.5 19.3 23.6 100.0 34.6 41.8 23.6 100.0

29.7 55.3 15.0 100.0 1.2 31.1 28.3 20.0 19.4 100.0 32.3 48.3 19.4 100.0

23.0 55.4 21.6 100.0 1.6 26.4 32.5 16.9 22.7 100.0 28.0 49.4 22.7 100.0

29.8 60.8 9.4 100.0 3.2 34.4 30.1 21.6 10.8 100.0 37.6 51.7 10.8 100.0

Table 9 Do you thethe High powers should be reduced, increased, or stay the same? youthink think High RRepresentative's p powers should be, reduced y the same? Bosniak majority

Sample

Reduced Increased Stay the same DK/NA Total

Mar 08 % 13.9 49.2 24.2 12.7 100.0

Jun 08 % 23.3 25.9 33.8 17.0 100.0

Sept 08 % 22.6 33.1 29.7 14.5 100.0

Nov 08 % 10.9 41.9 40.0 7.2 100.0

Croat majority Nov 09 % 7.5 61.2 21.9 9.4 100.0

Mar 08 % 29.0 32.6 22.7 15.7 100.0

Jun 08 % 40.2 15.5 39.8 4.5 100.0

Sept 08 % 42.2 16.2 36.1 5.4 100.0

Serb majority Nov 08 % 28.9 18.9 31.9 20.2 100.0

Nov 09 % 32.6 24.4 25.3 17.7 100.0

Mar 08 % 71.2 4.3 18.3 6.2 100.0

Jun 08 % 69.9 1.7 23.5 5.0 100.0

Sept 08 % 69.9 2.8 20.0 7.3 100.0

Nov 08 % 71.6 2.9 19.1 6.4 100.0

*Source: Public opinion polls conducted for this project by PRISM Research

139

Nov 09 % 74.5 3.2 19.4 3.0 100.0

Table 10 Looking at the effectiveness of state-level institutions over the past five years, has it significantly improved, somewhat improved, stayed the same, somewhat deteriorated, or significantly deteriorated? Sample

Bosniak majority

Croat majority

Sept Nov Nov 08 08 09 % % % Significantly improved 0,1 1,2 0,2 Somewhat improved 14,1 18,6 10,7 Stayed the same 48,2 45,0 41,0 Somewhat deteriorated 18,4 26,4 25,6 Significantly deteriorated 5,4 3,2 18,8 Don't know/Won't answer 13,9 5,7 3,8 Total 100,0 100,0 100,0 *Source: Public opinion polls conducted for this project by PRISM Research

Sept 08 % 1,2 8,8 59,0 12,0 2,2 16,9 100,0

Nov 08 % 0,8 14,2 43,3 18,0 1,5 22,1 100,0

Serb majority Nov 09 % 0,3 14,3 50,9 18,8 3,3 12,4 100,0

Sept 08 % 5,0 29,5 47,9 8,5 0,9 8,2 100,0

Nov 08 % 1,8 37,9 45,7 6,8 1,5 6,2 100,0

Nov 09 % 0,2 20,2 46,9 20,9 2,0 9,9 100,0

Table 11 Looking at the effectiveness of entity-level institutions over the past five years, has it significantly improved, somewhat improved,stayed the same, somewhat deteriorated, or significantly deteriorated? Sample

Significantly improved Somewhat improved Stayed the same Somewhat deteriorated Significantly deteriorated Don't know/Won't answer Total

Bosniak majority Sept 08 % 1.0 12.8 55.3 13.4 3.7 13.8 100.0

Nov 08 % 1.0 18.1 51.7 21.3 3.0 5.0 100.0

Nov 09 % 2.5 7.9 41.5 26.6 17.9 3.6 100.0

Croat majority Sept 08 % 0.7 10.7 56.9 14.0 1.6 16.1 100.0

Nov 08 % 0.5 16.6 47.4 18.9 1.9 14.7 100.0

Nov 09 % 0.3 15.4 48.6 20.0 3.1 12.6 100.0

Serb majority Sept 08 % 4.9 34.5 44.2 5.8 0.9 9.6 100.0

Nov 08 % 1.6 40.7 43.7 5.8 1.0 7.2 100.0

Nov 09 % 0.8 28.1 45.8 13.2 3.0 9.2 100.0

*Source: Public opinion polls conducted for this project by PRISM Research

140

III. THE ECONOMIC SITUATION IN BOSNIA AND HERZEGOVINA

The Economic Stability Index for Bosnia and Herzegovina Survey Chain index Composite index Feb 05 96.83 61 Jun 05 98.36 60 Sep 05 96.67 58 Nov 05 103.45 60 Apr 06 101.67 61 Jun 06 98.36 60 Sep 06 101.67 61 Nov 06 101.64 62 Apr 07 98.39 61 Sep 07 96.72 59 Nov 07 96.61 57 Mar 08 103.51 59 Jun 08 100.00 59 Oct 08 101.69 60 Nov 08 100.00 60 Nov 09 98.33 59 Source: Public opinion poll conducted by PRISM Research. November 2009. and the calculations of the EWS team.

Table 1

Table 2

Index of the volume of industrial production in Bosnia and Herzegovina

Entity

Federation of BiH

1 2008 11 2009 12 1 12 2007 2008

Results achieved during 2009 1 2009 11 1 11 2008

107.9

86.6

88.2

116.8

129.6

118.8

Republika Srpska

Best performing sector

Worst performing sector Car industry

Tobacco production Petrol Production production of technical equipment

Source: Federal Statistics Office. ni statisti ki pregled. Mjese No. 12. Year XIII. December 2009; Republican Statistics Office of the RS. Mjese no ; 7* 8< 0 < $ No. 219/09. Indeksi industrijske proizvodnje. December 2009

141

Table 3

Retail price index for Bosnia and Herzegovina

Unemployment in Bosnia and Herzegovina Bosnia and Herzegovina

2007

Table 4

2008

Total unemployment in BiH 520.432 480.313 Unemployed women in BiH Unemployed men in BiH Unemployed Highly Skilled BiH Federation of BiH Republika Srpska

January 2009 488.496 247.279 241.217 12.516 342.174 134.798

October 2009 503.979 254.274 249.705 16.083 351.444 143.305

Sources: BiH Statistics Agency. Statement: Registrirana nezaposlenost u Oktobru 2009.. No. 10. Year III; Federal Statistics Office. Mjese ni statisti ki pregled broj 12. Year XIII. December 2009; Republika Srpska Statistics Office. www.zzrs.org. December 2009.

Retail price index Retail price index for Bosnia and Herzegovina

11 2009 2005 0 116.0

11 2009 11 2008 99.3

116.2 115.9

98.9 99.7

Retail price index for the Federation of Bosnia and Herzegovina Retail price index for the Republika Srpska

Table 5 Expectations regarding prices changes over the coming half-year Sep 2006 % 5.0 54.7 33.7 6.7

Dec 2006 % 6.8 62.8 25.5 4.9

April 2007 % 2.2 60.2 26.0 11.6

Sep 2007 % 4.1 87.6 2.9 5.4

99.7 99.5

Source: Data for BiH: BiH Statistics Agency. Statement: Indeks 5! 4! : kih cijena u BiH u oktobru 2009. Year III. No. 11. Data for FBiH: Source: Federal Statistics Institute. Mjese ni statisti ki pregled broj 12. Year XIII. December 2009 Data for RS: Republic Statistics Institute. Monthly Statement: Indeks 5! 4! : kih cijena No. 217/09. December 2009

BiH Falling prices Rising prices No change No answer

1 11 2009 1 11 2008 99.6

Nov March June 2007 2008 2008 % % % 6.7 4.7 2.5 87.5 83.8 81.1 3.8 7.9 11.5 1.9 3.6 4.9

Sep 2008 % 9.8 71.8 13.1 5.2

Nov 2008 % 8.7 74.9 11.6 4.9

Source: Public opinion polls conducted by PRISM Research. November 2009

142

Table 6

Foreign Currency Reserves of the Central Bank of BiH Month

Reserves

12 2003

2821

12 2004

3507

12 2005

4252

12 2006

5480

12 2007

6726

12 2008

6324

1 2009

6177

6094

6081

5954

5756

5715

6167

6547

6434

11 2009

6089

Source: Central Bank of BiH. www.cbbh.gov.ba. November 2009. Data refer to total CBBiH foreign currency assets.

Table 7 The balance of foreign trade between Bosnia and Herzegovina and abroad (millions of KM) for the periods of I-X, 2008/09

in %

Export

5.849

4.649

20.5 %

Import

13.598

9.984

26.6 %

Volume

19.447

14.633

24.76

7.749

5.335

31.16

Import Export " in %

43.0 %

46.6 %

+ 8.26

Source: Foreign Trade Chamber of BiH. Pregled i analiza ostvarene razmjene za BiH za period 01. do 10. mjesec 2008/09 godine. November 2009

Table 8

Assessment of economic conditions during past year BiH Better Same Worse No answer

March 2008 % 13.5 51.5 34.3 0.7

June 2008 % 14.0 51.5 33.7 0.7

Sep 2008 % 15.5 57.1 27.0 0.3

Nov 2008 % 10.8 53.8 34.5 1.0

Source: Public opinion polls conducted by PRISM Research. November 2009.

143

Nov 2009 % 45.9 47.0 5.4

Table 9 Assessment of economic conditions during past year, by entity Better Same Worse No answer

FBiH %

RS %

DB %

4.7

5.4

20.2

44.8

50.6

43.7

47.8

43.7

36.1

2.7

0.3

Source: Public opinion polls conducted by PRISM Research. November 2009.

Table 10 Assessment of economic situation in coming year BiH Worse Same Better No answer

March 2008 % 20.2 56.2 20.0 3.6

June 2008 % 22.5 56.1 17.2 4.3

Sep 2008 % 16.1 62.0 17.2 4.7

Nov 2008 % 24.5 55.4 15.0 5.1

Source: Public opinion polls conducted by PRISM Research. November 2009.

144

Nov 2009 % 29.1 51.3 15.6 5.1

IV. THE BUSINESS ENVIRONMENT IN BOSNIA AND HERZEGOVINA

Table 1

Compared to the same period last year, the economic situation in BiH is... February 2005 June 2005 September 2005 December 2005 March 2006 June 2006 September 2006 December 2006 April 2007 September 2007 December 2007 March 2008 July 2008 September 2008 December 2008 November 2009

Better (%) 4 4 2 5 7 7 17 13

The same (%) 31 39 42 51 41 39 38 40

Worse (%) 66 57 56 44 53 54 45 47

16 22 9 12 9 12 4 48

51 34 29 35 35 35 28 46

33 43 62 53 55 53 68 6

Table 2

In your opinion, the economic situation in BiH in six months will be....

March 2006 June 2006 September 2006 December 2006 April 2007 September 2007 December 2007 March 2008 July 2008 September 2008 December 2008 November 2009

Better (%) 15 13 16 19

The same (%) 52 60 62 54

Worse (%) 33 26 21 25

21 21 18 17 15 11 3 38

55 52 29 47 58 52 35 57

23 24 62 36 26 37 62 5

Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. Business to Business Survey top 150. November 2009.

145

Table 3

Capacity utilisation at company Bosnia and Herzegovina

FBiH

Survey December 2005 March 2006 June 2006 September 2006 December 2006 April 2007 September 2007 December 2007 March 2008 July 2008 September 2008 December 2008 November 2009 March 2006 June 2006 September 2006 December 2006 April 2007 September 2007 December 2007 March 2008 July 2008 September 2008 December 2008 November 2009 March 2006 June 2006 September 2006 December 2006 April 2007 September 2007 December 2007 March 2008 July 2008 September 2008 December 2008 November 2009

Above % 31 5 7 7 9 6 9 8 10 10 5 2 52 4 7 8 11 6 11 8 12 10 4 1 51 7 13 6 29 6 3 10 9 0 56

At % 39 51 57 47 42 49 53 42 43 43 56 53 45 50 59 49 42 51 54 47 42 46 61 53 48 54 38 38 42 44 48 24 45 21 36 58 31

Below % 29 43 35 46 48 45 38 51 48 47 39 45 3 45 34 43 45 43 35 45 46 44 35 46 1 39 50 62 58 50 35 71 52 47 55 42 13

Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. Business to Business Survey top 150. November 2009.

146

Table 4

Considering your companyâ&#x20AC;&#x2122;s operations as a whole, would you say that, compared to the same period last year, from a financial perspective, your situation now is... Better (%)

Worse (%)

The SAME (%)

April 2007 September 2007 December 2007

43 36 21 62 24 14 46 34 20 March 2008 50 32 17 July 2008 35 41 24 September 2008 28 46 26 Decmber 2008 27 44 29 November 2009 73 27 by Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project PRISM Research. Business to Business Survey top 150. November 2009.

Table 5

In six months, do you expect your companyâ&#x20AC;&#x2122;s operations, financially speaking, to be... Bosnia and Herzegovina Better The same Worse (%) (%) (%) 50 36 14 March 2008 July 2008 45 46 9 September 2008 31 48 21 December 2008 21 36 43 November 2009 73 27 FBiH April 2007 55 41 4 September 2007 54 38 7 December 2007 27 47 26 49 32 18 March 2008 July 2008 46 46 9 September 2008 31 47 22 December 2008 18 36 46 November 2009 73 27 RS December 2005 23 52 26 April 2007 78 11 11 September 2007 58 29 10 December 2007 53 12 35 March 2008 52 45 3 July 2008 41 48 10 September 2008 55 18 27 December 2008 25 33 42 November 2009 75 25 Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. Business to Business Survey top 150. November 2009.

147

Table 6

Compared to the same period last year, would you say your companyâ&#x20AC;&#x2122;s level of debt is...?

Higher (%) The same (%) Lower (%) N.A. (%) Sept Dec Nov Sept Dec Nov Sept Dec Nov Sept Dec Nov 2008 2009 2008 2008 2008 2008 2008 2008 2009 2009 2008 2009 BiH 34 37 67 42 35 30.6 24 28 2 FBIH 31 35 68 43 38 29.3 26 27 2 RS 41 42 62 41 33 37.5 18 25 The Survey for Early Warning System in PRISM Source: Business Environment conducted the UNDP BiH project by to 150. Research. Business Business Survey top November 2009. Table 7 During the first quarter of the year your company made a... Profit Loss (%) (%) March 2006 76 24 77 June 2006 23 September 2006 79 21 December 2006 81 19 2007 April 79 18 September 79 16 2007 December 2007 77 20 2008 March 78 18 July 2008 72 26 September 63 26 2008

69 31 2008 December November 2009 67 33 Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project PRISM by Research. Business Survey top 150. November 2009. Business to

Table 8

How the various of government to the business with levels sector in dealing helpful are business problems?

Very helpful Generally Neither helpful Generally Not at all helpful nor unhelpful unhelpful helpful Sept Dec Nov Sept Dec Nov Sept Dec Nov Sept Dec Nov Sept Dec Nov 08 08 09 08 08 09 08 08 09 08 08 09 08 08 09 State level 3 30 11 5 56 29 26 14 22 27 19 29 1 Entity 2 2 16 16 11 60 26 20 22 21 26 1 19 28 Cantonal 1 2 8 22 19 53 19 13 38 22 26 1 19 25 Municipal 3 2 13 16 20 44 20 15 42 23 28 1 23 24

Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. Business to Business Survey top 150. November 2009.

148

Table 9

How great an obstacle are the following to the successful conduct of business

Very

Somewhat

Not much

Not at all

Sept Dec Nov Sept Dec Nov Sept Dec Nov Sept Dec Nov 08 08 09 08 08 09 08 08 09 08 08 09 Customs procedures 21 19 26 46 39 50 17 25 23 12 12 1 9 33 28 48 17 17 41 6 2 Tax rates 39 48 2 Unfair business practices 34 42 13 26 27 52 25 16 34 7 9 1 Corruption 37 42 13 25 26 45 20 12 39 5 6 3 How the courts work 43 45 22 22 26 36 20 16 38 5 3 4 Political instability 26 34 19 39 27 42 23 24 36 3 6 3 Labour market legislation 24 28 19 31 31 53 27 21 24 11 14 3 Tax administration 20 19 7 34 38 65 29 29 27 9 9 1 Work permit regulations 36 38 19 29 29 42 20 20 35 7 8 4 Environmental regulations 17 17 17 35 36 49 30 23 32 9 12 2 Safety regulations and standards 11 14 18 28 30 53 36 31 27 13 15 2 Lack of qualified personnel 17 19 19 34 34 49 25 26 31 16 14 1 Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. to Business top 150. November 2009. Business Survey

Table 10

How well do the following do institutions their jobs?

Very well Well enough Quite poorly Very poorly Sep Dec Nov Sep Dec Nov Sep Dec Nov Sep Dec Nov 08 08 09 08 08 09 08 08 09 08 08 09 Central Bank of BiH 24 30 29 43 39 53 7 4 17 6 6 Indirect Tax Authority 15 16 12 47 50 64 23 18 21 8 9 1 Entity tax administrations 11 6 11 46 48 52 25 25 35 13 17 1 Legal system 4 3 10 18 17 46 39 36 34 30 35 1 Directorate for European 7 2 Integration 7 20 22 18 40 26 20 37 11 10 FIPA 4 3 15 29 19 55 18 18 28 20 19 1 Privatisation agencies 1 2 13 20 14 54 28 22 32 25 28 Banking agencies 7 5 11 28 32 53 29 20 30 8 7 5 Employment bureaux 3 3 16 31 36 50 34 24 27 16 17 6 Foreign Trade Chamber of BiH 7 4 17 28 29 44 32 30 35 20 18 1 Entity chambers of commerce 9 11 19 28 28 46 31 27 31 20 19 3 Social funds 20 2 17 9 10 50 33 26 28 33 37 4 The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Source: Research. Business to Business Survey top 150. November 2009.

149

Table 11 Please estimate how much you use various informal connections and contacts like family, friends, colleagues, etc.. in your day-to-day business... March 08

Table 12

Very much Somewhat Not much Not at all

March 08 Jul 08 7 4 38 26 24 29 21 19

Won t answer

Sept 08 8 39 33 11

Dec 08 9 37 26 17

Nov 09 22 66 11

Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Business 2009. Research. to Business Survey top 150. November

Table 13

How do you think the current institutional framework in BiH, that is the much way in which is organised and functions, affects government your business operations in terms of cash payments you have to make

Sept March 08 Jul 08 08 Dec 08 Nov 09 necessary Much more 32 42 39 than 39 35 than necessary more 24 Somewhat 24 31 24 54 Just right 14 10 11 10 10 Somewhat 2 3 2 2 less 7

A lot less than necessary No answer

Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. Business to Business Survey top 150. November 2009.

150

Please estimate how much you use various ''unwritten rules'' like customs, different business practices, codes of behaviour, etc. in your day-to-day business...

Nov 09

Dec 08

3 8 9 11 28 Somewhat 28 26 31 27 61 Not much 32 31 32 28 10 Not at all 29 22 19 24 1 Won t answer 8 13 8 10 The UNDP Early System Source: Business Environment Survey conducted for the Warning in BiH project by PRISM Research. Business Survey top 150. 2009. November Business to

Sept 08

Very much

Jul 08

Table 14 How much do you think the current institutional framework in BiH, that is the way in which government is organised and functions, affects your business operations in terms of time spent (time-intensive procedures, activities...) March 08 Jul 08 Sept 08 Dec 08 Nov 09 Much more than necessary 36 42 44 40 32 Somewhat more than necessary 26 21 19 18 55 Just right 7 9 16 11 12 Somewhat less 6 5 3 A lot less than necessary 5 4 4 7 No answer 20 3 12 21 The Environment Survey for Warning in by Source: Business conducted the UNDP Early System BiH project PRISM Research. to Business Survey top 150. November 2009. Business Table 15

In looking at institutions in BiH, can you estimate how much higher your total of direct cash payments to state institutions? business costs are because Sept 08 Dec 08 Nov 09 March 08 BIH FBIH RS BIH FBIH RS BIH FBIH RS 0 % 13 13 14 17 47 46 5 13 14 50 5 10 % 29 35 9 21 17 41 40 20 44 10 20 % 22 20 32 26 29 9 11 28 20 30 % 13 14 5 13 14 8 2 1 6 30 40 % 5 4 3 4 4 4 40 50 % 1 5 0 0 0 50 60 % 3 4 0 4 4 4 > 60 % 1 1 5 7 0 13 9 13 n.a. 25 1 1 27 7 Source: The Business Environment conducted for the UNDP Early Warning System in BiH project PRISM Survey by Research. Business to Business Survey top 150. November 2009.

Table 16

In looking in BiH, can you higher your at institutions estimate how much total costs are because of indirect business costs associated with state institutions?

March 08 0 5 % 5 10 % 10 20 % 20 30 % 30 40 % 40 50 % 50 60 % % > 60 n.a.

Sept 08 BIH FBIH RS 10 13 27 27 23 26 33 5 9 7 18 4 4 5 18 7 4 1 1 3 1 9 13 10 23

Dec 08 Nov 09 BIH FBIH RS BIH FBIH RS 15 18 13 34 32 44 25 21 29 39 40 31 21 24 13 26 26 25 10 10 13 1 1 3 4 0 3 3 4 2 3 0 7 6 8 14 13 21 1 1

Source: The Business Environment Survey conducted for the UNDP Early Warning System in BiH project by PRISM Research. Business to Business Survey top 150. November 2009.

151

Table 17

! -

!" /$

#$%& 1/

' (

)

*+ ,

&-.

152

V. INCOMES AND THE SOCIAL PROTECTION SYSTEM

Table 1

Monthly household income, including the wages and earnings of all household members, child allowance, pensions, and other sources of income (in %) No income < 100 KM 101 200 201 300 301 400 401 500 501 600 601 700 701 800 801 900 901 1000 1001 1100 1101 1200 1201 1300 1301 1400 1401 1500 1501 1600 1601 1700 1701 1800 1801 1900 1901 2000 >2000 KM/DM No answer/Refusal No income < 100 KM 101 200 201 300 301 400 401 500 SUBTOTAL to 500 1501 1600 1601 1700 1701 1800 1801 1900 1901 2000 >2000 KM/DM SUBTOTAL > 1500

FBiH Sept Nov Nov 08 08 09 1.0 2.4 4.6 1.0 1.3 2.0 2.2 4.3 7.0 15.3 5.8 8.1 15.7 12.8 13.0 11.7 1.5 2.9 9.5 8.7 11.8 6.7 3.5 3.5 5.5 9.4 4.3 5.9 1.4 2.5 3.3 6.3 4.3 0.9 2.0 3.1 0.1 4.5 2.7 0.2 1.4 2.4 4.0 1.1 1.6 2.3 0.3 1.2 0.3 0.2 0.2 1.1 0.9 0.6 0.7 1.1 0.1 2.1 2.1 20.5 23.7 19.1 100.0 100.0 100.0 June Sept Nov 08 08 08 1.0 2.4 4.6 1.0 1.3 2.0 2.2 4.3 7.0 15.3 5.8 8.1 15.7 12.8 13.0 11.7 1.5 2.9 47.0 28.1 37.6 June Sept Nov 08 08 08 0.3 1.2 0.3 0.2 0.2 1.1 0.9 0.6 0.7 1.1 0.1 2.1 2.1 0.3 5.4 5.2

Sept 08 0.8 5.6 6.7 15.4 17.7 13.2 6.7 4.6 2.3 2.7 1.6 0.3 0.3

RS Nov 08 4.5 3.1 5.6 10.4 12.5 2.0 6.2 5.2 8.2 1.8 3.4 4.1 3.4 1.0 1.2 1.0 0.8

Nov 09 3.9 4.5 14.9 6.0 6.8 2.6 19.0 1.0 7.9 6.5 4.0 2.9

0.6 0.6 0.7

0.1 1.1 0.4 0.9 22.1 24.0 17.3 100.0 100.0 100.0 June Sept Nov 08 08 08 0.8 4.5 3.9 5.6 3.1 4.5 6.7 5.6 14.9 15.4 10.4 6.0 17.7 12.5 6.8 13.2 2.0 2.6 59.4 38.1 38.6 June Sept Nov 08 08 08 0.8

0.0

0.1 1.1 0.4 2.4

0.6 0.6 0.7 0.9 2.8

Br ko District Sept Nov Nov 08 08 09 4.2 9.2 10.6 7.8 5.3 1.6 13.5 8.7 34.5 38.1 19.0 7.2 18.9 20.4 17.6 3.8 3.8 3.9 14.1 7.7 4.1 4.8 5.9 9.6 0.5 1.9 1.0 0.5 5.1 12.6 4.1 100.0 100.0 100.0 June Sept Nov 08 08 08 4.2 9.2 10.6 7.8 5.3 1.6 13.5 8.7 34.5 38.1 19.0 7.2 18.9 20.4 17.6 3.8 3.8 86.3 66.5 71.4 June Sept Nov 08 08 08 0.0 0.0 0.0

Source: Public opinion polls conducted by PRISM Research

153

Table 1a

Monthly household income, including the wages and earnings of all household members, child allowance, pensions, and other sources of income (in %) Sept 08 1.0 3.0 4.2 15.9 16.6 12.1 52.8

No income < 100 KM 101 200 201 300 301 400 401 500 SUBTOTAL to 500

Nov 08 3.4 2.1 4.9 7.9 12.9 1.8 33.0

Nov 09 4.5 2.9 10.9 7.2 10.7 2.7 38.9

Source: Public opinion polls conducted by PRISM Research

Table 2 Monthly household income, including the wages and earnings of all household members, child allowance, pensions, and other sources of income (in %) Income in KM

Quarter No income < 100 101 200 201 300 301 400 401 500 Subtotal to 500

Bosniak majority Croat majority Serb majority areas areas (BMA) areas (CMA) (SMA) Sept Nov Nov Sept Nov Nov Sept Nov Nov 08 08 09 08 08 09 08 08 09 0.7 2.6 5.7 2.1 1.5 0.7 0.8 4.5 3.9 1.3 1.2 2.1 0.1 1.6 1.3 5.6 3.1 4.5 2.0 5.4 7.9 2.8 3.7 6.7 5.6 14.9 17.2 6.0 7.3 8.7 5.0 10.8 15.4 10.4 6.0 18.8 14.4 14.0 5.1 6.5 9.4 17.7 12.5 6.8 12.2 1.6 3.3 10.0 1.2 1.3 13.2 2.0 2.6 52.2 31.3 40.4 28.9 15.7 27.2 59.4 38.1 38.6

Income in KM Quarter No income < 100 101 200 201 300 301 400 401 500 Subtotal to 500

Minorities in BMA Minorities in CMA Minorities in SMA Sept Nov Nov Sept Nov Nov Sept Nov Nov 08 08 09 08 08 09 08 08 09 2.0 4.3 2.0 1.0 2.6 1.2 0.9 4.6 16.1 2.0 6.2 2.5 1.6 5.2 3.8 8.6 2.0 9.3 9.1 1.9 6.6 6.7 11.8 7.7 11.7 15.4 20.5 14.2 11.4 8.8 10.3 25.9 13.9 4.9 24.5 13.7 17.2 10.8 9.4 8.0 16.8 23.3 10.2 10.6 3.8 7.0 14.4 1.2 9.5 2.7 7.7 56.5 57.7 49.5 39.3 29.9 29.0 70.1 56.0 59.2

Source: Public opinion polls conducted by PRISM Research

154

Table 3

Monthly household income, including the wages and earnings of all household members, child allowance, pensions, and other sources of income (in %)

Income in KM

No income < 100 101 200 201 300 301 400 401 500 SUBTOTAL TO 500

Area Gender Age group Urban Rural Male Female 18 35 36 50 51+ Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov 08 09 08 09 08 09 08 09 08 09 08 09 08 09 2.0 3.9 4.4 5.0 2.8 5.7 3.9 3.4 3.3 4.7 2.9 4.7 3.8 4.3 1.3 1.9 2.7 3.7 1.9 3.0 2.3 2.9 0.9 2.0 0.5 2.5 4.4 3.9 2.4 8.6 6.8 12.6 4.6 9.5 5.3 12.2 0.6 3.4 4.4 4.5 9.8 20.0 6.6 5.5 8.9 8.6 6.9 6.4 8.8 8.1 2.0 4.8 5.5 2.1 15.6 11.7 10.7 10.3 14.5 11.1 13.9 10.9 11.9 10.5 9.4 9.2 12.5 14.5 16.8 10.1 2.3 2.7 1.4 2.7 1.6 2.3 2.0 3.1 1.0 2.6 1.4 3.5 2.8 2.3 25.3 32.8 38.6 43.7 31.7 37.8 34.1 40.1 17.1 26.7 27.2 31.8 53.2 52.3

Source: Public opinion polls conducted by PRISM Research

Table 4 Have your familyâ&#x20AC;&#x2122;s economic circumstances changed over the past year (in %)? BiH Survey TOTAL BETTER The same TOTAL WORSE DK/NA Total

FBiH

Br ko District

Nov Nov Nov Nov Nov Nov Nov Nov 08 09 08 09 08 09 08 09 10.76 5.43 10.24 4.72 9.39 5.40 43.77 20.17 47.00 51.95 44.77 58.24 50.58 28.00 43.73 53.78 34.46 45.86 36.73 47.77 31.63 43.73 25.41 36.10 1.71 1.09 2.74 0.74 0.29 2.82 0.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Bosniak majority areas (BMA) Nov 09 4.3 44.8 49.9 0.9 100.0

Croat Serb majority majority areas areas (CMA) (SMA) Nov Nov 09 09 6.2 5.4 44.5 50.6 39.8 43.7 9.5 0.3 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

155

Table 5 Do you expect the economic situation over the next year to be....(in %)

Part of the Federation of Part of the Federation of BiH with a Bosniak BiH with a Croat majority majority (only for (only for respondents respondents from the from the FBiH Croat FBiH Bosniak majority majority areas areas) Nov 08 Nov 08 Nov 09 Nov 09 0.1 14.4 5.5 8.9

Republika Srpska (only for respondents from the RS)

Nov 08 Nov 09 Much WORSE 3.7 5.6 Generally WORSE 39.6 36.9 17.1 25.8 23.7 35.1 N The same 38.9 34.5 57.1 38.9 48.8 41.7 Generally BETTER 4.0 2.4 15.9 7.6 19.1 15.3 Much BETTER 13.3 0.2 0.2 1.0 DK/NA 4.1 11.5 4.2 17.8 4.7 2.3 Total 100.0 100.0 100.0 100.0 100.0 100.0 TOTAL WORSE 39.7 51.3 22.6 34.7 27.3 40.7 The same 38.9 34.5 57.1 38.9 48.8 41.7 TOTAL BETTER 17.2 2.7 16.1 8.6 19.1 15.3 DK/NA 4.1 11.5 4.2 17.8 4.7 2.3 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Public opinion polls conducted by PRISM Research Table 6 Expect continuation of the privatisation process to affect their familyâ&#x20AC;&#x2122;s economic circumstances (%) Br Bosniak Croat Serb ko majority majority majority FBiH RS District areas (BMA) areas (CMA) areas (SMA) Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Quarter 08 09 08 09 08 09 08 09 08 09 08 09 TOTAL NEGATIVE 66.4 67.4 53.5 57.9 33.6 44.1 68.8 71.3 56.9 52.9 53.5 57.9 TOTAL POSITIVE 10.1 7.0 11.3 17.7 40.1 16.0 7.9 5.2 18.9 13.7 11.3 17.7 DK/NA 23.5 25.6 35.2 24.4 26.3 39.9 23.3 23.5 24.3 33.4 35.2 24.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

156

Table 7 six months (in %)? Do you expect any change in the level of your household cash income over the next

Quarter TOTAL REDUCE TOTAL INCREASE No change DK/NA

Total

Bosniak Croat Serb FBiH RS majority majority majority 18 35 36 50 51+ areas areas areas Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov 08 09 08 09 08 09 08 09 08 09 08 09 08 09 08 09 22.2 8.9 18.0 13.6 23.5 16.6 17.2 8.9 18.0 13.4 17.7 9.0 22.1 12.3 20.9 14.2 18.4 17.1 25.6 28.7 14.6 14.8 33.3 25.5 25.6 28.7 24.1 24.4 18.6 23.1 19.4 17.6 56.8 60.6 46.4 67.7 59.3 43.4 47.5 60.6 46.4 57.2 54.9 68.2 50.0 64.1 54.6 62.8 4.6 3.9 4.9 6.9 4.1 2.4 6.8 9.7 4.9 6.9 5.3 3.1 4.2 4.8 4.2 6.9 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

Table 8

Will prices rise over the next six months (in %)

FBiH Nov June Nov 07 08 08 6.48 2.40 7.40 89.51 76.32 78.08 2.08 15.01 9.31 1.93 6.27 5.22 100.0 100.0 100.0

TOTAL FALL TOTAL RISE No change in prices DK/NA Total Source: opinion polls conducted by PRISM Research Public

Nov 09 8.28 71.58 14.36 5.78 100.0

Nov 07 7.48 83.87 6.62 2.03 100.0

RS June Nov 08 08 2.46 8.88 89.28 74.92 5.30 11.67 2.96 4.53 100.0 100.0

Br ko District Nov Nov June Nov Nov 09 07 08 08 09 17.87 4.18 35.56 6.73 54.43 59.62 100.00 0.43 6.00 23.68 33.33 61.96 85.63 4.01 2.87 2.05 1.64 100.0 100.0 100.0 100.0 100.0

157

Table 8a Do you expect your household cash income to change in the next six months (in%)?

Urban Rural Nov June Nov Nov Nov June Nov Nov 08 08 09 07 08 08 09 07 20.40 11.53 13.62 21.63 14.24 10.80 10.53 18.77 16.44 18.22 20.67 20.16 18.94 18.79 21.14 21.89 56.71 61.93 60.20 54.45 58.92 63.83 64.36 53.17 6.45 8.32 5.52 3.76 7.90 6.58 3.97 6.17 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

FALL TOTAL TOTAL RISE No change DK/NA Total opinion Source: Public polls conducted by PRISM Research

Table 9 Expect to be jobless during the next three months (in %) Sept 08 14.97

FBiH

Nov Nov 08 09 15.41 17.09

Sept 08 8.98

Nov 08 22.28

Source: Public opinion polls conducted by PRISM Research

Nov 09 12.91

Br ko District Sept Nov Nov 08 08 09 11.39 0.00 0.00

18 35 Nov Nov 08 09 22.62 19.90

36 50 Nov Nov 08 09 14.46 11.56

Nov 08 12.63

158

51+ Nov 09 13.84

Table 10 Support the holding of public protests, strikes, or demonstrations related to(in %) FBiH

Survey Loss of employment Inability to find a job Against entity government policy Low salaries/pensions Threats to ethnic or civil rights The conduct of the international community The recovery of property

Sept Nov Nov 08 08 09

Sept 08

Nov Nov 08 09

36 18 51+ 50 35 Nov Nov Sept Nov Nov Sept Nov Nov Nov Nov Nov 08 09 08 08 09 08 08 09 09 09 09

Br ko District Sept 08

Urban

Rural

53.5 61.3 67.4 45.6 35.1 39.9 33.4 33.7 48.4 55.1 49.7 58.1 46.0 50.9 54.7 61.6 63.1 48.3 50.9 58.2 61.8 44.8 35.3 38.2 33.4 31.6 48.7 52.9 48.4 54.5 44.5 48.8 50.5 59.4 59.9 42.6 45.0 51.6 55.2 40.2 32.5 35.8 27.6 2.9 49.5 45.7 42.9 49.3 40.4 43.0 46.1 54.2 55.9 37.9 51.9 60.8 65.9 45.4 37.7 41.6 45.2 38.8 54.9 54.5 50.9 59.1 45.2 51.6 53.8 59.5 62.9 50.1 50.8 56.4 61.3 47.3 39.0 39.8 30.6 5.5 48.4 53.7 47.1 55.1 45.4 49.3 50.6 58.0 60.6 44.2

43.2 49.8 53.7 43.8 39.9 36.5 25.2 4.2 49.3 46.0 43.3 48.8 40.8 46.0 45.5 53.4 55.9 37.2 50.3 54.6 60.3 46.9 41.9 36.3 28.3 33.1 51.0 52.2 46.4 51.8 45.7 51.2 49.7 56.0 58.8 42.4

Source: Public opinion polls conducted by PRISM Research

159

Table 11 Would leave BiH if opportunity arose (in %) - November 2007, 2008 and 2009

Nov 07 45.58 Nov 08 40.36 Nov 09 44.02 Source: polls conducted by PRISM Research Public opinion

BiH

18 35

36 50

46.41 40.08 52.10

44.21 41.56 32.69

65.90 63.29 66.54

56.42 39.38 51.92

51+ 19.54 17.57 22.22 Table 12

in the RS and FBiH (2009) Trends in the average salary and the consumer price indices Month Average salary (in KM) CPI (Consumer Price Index) Month salary (in Average KM)

FBiH

CPI (Consumer Price Index) Source: Entity Statistics Offices

RS 02/09 03/09 04/09 05/09 06/09 07/09 08/09 09/09 10/09 01/09 771.00 813.00 781.00 786.00 773.00 794.00 792.00 790.00 786.00 789.00 99.90 99.70 99.90 98.50 99.90 100.10 101.00 99.79 100.30 100.90 FBiH 01/09 02/09 03/09 04/09 05/09 06/09 07/09 08/09 09/09 10/09 790.55 785.21 795.20 797.97 792.26 792.88 792.94 782.76 784.86 789.83 99.90 100.10 99.90 99.00 99.90 100.00 100.30 99.90 99.90 100.60

Table 12a Pension data for the RS and FBiH for November 2008 and 2009 FBiH RS Nov 08 Nov 09 Nov 08 Nov 09 Maximum pension 296.36 296.36 160.00 160.00 Minimum pension 1393.48 1977.00 1408.88 1564.56 Average pension 368.42 343.00 319.41 316.22 Source: RS and FBIH Pension Funds

160

Table 12b

Data on average salaries by sector for the RS and the FBiH for December 2007, October 2008, and September 2009

FBiH

537.00 555.00 672.00 446.00 697.00 533.00 442.00

659.00 683.00 903.00 510.00 871.00 567.00 536.00

573.00 609.00 922.00 518.00 922.00 551.00 546.00

Salary growth December (Sep 09/ 2007 Oct 08) 13.05% 607.03 10.83% 423.56 2.10% 645.98 1.57% 507.04 5.86% 1082.41 2.82% 450.95 1.87% 482.09

400.00 763.00 1269.00 688.00

450.00 752.00 1204.00 676.00

475.00 833.00 1256.00 625.00

5.56% 10.77% 4.32% 7.54%

910.00

1059.00

1071.00

552.00 664.00 530.00 628.00

890.00 1143.00 620.00 783.00

895.00 993.00 632.00 786.00

December 2007 Agriculture Fisheries Mining and quarries Manufacturing Electricity. gas. and water Construction Wholesale and retail. motor vehicle repairs. and personal or household goods Hotels and restaurants Transport. warehousing. and communications Financial mediation Activities related to property. renting. and business activities Government administration. defence. mandatory social insurance Education Healthcare and social work Other communal. social. or personal services TOTAL average

October 2008

September 2009

October 2008

September 2009

Salary growth (Sep 09/ Oct 08) 6.50% 14.10% 0.98% 0.25% 0.37% 1.44% 3.18%

727.30 483.66 751.05 562.18 1235.22 516.36 522.85

680.05 551.84 758.40 560.77 1230.64 508.90 539.48

460.88 871.36 1254.25 693.70

517.32 977.26 1257.11 757.62

528.32 957.58 1210.46 769.86

2.13% 2.01% 3.71% 1.62%

1.13%

951.99

1099.49

1100.02

0.05%

0.56% 13.12% 1.94% 0.38%

740.23 827.28 702.45 696.74

820.20 971.48 744.77 780.51

809.16 972.09 761.56 784.86

1.35% 0.06% 2.25% 0.56%

Source: Entity Statistics Offices

161

Table 13 Consumer Price Index (CPI) by category (October 2009) Total Food and non alcoholic beverages Alcohol and tobacco Clothes and footware Accommodation. water. electricity. gas. and other fuels Furniture. household goods. and regular maintenance Health Transport Communication Recreation and culture Education Restaurants and hotels Other goods and services

RS FBiH 1 10 2009/ 10 2009 / 1 10 2009/ 10 2009 / 1 10 2008 10 2008 1 10 2008 10 2008 99.50 98.90 99.80 98.20 98.60 96.40 100.50 96.50 109.30 119.50 106.80 114.60 97.10 96.40 95.30 95.30 104.70

103.60

104.40

101.20

101.10

99.10

101.10

99.10

100.80 88.60 102.60 102.40 100.80 104.00 103.10

101.90 89.60 102.60 101.00 100.40 101.70 102.30

100.40 88.30 100.80 104.50 98.40 106.50 101.90

100.90 90.50 99.70 101.70 100.80 105.80 100.30

Source: Entity Statistics Offices

Table 14 Average household costs, itemised (in %) Nov Quarter 07 Food (including coffee and drinks) 29.8 Clothes and footwear 6.4 Cigarettes / tobacco 5.3 Personal Hygiene Items 6.2 Fuel and car maintenance 6.1 Public transport bus and tram 2.6 Kindergarten / child care 1.3 Debt repayment 4.2 Works and house repairs 3.3 Medicine and treatment 7.0 Recreation 3.4 Children s education 4.6 Power 8.6 Water 3.6 Telephone 6.1 Gas 1.5

FBiH Nov 08 40.2 5.5 4.0 6.0 5.5 1.4 0.2 5.9 1.9 5.0 2.4 3.0 6.3 2.0 4.3 0.2

Nov 09 37.6 6.3 4.3 7.2 7.1 1.6 0.2 3.0 2.5 6.0 1.9 4.9 7.7 3.0 4.1 0.3

Nov 07 33.0 7.1 5.1 6.4 5.9 1.7 0.6 4.0 2.8 6.3 4.2 4.7 9.8 2.4 5.1 0.8

RS Nov 08 36.7 6.8 3.8 6.4 6.2 1.6 0.1 3.7 2.4 4.9 2.8 3.4 7.8 1.5 4.7 0.6

Source: Public opinion polls conducted by PRISM Research

162

Nov 09 42.7 7.6 4.0 6.5 3.5 1.3 0.0 2.5 0.9 4.1 1.6 1.8 6.9 2.0 4.1 0.1

Table 15 Number of households with durable consumer goods (in %)

Te l e p h on e M o b i l e ph on e D i a l - u p a c c e s s t o t h e i n t e r n et a t h o m e Ca r

Nov 07 81.47 63.65 15.28 50.86

FB iH Nov 08 63.85 64.85 8.67 48.72

Nov 09 63.85 64.85 8.67 48.72

Nov 07 63.85 64.85 8.67 48.72

RS Nov 08 71.41 65.23 14.22 54.59

Nov 09 65.56 73.66 13.28 48.65

S o u r ce : P u b l i c op i n i on p o l ls c on d u ct e d b y P RI S M Re s e a rc h

Table 16 Household status - self-described (%)

B a r e l y s u r v i v in g W el l b el o w a ver a g e A b it b e l o w a v e r a g e T O T A L b e lo w a v e r ag e

Sep t 08 9.5 14.0 19.7 43.2

B iH Nov 08 8.1 11.4 24.3 43.8

Nov 09 14.9 12.1 22.0 49.0

Sep t 08 7.7 12.0 17.5 37.2

FB iH Nov 08 5.1 9.2 24.4 38.7

Nov 09 8.3 11.6 25.1 45.0

Sep t 08 11.7 15.4 23.1 50.2

R RS Nov 0 08 11.5 14.3 24.1 4 49.9

Nov 09 23.7 11.6 17.7 53.0

Sep t N o v N o v 08 08 09 13.7 25.7 28 8.5 44.4 17.3 27 7.7 19.7 24.4 17 7.6 77.8 67.4 73.7

S o u r ce : P u b l i c op i n i on p o l ls c on d u ct e d b y P RI S M Re s e a rc h

163

Table 17

Table 18 The Social Stability Index for BiH Survey Feb 05 Jun 05 Sep 05 Nov 05 Apr 06 Jun 06 Sep 06 Nov 06 Apr 07 Sep 07 Nov 07 Mar 08 Jun 08 Oct 08 Nov 08 Nov 09

Chain index Composite index 92.00 97.83 93.33 102.38 104.65 102.22 100.00 102.17 104.26 91.84 95.56 106.98 97.83 102.22 100.00 100.00

46 45 42 43 45 46 46 47 49 45 43 46 45 46 46 46

Source: Public opinion polls conducted by PRISM Research.

164

VI. SOCIAL INCLUSION Table 1 Think might lose job in next three months (in %) FBiH

Br ko District

Sept 08 Nov 08 Nov 09 Sept 08 Nov 08 Nov 09 Sept 08 Nov 08 Nov 09 14.97 15.41 17.09 8.98 22.28 12.91 11.39 0.00 0.00

Source: Public opinion polls conducted by PRISM Research

Table 2 Monthly household income, including all household salaries and receipts, child allowance, pensions, and any of income other sources (in %)

No income < 100 101 200 201 300 301 400 401 500 Number low of income households

BiH 35 50 Urban Rural Male Female 18 36 51+ Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov Nov 08 09 08 09 08 09 08 09 08 09 08 09 08 09 2.0 3.9 4.4 5.0 2.8 5.7 3.9 3.4 3.3 4.7 2.9 4.7 3.8 4.3 1.3 1.9 2.7 3.7 1.9 3.0 2.3 2.9 0.9 2.0 0.5 2.5 4.4 3.9 2.4 8.6 6.8 12.6 4.6 9.5 5.3 12.2 0.6 3.4 4.4 4.5 9.8 20.0 6.6 5.5 8.9 8.6 6.9 6.4 8.8 8.1 2.0 4.8 5.5 2.1 15.6 11.7 10.7 10.3 14.5 11.1 13.9 10.9 11.9 10.5 9.4 9.2 12.5 14.5 16.8 10.1 2.3 2.7 1.4 2.7 1.6 2.3 2.0 3.1 1.0 2.6 1.4 3.5 2.8 2.3

25.3 32.8 38.6 43.7 31.7 37.8 34.1 40.1 17.1 26.7 27.2 31.8 53.2 52.3

Source: Public opinion polls conducted by PRISM Research

165

Table 3 Would leave BiH if opportunity arose (in %) - November 2007, 2008, and 2009

BiH

FBiH

18 35

36 50

51+

Nov 07

45.58

46.41

44.21

65.90

56.42

19.54

Nov 08 Nov 09

40.36 44.02

40.08 52.10

41.56 32.69

63.29 66.54

39.38 51.92

17.57 22.22

Source: Public opinion polls conducted by PRISM Research

Table 4 household income, including all household salaries and receipts, child allowance, and any other sources Monthly pensions, of income (in %) 35 50 18 36 51+ Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 No income 3.3 4.7 2.9 4.7 3.8 4.3 < 100 0.9 2.0 0.5 2.5 4.4 3.9 101 200 0.6 3.4 4.4 4.5 9.8 20.0 201 300 2.0 4.8 5.5 2.1 15.6 11.7 301 400 9.4 9.2 12.5 14.5 16.8 10.1 401 500 1.0 2.6 1.4 3.5 2.8 2.3 Number of households 17.1 26.7 27.2 31.8 53.2 52.3 Source: opinion polls conducted by PRISM Research Public 166

Table 5 Monthly household income, including all household salaries and receipts, child allowance, pensions, and any other sources of income (in %) Income in KM Quarter No income < 100 101 200 201 300 301 400 401 500 Subtotal to 500

Bosniak majority areas (BMA) Nov 08 2.6 1.2 5.4 6.0 14.4 1.6 31.3

Income in KM Quarter No income < 100 101 200 201 300 301 400 401 500 Subtotal to 500

Nov 09 5.7 2.1 7.9 7.3 14.0 3.3 40.4

Minorities in BMA Nov 08 4.3 6.2 9.3 20.5 13.7 3.8 57.7

Nov 09 2.0 9.1 14.2 17.2 7.0 49.5

Croat majority areas (CMA) Nov 08 1.5 1.6 5.0 6.5 1.2 15.7

Nov 09 0.7 1.3 3.7 10.8 9.4 1.3 27.2

Minorities in CMA Nov 08 2.6 2.5 6.6 8.8 9.4 29.9

Nov 09 1.2 1.6 6.7 10.3 8.0 1.2 29.0

Serb majority areas (CMA) Nov 08 4.5 3.1 5.6 10.4 12.5 2.0 38.1

Nov 09 3.9 4.5 14.9 6.0 6.8 2.6 38.6

Minorities in SMA Nov 08 4.6 3.8 7.7 13.9 23.3 2.7 56.0

Nov 09 16.1 8.6 11.7 4.9 10.2 7.7 59.2

Source: Public opinion polls conducted by PRISM Research

167

Table 6 Possession of durable consumer goods

Nov Nov Nov 07 08 09 83.3 85.7 80.7 64.3 74.6 79.1 47.9 49.2 49.9 Minorities in BMA Nov Nov Nov 07 08 09 84.5 80.5 58.2 60.5 47.6 67.5 28.3 31.3 40.4

Telephone Mobile phone Car Telephone Mobile phone Car

Serbs majority

Nov Nov Nov 07 08 09 75.1 73.4 73.2 61.2 73.1 66.0 61.4 68.2 61.8 Minorities in CMA Nov Nov Nov 07 08 09 76.5 62.5 76.1 56.3 53.1 71.3 54.3 36.9 52.1

Nov Nov Nov 07 08 09 63.8 71.4 65.9 64.9 65.2 74.9 48.7 54.6 46.5 Minorities in SMA Nov Nov Nov 07 08 09 63.8 51.2 76.4 64.9 62.2 64.9 48.7 24.5 34.3

Source: Public opinion polls conducted by PRISM Research

Table 7 Expectations of change in household economic circumstances over coming year (in %) Bosniak majority Croat majority Serb majority areas (BMA) areas (CMA) areas (SMA) Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 30.2 30.4 15.0 14.5 21.8 33.7 56.7 55.5 65.8 54.4 52.2 45.1 8.2 11.0 14.7 18.8 20.2 18.2 4.8 3.0 4.5 12.4 5.8 3.0 100.0 100.0 100.0 100.0 100.0 100.0

Quarter TOTAL WORSE The same TOTAL BETTER DK/NA Total

Minorities in BMA Minorities in CMA Minorities in SMA

Quarter TOTAL WORSE The same TOTAL BETTER DK/NA Total

Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 26.7 31.1 20.7 17.1 24.1 22.9 64.5 47.5 59.9 51.9 60.5 61.3 8.1 15.3 18.6 17.0 13.0 14.0 0.7 6.0 0.7 14.0 2.4 1.8 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

Bosniaks majority Croats majority

168

Table 8

Think that the legal system will support them regarding contractual and property rights (in %)

Bosniaks

Nov 08 Nov 09 Majority Minority Majority Minority Strongly agree 13.63 17.27 25.36 27.53 Somewhat agree 44.12 16.99 26.64 30.13 Somewhat disagree 11.04 23.68 8.87 10.73 Absolutely disagree 21.61 36.47 35.75 23.17 DK/NA 9.60 5.59 3.38 8.44 Total 100.00 100.00 100.00 100.00 Source: Public opinion polls conducted by PRISM Research

Croats Nov 08 Majority Minority 7.81 19.25 24.21 21.63 22.11 17.35 19.66 18.47 26.21 23.30 100.00 100.00

Nov 09 Majority Minority 13.58 17.65 29.30 22.62 7.52 10.77 37.21 37.74 12.39 11.23 100.00 100.00

Serbs Nov 08 Majority Minority 10.42 23.88 46.87 42.32 12.75 6.27 22.02 15.52 7.93 12.02 100.00 100.00

Nov 09 Majority Minority 12.59 12.20 39.46 41.97 4.57 3.07 28.60 30.56 14.78 12.20 100.00 100.00

Table 9

Assessment of political trends in BiH (%) Deteriorating Improving DK/NA Total

Bosniaks

Croats

Serbs

Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 Majority Minority Majority Minority Majority Minority Majority Minority Majority Minority Majority Minority 79.7 82.1 89.6 81.1 52.9 47.4 71.4 75.9 50.3 41.2 64.0 46.6 13.5 14.7 6.8 13.3 24.7 48.2 15.8 16.8 34.6 51.7 25.2 38.2 6.8 3.1 3.7 5.5 22.4 4.4 12.8 7.2 15.1 7.1 10.8 15.1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Public opinion polls conducted by PRISM Research

169

Table10

Attitudes regarding the powers of the High Representative in BiH (%) Bosniaks Croats Serbs Nov 08 Nov 09 Nov 08 Nov 09 Nov 08 Nov 09 Majority Minority Majority Minority Majority Minority Majority Minority Majority Minority Majority Minority Reduce 10.9 12.8 7.4 30.5 28.9 12.0 31.6 21.7 71.6 17.6 73.6 34.2 Increase 41.9 26.9 61.9 34.9 18.9 30.5 27.3 32.7 2.9 28.2 3.3 29.7 Leave alone 40.0 56.4 21.7 14.2 31.9 54.2 23.4 22.9 19.1 42.2 20.6 32.5 DK/NA 7.2 3.9 9.1 20.4 20.2 3.4 17.7 22.7 6.4 12.0 2.5 3.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Public conducted PRISM Source: opinion polls by Research

Table 11 Number of people who approve of the performance of various institutions in BiH (in %) November 2009

Bosniaks

Croats

Serbs

Majority Minority Majority Minority Majority Minority

BiH Presidency

15.7

21.4

32.2

33.3

49.5

56.0

BiH Parliamentary Assemby

16.0

18.2

30.8

36.2

51.2

55.2

BiH Council of Ministers

16.6

19.7

30.8

31.6

52.4

51.8

Parliament of FBiH FBiH Government RS National Assembly RS Government Municipal Authorities Cantonal Governments

16.9 15.8 9.3 9.2 19.0 18.1

21.3 18.4 16.6 19.0 22.1 19.5

28.8 27.5 10.0 11.6 28.4 29.4

28.8 28.0 13.3 13.5 25.6 24.1

47.8 48.8 71.6 71.9 69.0

50.6 51.3 53.1 52.6 54.2

Source: Public opinion polls conducted by PRISM Research

170

Table 12 Pride in belonging to oneâ&#x20AC;&#x2122;s own ethnic group/people (%) - November 2009 Bosniaks Croats Serbs Majority Minority Majority Minority Majority Minority Very proud 73.4 65.5 82.4 79.2 72.3 75.1 Somewhat 14.4 18.4 11.5 10.8 13.0 12.9 Not 4.3 5.2 1.6 0.9 7.7 very 5.7 Not all 3.3 5.1 0.2 1.4 4.3 at importance Of no 3.6 3.0 2.2 6.3 2.4 4.9 0+ - + 0 2+ - decide 1.0 2.0 0.7 0.1 DK/NA 0.8 1.3 1.4 0.3 1.5 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: opinion conducted by PRISM Public polls Research Table 13 Pride in being a citizen of BiH (%) Serbs Bosniaks Croats Nov 08 Nov 09 Nov Nov 09 Nov Nov 08 08 09 Majority Minority Majority Minority Majority Minority Majority Minority Majority Minority Majority Minority proud Very 80.7 87.0 61.7 52.4 32.5 75.4 52.4 69.3 23.7 72.9 17.9 46.4 Somewhat 11.2 8.7 18.7 17.4 33.8 12.5 25.1 13.6 20.1 9.8 16.5 16.7 Not much 5.4 2.7 6.5 12.3 13.8 3.0 7.7 1.3 15.7 1.1 22.7 21.6 Not at all 0.4 8.5 9.6 4.7 1.1 6.5 7.1 20.8 5.3 20.7 3.0 Of no importance 0.8 3.3 3.2 14.0 6.7 6.7 6.5 17.7 10.2 18.0 8.0 0+ - + 0 2+ - decide 0.9 0.8 1.0 2.0 0.3 0.7 1.2 1.0 DK/NA 0.6 0.8 0.2 3.2 0.9 1.4 0.9 2.2 0.9 0.7 3.2 4.3 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Public opinion polls conducted by PRISM Research 171

Table 14 Expect things to get worse in BiH as regards the political situation (%) Nov 07 Nov 08 Nov 09

Bosniaks Croats Serbs Majority Minority Majority Minority Majority Minority 79.4 90.7 80.2 60.3 82.4 82.5 79.7 82.1 52.9 47.4 50.3 41.2 89.6 81.1 71.4 75.9 64.0 46.6

Source: Public opinion polls conducted by PRISM Research

Table 15 Number of individuals vis-a-vis confidence in other people (in %) BMA CMA SMA Majority Minority Majority Minority Majority Minority Cautious with others (RESPONSES on of 1 5) 80.44 81.36 77.26 87.10 93.12 a scale 82.66 others a Trustful of (RESPONSES on 18.38 17.98 20.50 12.90 6.88 scale of 6 10) 16.40 /* , know/No response 0.94 1.18 0.66 2.24 0.00 0.00 100.00 100.00 100.00 100.00 100.00 Total 100.00

opinion conducted PRISM Source: Public polls by Research

172

VII. ETHNIC RELATIONS The Interethnic Stability Index for Bosnia and Herzegovina

Interethnic Stability Index

110 100 90 80 70 60 Chain index Composite index

May Aug Jan Apr Jan Aug Dec Mar Apr Jun Aug Oct Jan Jul Sep Nov Feb Jun Sep Nov Feb Jun Sep Nov Apr Jun Sep Nov Apr Sep Nov Mar Jun Oct Nov Nov 00 00 01 01 01 01 01 02 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 08 08 08 08 09 95 106 99 101 101 103 100 99 100 100 101 99 101 100 97 103 99 101 101 100 96 97 104 101 100 100 104 96 101 94 103 J105 100 99 96 73 69 73 72 73 74 76 76 75 75 75 76 75 76 76 74 76 75 76 77 77 74 72 75 76 76 76 79 76 77 72 74 78 78 77 74

Table 1a Have you or anyone you live with been subjected to verbal harassment or physical attack solely due to your ethnicity/nationality over the past year? Sep 2008 % 93 2

No 2 Never Yes 2 Once Yes 2 On a number of occasions 2 Yes 2 Often 1 DK/NA 2 TOTAL 100

BiH Nov 2008 % 95 2

Nov 2009 % 90 3

Sep 2008 % 91 3

FBiH Nov 2008 % 93 2

Nov 2009 % 88 5

Sep 2008 % 98 1

RS Nov 2008 % 97 0

Nov 2009 % 94 1

1 1 1 100

2 1 3 100

3 1 2 100

2 1 1 100

2 2 2 100

1 1 0 100

1 1 1 100

1 1 3 100

Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

173

Table 1c Have you or anyone you live with been subjected to verbal harassment or physical attack solely due to your ethnicity/nationality over the past year?

Bosniaks

No 2 Never Yes 2 Once Yes 2 On a number of occasions Yes 2 Often DK/NA TOTAL

Majority % 92 4 1 1 3 100

Minority % 90 3 2 3 2 100

Croats Nov 2009 Majority Minority % % 86 79 6 9 3 3 2 100

Serbs Majority % 95 1

6 2 3 100

Minority % 92 1

1 0 3 100

1 2 4 100

Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009..

Table 2a

To what extent do you agree/disagree that members of minority peoples, who lived in this municipality before the war, should return to their homes? Disagree Agree DK/NA Total

BiH

FBiH

% 11 84 5 100

% 12 83 6 100

% 11 86 3 100

Br ko District Nov 2009 % 0 98 2 100

Bosniaks % 9 88 3 100

Croats % 14 77 8 100

Serbs % 11 86 3 100

Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

174

Table 2b

To what extent do you agree/disagree that members of minority peoples, who lived in this

municipality before the war, should return to their homes?

Gender Age group Male Female 18 35 36 50 + 50 Nov 2009 % % % % % Agree 12 10 10 12 11 Disagree 83 85 84 84 85 DK/NA 5 5 6 4 4 Total 100 100 100 100 100 Source: environment survey for UNDP Early System BiH project. PRISM Research. 2009. Business the Warning in conducted by November

Type Urban Rural % % 11 11 84 84 5 4 100 100

Table 3a

Into which category does your household fall?

Locals Displaced Refugees from another country Returnee Moved here after the war DK/NA

BiH % 68 9 2 15 5 2

FBiH % 70 6 2 16 5 2

Nov 2009 RS Bosniaks % % 70 78 15 4 1 10 11 4 6 1 1

Croats % 61 7 4 21 4 3

Serbs % 70 15 1 10 4 1

100 100 TOTAL 100 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

175

Table 7 Would you move to a town where the majority were of an ethnic group you do not belong to for better job prospects?

BiH % 42 49 9 100

Yes No DK/NA Total

FBiH

RS Br ko District Nov 2009 % % % 47 33 28 43 59 69 10 9 4 100 100 100

Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

Table 8 How proud are you of belonging to your ethnic group?

BiH % 76 13 4 2 3 1 1 100

Very proud Somewhat Not very Not at all Not important Don t know/Can t decide No answer/Won t answer Total

FBiH Nov 2009 % 77 13 3 2 3 1 1 100

RS % 73 13 7 4 3 0 0 100

Source: Business environment survey for the UNDP Early Warning System in BiH conducted project. by PRISM Research. November 2009.

Table 8a

How proud are you of belonging to your ethnic group? Bosniaks Croats Serbs Nov 2009 % % % Very proud 72 82 73 Somewhat 15 11 13 Not very 4 2 7 Not at all 4 0 4 Not important 3 3 3

Don t know/Can decide t No answer/Won t answer Total

0 100

1 1 100

0 0 100

Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

176

Table 9

How proud are you of being a citizen of Bosnia and Herzegovina?

Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % Very proud 52 54 47 Somewhat 21 18 20 Not very 11 9 12 all 6 7 11 Not at Not 7 9 8 important 1 Don t know/Can t decide 1 1 No 2 2 answer/Won t answer 1 100 100 100 Total Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted PRISM November 2009. by Research. Table 9a

of Bosnia How proud are you of being a citizen and Herzegovina?

FBiH RS Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2008 2009 % % % % % % Very proud 61 62 58 31 37 23 Somewhat 19 20 21 27 17 17 Not very 9 8 7 17 12 23 Not at all 4 2 8 11 17 18 Not important 5 6 5 11 16 16 Don t know/Can decide 1 t 1 1 1 1 1 No answer/Won answer 1 2 1 3 t 2 1 Total 100 100 100 100 100 100 Source: environment survey the UNDP Early Warning in project. conducted by Research. Business for System BiH PRISM November 2009.

Table 9b How are you of being a citizen of Bosnia and Herzegovina? proud Bosniaks Croats Serbs Sep Nov Nov Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2009 2008 2008 2009 2008 % % % % % % % % % Very 80 82 60 42 40 55 31 37 23 proud Somewhat 12 11 18 26 30 23 27 17 17 Not very 5 5 7 13 12 7 17 12 23 Not at 1 0 9 6 4 7 17 18 all 11 Not important 2 1 3 8 13 7 11 16 16 Don t know/Can t decide 0 1 1 1 0 1 1 1 1 t 0 1 1 3 2 No answer/Won answer 1 1 1 3 Total 100 100 100 100 100 100 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

177

Table 10 Do you think war might break out if EUFOR withdraw? Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % Yes 17 22 25 No 71 66 64 DK/NA 12 13 11 Total 100 100 100 Source: Business environment survey for the UNDP Early Warning System BiH project. conducted by in PRISM Research. November 2009. 10a Table

Do you think war might break out if EUFOR withdraw? FBiH RS Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2008 2009 % % % % % % Yes 20 24 27 12 20 21 No 67 61 60 77 69 72 DK/NA 13 15 14 11 10 7 Total 100 100 100 100 100 100 Business survey for project. by Source: environment the UNDP Early System BiH conducted Warning in PRISM Research. November 2009.

Do you think war might break out if EUFOR withdraw?

Table 10b

Serbs

Bosniaks Croats Sep Nov Nov Sep Nov Nov Sep Nov Nov 2008 2009 2008 2008 2009 2008 2008 2009 2008 % % % % % % % % % 27 Yes 24 35 16 20 19 12 20 21 No 60 64 53 74 59 66 77 69 72 9 11 10 7 12 10 DK/NA 16 15 21 100 100 100 100 100 100 Total 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

Table 12

Would you support/participate in public protests, strikes, or demonstrations over... ? Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 Ethnic and civil rights % % % Yes 49 47 49 No 43 46 43 DK/NA 9 7 8 Total 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

178

Table 12a Would you support/participate in public protests, strikes, or demonstrations over... ?

FBiH RS Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2008 2009 % % % % % % 55 53 47 38 40 Ethnic and civil rights Yes 50 No 40 55 37 37 47 58 DK/NA 10 8 6 5 5 10 Total 100 100 100 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

Table 13

How much influence do you think the religious communities/churches in BiH have on actual political events?

Bosnia and Herzegovina Sep 2008 Nov 2009 Nov 2008 % % % None 14 13 7 Not much 22 20 23 Some 30 29 30 A lot 25 29 34 DK/NA 8 9 7 Total 100 100 100 TOTAL NOT MUCH 36 33 29 TOTAL A LOT 56 58 64 8 9 DK/NA 7 Total 100 100 100

Source: Business environment survey for the UNDP Early Warning System 2009. in BiH project. conducted by PRISM Research. November

Table 13a

religious communities/churches in BiH How much influence do you think the have on actual political events? FBiH RS Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2008 2009 % % % % % % None 8 4 4 23 23 13 Not much 19 17 15 30 24 38 Some 34 31 30 23 28 29 A lot 32 39 43 15 16 15 DK/NA 8 9 8 9 9 5 100 100 100 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

Total

179

Table 13b How much influence do you think the religious communities/churches in BiH have on actual political events? Bosniaks Croats Serbs Sep Nov Nov Sep Nov Nov Sep Nov Nov 2009 2008 2008 2009 2008 2008 2009 2008 2008 % % % % % % % % % None 7 3 3 9 6 5 23 23 13 Not much 12 17 10 25 16 20 30 24 38 Some 31 30 21 37 32 39 23 28 29 A lot 44 48 59 20 29 27 15 16 15 DK/NA 7 3 7 9 17 9 9 9 5 Total 100 100 100 100 100 100 100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted PRISM Research. 2009. by November

Table 14 Some people say that only the ethnic or ethnically affiliated parties in BiH can protect the vital ethnic/national interests of the ethnic group/people they represent. To what extent do you agree or disagree with this opinion? Absolutely disagree Generally disagree Generally agree Absolutely agree DK/NA Total

BiH

% 44 28 15 4 9 100

FBiH Nov 2009 % 46 24 15 4 11 100

% 39 34 17 4 6 100

Table 14a

Some people say that only the ethnic or ethnically affiliated parties in BiH can protect the vital ethnic/national interests of the ethnic group/people they represent. To what extent do you agree or disagree with this opinion? disagree Absolutely Generally disagree Generally agree agree Absolutely DK/NA

Croats Nov 2009 % 30 28 21 5 17

Serbs % 39 34 17 4 6

100 100 100 Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

Total

Bosniaks % 62 20 9 4 5

180

Table 15 Please state in what direction you think BiH is headed, as regards the political situation?

BiH FBiH RS Sep Nov Nov Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2008 2009 2008 2008 2009 % % % % % % % % % 53 58 72 60 67 80 43 48 61 33 30 19 27 21 12 41 39 27 14 12 9 13 12 8 16 13 12 100 100 100 100 100 100 100 100 100

Worse Better DK/NA Total

Source: Business environment survey for the UNDP Early Warning System in BiH project. conducted by PRISM Research. November 2009.

181

VIII. PUBLIC SAFETY

The Security Stability Index for Bosnia and Herzegovina 110

100

Security Stability Index

90 80

May Aug Oct Jun Sep Jun Sep Nov Apr Jun Jan Apr Jan Aug Dec Mar Apr Jun Aug Jan Jul Sep Nov Feb Nov Feb Sep Nov Apr Sep Nov Mar Jun Oct Nov Nov 00 01 01 01 01 01 02 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 08 08 08 08 09 00 100 100 98.88 100 101.1 98.88 98.86 102.3 98.88 98.86 101.1 100 100 97.73 100 101.2 101.1 97.73 101.2 101.1 97.73 101.2 98.85 100 98.84 103.5 97.73 102.3 97.73 102.3 96.59 101.2 102.3 100 98.86 Chain index Composite index 89 89 89 88 88 89 88 87 89 88 87 88 88 88 86 86 87 88 86 87 88 86 87 86 86 85 88 86 88 86 88 85 86 88 88 87

Table 1

During the past three months have you, a family member or your family as a whole suffered... A Burglary at home A Burglary at a business premises Wallet been stolen

Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % Yes 2 1 3 No 95 98 97 DK/NA 2 1 1 Yes 1 1 1 No 97 98 99 DK/NA 2 1 1 Yes 3 2 3 No 95 97 97 DK/NA 2 1 1

182

Car theft Theft of other valuables

Yes No DK/NA Yes No DK/NA

1 97 2 2 96 2

1 99 1 2 97 1

2 98 1 3 96 1

Source: Public opinion polls conducted by PRISM Research. November 2009.

Table 1a

During the past three months have you, a family member or your family as a whole suffered...

FBIH

Sep 2008 Nov 2008 Nov 2009 % % % Yes 3 2 3 No 94 97 96 DK/NA 3 1 1 Yes 1 1 1 No 95 98 98 DK/NA 3 1 1 Yes 3 3 4 No 94 96 96 DK/NA 3 1 1 Yes 1 1 2 No 96 98 97 DK/NA 3 1 1 Yes 2 2 4 No 95 97 95 DK/NA 3 1 1

A burglary at home A burglary at a business premises Wallet been stolen Car theft Theft of other valuables...

Source: Public opinion polls conducted by PRISM Research. November 2009.

183

Table 1b

During the past three months have you, a family member or your family as a whole suffered... RS A burglary at home A burglary at a business premises Wallet been stolen Car theft Theft of other valuables

Yes No DK/NA Yes No DK/NA Yes No DK/NA Yes No DK/NA Yes No DK/NA

Sep Nov 2008 2008 % % 1 0 98 100 0 1 0 99 99 0 0 3 1 97 99 0 1 99 100 0 0 2 1 98 99 0

Nov 2009 % 2 98 0 0 100 0 2 98 0 2 98 0 1 99 0

Source: Public opinion polls conducted by PRISM Research. November 2009.

184

Table 2

During the past three months, have you, or a member of your close family sought police assistance for any reason?

Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 09 % % % Yes 5 4 9 No 93 95 90 DK/NA 2 1 1 TOTAL 100 100 100 opinion November Source: Public polls conducted by PRISM Research. 2009. Table 2a

During the past three months, have you, or a member of your close family sought police assistance for any reason?

FBiH Sep 2008 Nov 2008 Nov 2009 % % % 5 5 10 92 94 88 3 2 2 100 100 100 Source: Public opinion polls conducted by PRISM November 2009. Research. 2b Table you, or a member During the past three months, have of your close family sought police assistance for any reason? RS Sep 2008 Nov 2008 Nov 2009 % % % 4 3 6 95 97 94 1 0 100 100 100

Source: opinion polls conducted by PRISM Research. 2009. Public November

185

Table 3

How satisfied or unsatisfied were you with what the police did?

Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % 15 19 23 41 29 31 35 38 28 9 9 13 5 6 100 100 100

Not at all satisfied Quite dissatisfied Quite satisfied Entirely satisfied DK/NA TOTAL

Source: Public opinion polls conducted by PRISM Research. November 2009.

Table 3a

How satisfied or unsatisfied were you with what the police did? Not at all satisfied Quite dissatisfied Quite satisfied Entirely satisfied DK/NA TOTAL

FBiH RS Sep 2008 Nov 2008 Nov 2009 Sep 2008 Nov 2008 Nov 2009 % % % % % % 12 23 14 21 3 55 46 35 34 31 15 20 34 26 31 36 70 18 8 9 13 12 12 7 7 8 100 100 100 100 100 100

Source: Public opinion polls conducted by PRISM Research. November 2009.

186

Table 4 family During the past three months have you or a close member been taken to the police station without a warrant? Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % 2 2 Yes 1 No 98 95 96 DK/NA 1 3 2 100 TOTAL 100 100 polls 2009. Public Source: opinion conducted by PRISM Research. November Table 4a During the past three months have family member you or a close been taken without a warrant? to the police station FBiH RS Sep Nov Nov Sep Nov Nov 2008 2008 2009 2008 2008 2009 % % % % % % Yes 1 3 2 1 0 94 No 95 99 97 99 98 DK/NA 1 3 3 0 3 1 TOTAL 100 100 100 100 100 100 Source: Public opinion polls conducted by PRISM Research. November 2009. Table 5 During the past six months have you experienced or witnessed a situation where the police clearly abused their authorities (eg. Dealing with traffic, regulating public protests, in an investigation etc.) Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % Yes 7 8 12 No 90 91 83 DK/NA 3 1 5 TOTAL 100 100 100 Source: Public opinion polls conducted by PRISM Research. November 2009.

187

Table 5a

During the past six months have you experienced or witnessed a situation where the police clearly abused their authorities (eg. Dealing with traffic, regulating public protests, in an investigation etc.) Yes No DK/NA TOTAL

Sep 2008 % 7 89 3 100

FBiH Nov 2008 % 8 90 2 100

Nov 2009 % 11 85 4 100

Sep 2008 % 7 91 2 100

RS Nov 2008 % 7 92 1 100

Nov 2009 % 16 76 8 100

Source: Public opinion polls conducted by PRISM Research. November 2009.

Table 6

Do you approve or not approve the work of... ? Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % The police Yes 52 61 53 No 27 20 33 No applicable 1 1 Neither approve nor disapprove 11 8 10 DK/NA 10 11 4 Total 100 100 100 The courts Yes 47 54 48 No 31 25 36 No applicable 1 0 Neither approve nor disapprove 11 9 11 DK/NA 9 11 4 Total 100 100 100 Source: Public opinion polls conducted by PRISM Research. November 2009.

188

Table 6a

Do you approve or not approve the work of... ? FBiH RS Sep 2008 Nov 2008 Nov 2009 Sep 2008 Nov 2008 Nov 2009 % % % % % % The police Yes 42 50 41 69 76 73 No 34 26 43 13 11 17 No applicable 1 1 1 0 Neither approve nor disapprove 12 10 12 10 5 8 DK/NA 11 14 5 7 8 2 Total 100 100 100 100 100 100 The courts Yes 38 46 39 62 65 63 No 37 30 43 20 20 26 No applicable 1 0 1 0 Neither approve nor disapprove 12 11 13 10 7 9 DK/NA 11 14 5 7 8 2 Total 100 100 100 100 100 100 Source: Public opinion polls conducted by PRISM Research. November 2009.

Table 7

How widespread do you think corruption, that is bribery or abuse of office for private purposes, is in these institutions? The police

Not at all Not much To some degree Fairly Very

TOTAL

Bosnia and Herzegovina Sep 2008 Nov 2008 Nov 2009 % % % 2 2 3 16 17 16 20 23 39 100

18 26 37 100

20 27 34 100

Source: Public opinion polls conducted by PRISM Research. November 2009.

189

Table 7a How widespread do you think corruption, that is bribery or abuse of office for private purposes, is in these institutions? FBiH RS Sep 2008 Nov 2008 Nov 2009 Sep 2008 Nov 2008 Nov 2009 % % % % % % The police Not at all 2 3 1 2 0 5 Not much 10 11 16 26 22 12 To some degree 17 17 19 24 21 22 Fairly 24 26 25 22 28 34 Very 47 43 39 26 29 28 TOTAL 100 100 100 100 100 100 Source: Public opinion polls conducted by PRISM Research. November 2009.

Table 8

Would you personally participate in public protests, strikes, demonstrations related to...? Loss of employment Total Inability to find a job Total Against entity government policy Total Low salaries/pensions Total Ethnic and civil rights Total The conduct of the international community Total The recovery of property Total

Yes No DK/NA Yes No DK/NA Yes No DK/NA Yes No DK/NA Yes No DK/NA Yes No DK/NA Yes No DK/NA

Bosnia and Herzegovina Sep Nov Nov 2008 2008 2009 % % % 48 48 53 44 46 40 8 7 7 100 100 100 46 47 48 46 46 44 8 7 7 100 100 100 41 41 43 49 52 49 10 7 8 100 100 100 47 50 52 44 44 41 9 6 7 100 100 100 49 47 49 43 46 43 9 7 8 100 100 100 42 43 44 48 50 48 10 7 9 100 100 100 47 48 48 44 45 43 9 7 8 100 100 100

Source: Public opinion polls conducted by PRISM Research. November 2009.

190

Table 8a

Would you personally participate in public protests, strikes, demonstrations related to...? Loss of employment Total Inability to find a job Total Against entity government policy Total Low salaries/pensions Total Ethnic or civil rights Total The conduct of the international community Total The recovery of property Total

FBiH Sep 2008 Nov 2008 Nov 2009 % % % 50 57 60 40 35 32 10 8 8 100 100 100 48 55 54 42 37 38 11 8 9 100 100 100 42 49 47 46 43 43 12 8 10 100 100 100 49 58 57 41 35 34 11 8 9 100 100 100 50 55 53 40 37 37 10 8 10 100 42 45 12 100 49 41 10 100

100 48 43 9 100 54 38 9 100

100 47 42 10 100 54 36 10 100

RS Sep 2008 Nov 2008 Nov 2009 % % % 45 33 38 51 62 57 5 5 5 100 100 100 44 35 37 51 60 58 0 5 5 5 100 100 100 39 31 34 53 64 60 7 5 5 100 100 100 44 37 40 49 58 55 7 5 5 100 100 100 47 38 40 47 58 55 6 5 5 100 42 51 6 100 46 47 7 100

100 37 59 5 100 40 54 5 100

Source: Public opinion polls conducted by PRISM Research. November 2009.

191

100 36 58 6 100 38 57 5 100