Following the Forum for Prosperity and Jobs in BiH: Economic Corruption and Privilege

Deep-rooted corruption is an obstacle to sustainable development in Bosnia and Herzegovina, as well as one of the main obstacles to investment, economic progress and European integration. Corruption is therefore one of the biggest socio-economic challenges that all segments of BiH society must decisively tackle.
 
“Corruption kills initiative and investment in Bosnia and Herzegovina’s economy. Fighting corruption will require strengthening adherence to the rule of law  – police, prosecutors and judges – and deep public administration reform,” Ambassador Peter Sorensen, Head of the EU Delegation to BiH and EU Special Representative, told participants at the Forum for Prosperity and Jobs.
 
“The EU will provide political support and guidance to the BiH authorities in the Structured Dialogue on Justice and the Rule of Law,” he added. “It will also provide assistance in cooperation with local counterparts to undertake a comprehensive mapping of para-fiscal fees  and other costs and permits with a view to increasing their transparency. The on-going review of the Anti-Corruption strategy should involve all institutions, civil society and academia.”
 
At the Forum held in May 2014, experts and representatives of the International Community discussed possible steps that can be taken in order to tackle corruption, in the workshop on Economic Corruption and Privilege, organised by the European Commission.
 
Jean-Eric Paquet, Director for Albania, BiH, Serbia and Kosovo* in the European Commission’s Directorate-General for Enlargement, noted that, according to the Transparency International Corruption Perceptions Index, Bosnia and Herzegovina is the lowest ranked of all the ex-Yugoslavia countries.
 
The country’s complicated legal and institutional structure, with a high incidence of para-fiscal taxes and regulations that lack transparency, has created an environment where corruption can grow.
An additional problem is that many individuals and businesses find it simpler to accept corruption – to view it as part of life and a necessary “cost of doing business”. However, a full 40% of the respondents to Transparency International’s survey ranked corruption as a major obstacle to sustainable development.
 
“In this region, corruption is ranked as the third largest obstacle to business and investment, since it increases the unpredictable cost of doing business,” Mr Paquet said in the Forum’s workshop report. “Additionally, it is the major obstacle to FDI and diaspora investment. Thus around 5.5% of investors decided not to make a major investment in the past year due to the bribes necessary to obtain different permits.”
 
Mr Paquet pointed out that corruption holds back economic development, economic growth and the efficient implementation of public policy. An efficient solution to the situation is to entrench the rule of law that can kick start FDI, he said.
 
Anti-corruption measures supported in the Forum’s workshop report include:

– A review of the Anti-Corruption Strategy should be carried out with all stakeholders – institutions, civil society, academia, and media. The Strategy should promote a holistic approach: prevention, repression and identification of priorities, particularly in the field of enforcement.

– The Law on Public Procurement is welcome and must be Implemented fully;
 
It was also proposed that the International Community cooperate with stakeholders (such as the Foreign Investors’ Council) to undertake a comprehensive mapping of para-fiscal fees and other costs and permits in order to increase transparency. Mapping should be made public so that the process is transparent. Additionally, there should be a renewed focus on what Bosnia and Herzegovina needs to do in this area in order to join the EU; and anti-corruption practices to assist reforms must obtain political support and guidance through the Structured Dialogue on Justice and the Rule of Law.