The political economy of stalemate: organised crime,corruption and economic deformation in post-Dayton Bosnia

‘The biggest security threat to this country is not nationalism; it’s criminality, corruption and unemployment'2 More than seven years after the end of the Bosnian war and despite some $5 billion in international reconstruction assistance, Bosnia's economy remains stagnant and dysfunctional, while the country is rapidly gaining a reputation not as an emerging market economy but as a lawless and ungovernable state dominated by organised crime and corruption. This paper assesses Bosnia's post-Dayton political economy, arguing that the nexus between organised crime and corruption, on the one hand, and nationalist political forces, on the other, represents the most significant obstacle to the development of a market economy in Bosnia and poses a growing threat to the country's peace process. This situation is the product of Bosnia's particular post-war and post-socialist environment, which has created a powerful class of elites with an interest in perpetuating the status quo of a largely unreformed economy. In this context, international efforts to impose economic reforms from above, and to encourage local authorities to embrace a reformist marketisation and rule of law agenda, have met with little success. The paper concludes by suggesting that international peace building efforts need to pay greater attention to the ‘enforcement gap’ that has en abled crime and corruption to flourish in Bosnia.