Economic development and perspectives for reconciliation

This chapter outlines the effect of the economic crisis on the economies of Bosnia-Herzegovina (BiH), Croatia and Serbia, and addresses its effects on post-war reconciliation. It also considers the role of economic elites in mobilising political support along ethnic lines, and the way in which they respond to the need for structural reform proposed by the European Union and by the need to create more competitive and open economies. The economic crisis has led to a reduction in international trade, foreign investment, remittance flows and a fall in credit for businesses and households. As a consequence, all three countries have experienced a ‘double dip’ recession, which has led to a sharp increase in unemployment with adverse consequences for living standards. Youth unemployment in BiH is even higher than in crisis-hit Greece. In addition, when Croatia joined the EU in July 2013, new barriers were created to trade with BiH and Serbia, as Croatia left the CEFTA free-trade area.