Gladni smo na sva tri jezika : Corruption in Post-Dayton Bosnia 1

By Ezel ahinkaya

The Dayton Peace Agreement which was signed on 14 December 1995 has two tasks. One is to cre-

ate a peace and stop the brutal war and ethnic nationalism. Another is to change the path of Bosnia

and Herzegovina from a battlefield into a peaceful market economy in terms of pluralism and eco-

nomic liberalism. In the Dayton Peace Agreement, there is a "desire to promote the general welfare

and economic growth through the protection of private property and the promotion of a market eco-

nomy" (Dayton Peace Agreement, Annex 4, Preamble; OHR 1995). There was also a state building

process with the contributions of international actors. Although there were a tripartite presidency,

new national currency, flag and anthem, the newly created state needed to rebuild Bosnia and Her-

zegovina's war-shattered infrastructure and strengthening the country's transition from socialism to

capitalism and also liberal democracy. International actors offered Bosnia and Herzegovina to imp-

lement their institutionalization methods in terms of the funds for reconstruction with the purpose to

create a consolidated stateness, although Bosnian economy during the communist era was different

than other transition countries in South East Europe and East Europe in terms of the capitalist libe-

ral market. In 1990s, the social capital theory was in the mainstream implications especially for

transition countries. The idea of social capital was regarded as a way to predict political performan-

ce and political stability which was a quite important absence in these countries. In this context, the

question of social capital was shaped how societies solve their collective action problems. Because

the predictability is so important in the social capital theory, they focused on the policy planning

and making process. Although the term of social capital derives from Pierre Bourdieus articles, in

1990s it was shaped within the institutionalization for transition countries and their path to liberal

The slogan was used by protesters in Tuzla canton during the anti-corruption demonstrations in February 1

2014. It means that we are all hungry in three languages.

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market economy after the Washington Consensus in 1989. Even if according to Bourdieu, social

capital is defined as the aggregate of the actual potential resources which are linked to possession

of a durable network of more of less institutionalized relationships of mutual acquaintance or re-

cognition (Bourdieu in Tzanakis, 2013: 3), Robert D. Putnam framed the term as features of social

organization, such as trust, norms, and networks, that can improve the efficiency of society by faci-

litating coordinated actions (Putnam, 1993: 169). For scholars who defend the social capital theory,

evaluation criteria which should be derived from the quality of life indices and surveys to observe

the citizens opinions about their various dimension of life quality is crucial. Therefore, they focu-

sed on the data from the indices like World Values Survey (WVS) which started in 1981.

Here, in this research paper, I will focus on the higher corruption rate in post-Dayton Bosnia as an

indicator of misapplication of social capital theory to this country. Because in Bosnia, there was an

implication with the context of social capital. There were an intense institutionalization and transiti-

on to the liberal market economy with highly attending the international actors and organizations to

the process. With the Dayton Peace Agreement, government was framed as a weak agency both in

political and economic realm. On the other hand, they created a federalist system which includes

many politicians such as parliamentarians, ministers and bureaucrats in all cantons and many laws

and codes to solve the conflict among the three ethnicities and to shape the country in terms of their

understanding of how the liberal market should be. However, this system brings a higher rate of

corruption which blocks and reduces Bosnian citizens life quality, makes politics as an unpredic-

table and unreliable area and the most important, blocks and prevents the market to produce its own

resources in terms of human capital and economic capital. The reason is that it creates unbalanced

and irrational information and structure in the market. I argue that the process and high corruption

rate are an outcome of intensely and hungrily implied social capital theory by the international ac-

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tors and organizations. Ben Fine explains these implications of social capital theory to the transition

countries that:

Social capital has mushroomed in its application to transition economies. The World Bank

sponsored a social capital initiative to explain ill health in Russia by distribution of social

capital this modest aim to be set against the drama of mortality rates having risen over the

countrys transition, unprecedented for a relatively developed economy. In this vein, absence

of social capital at all or of the right type has been seen as the cause of malaise within transi-

tional societies. The inevitable conclusion is that successful transition depends on creating

the right type of social capital, and/or that social capital is seen as amelioration of some for

the negative excesses of an otherwise unexplained transition (Fine, 2010: 104).

In my opinion, at first, there is a need to examine Bosnian corruption case immediately. Although

Roland regards liberal political and economic principles as "the most promising model for the reor-

ganisation of war-shattered states" (Roland, 2002: 640), there is only a higher rate of corruption and

cronyism because of wrongly implemented privatization and liberalization process. Corruption in

Bosnia is accepted as an inalienable part of the political system. Besides corruption, transparency is

a lack in both political and economic arena of the country. Bosnia and Herzegovina was ranked 80

among 175 countries surveyed in Transparency Internationals 2014 Corruption Perceptions Index

(Transparency International, 2014). One has to look for the higher corruption rate in Bosnia and

Herzegovina as a parameter to solve the question why approximately two decade after the signing

of the Dayton Peace Agreement so little progress has been towards rebuilding Bosnia and Herzego-

vina in terms of liberal, free, 'European' market economy and to see the dysfunctionality of Bosnia's

post-war institutions.

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World Bank distinguishes between two main forms of corruption as state capture and administrative

corruption:

Administrative corruption refers to the intentional imposition of distortions in the prescribed

implementation of existing laws, rules and regulations to provide advantages to either go-

vernmental or non-governmental actors as a result of the illicit or non-transparent provision

of private gains to public officials (Pradhan, 2000: xvii).

State capture refers to actions of both the public and private sector actors to influence the

formation of laws, regulations, decrees, and other government policies to their advantage

(Pradhan, 2000: xv).

The social capital theory focuses on the trust from the citizens. For scholars who defend this theory,

the trust is one of the biggest necessities for the system to maintain itself. In their argument, if a so-

ciety has a trust for their political agencies such as government and bureaucracy, they will have

more effective governments, higher growth rates, less corruption and crime. Besides it, they will

have a tendency to redistribute resources from the rich to the poor. They argue that the system will

create its own circle for wealth distribution within a trusting society. On the other hand, they expla-

in the failure of transition countries or economies with the lack of trust. Eric M. Uslaner explains

this failure that:

Many people in transition countries have an opinion that they cannot succeed in life in terms

of their economic standards unless they have connections, engage in corruption, or both.

However, social capital theory offers them that optimism and control are the strongest de-

terminants of trust (Uslaner, 2008: 110).

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He also sees that only the courts and the police among governmental institutions have the power to

create trust (Uslaner, 2008: 112). In this context, shortly, the trust is a necessity and transition count-

ries have a lack of trust therefore they cannot achieve their ends in the market. Also Uslaner expla-

ins this failure with the argument that the legacy of communism prevents the progress in these tran-

sition countries like Bosnia and Herzegovina. However, Bosnia is a different example within the

transition countries. Peter W. Singer defines Bosnian economy as:

The best description of the Bosnian economy is that it combines a Communist legacy with

the worst excesses of a free market system: there is government interference in some eco-

nomic areas and absolutely no governance in others. Ironically, at the start of the decade, the

citizens of Yugoslavia had the most experience with capitalism of all the Eastern European

states. There is no lack of entrepreneurship, as is often the case in societies in transition, and

much of the population is well-educated (Singer, 2000: 33).

Besides the difference of Bosnia and Herzegovina in terms of communist legacy from the other

transition countries, there is a cynical and circular relation. These social capital theorists offered a

building institution process to the country with the Dayton Peace Agreement as a solution. They

claimed that everything will be predictable and transparent in the market and political realm. Ho-

wever, in Bosnia, the institutions do not work correctly. The country is on a path to be corrupt and

the degeneration of these institutions creates the high level of corruption. Nowadays, the social ca-

pital theorists are getting to be criticized and they reply all these critiques to their work with a lack

of trust and legacy of communism. However, they knew that the country had a communist past

when they wanted to build their liberal market there and impose their institutions for their own glo-

bal interests.

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In addition to the communist legacy and lack of trust criticism, we can observe that social capital

theorists declare a need for an effective government after the failures of transition markets. Howe-

ver, again in Bosnian context, the international actors created the governmental system in the co-

untry and the constitution with and after the Dayton Peace Agreement. They are also still the part of

the state building process with their NGOs, security forces and international organizations. For

example, Office of the High Representative (OHR) has tasks to create a multi-ethnic and democra-

tic state. Organization for Security and Cooperation in Europe (OSCE) has tasks to ensure democra-

tization process and electoral support. Although there are two decades after the Dayton Peace Agre-

ement was signed, state building process is still ineffective and passive. This also serves the inte-

rests of international actors because, in this way, they still maintain their domination over the co-

untry. Also, they can frame the definition of liberal and democratic state with their own perception

to the country. If an effective government is a necessity for the social capital and adequate wealth

distribution, why did these international actors claim a need for a partial government which has a

symbolic effect within a federal state during the Dayton Peace Agreement? With this artificial im-

posed political system, in Bosnia and Herzegovina, there is at least one politician or bureaucrat in

all families. They blocked the political area with the bureaucracy and political institutions both in

federal and in canton level. Did not they know the need for an effective government during the

Dayton Peace Agreement or the state building process?

In social capital theory, Putnam, Pharr, and Dalton offer a general explanation for the top-down

connection between social and political trust and the institutional arrangements of democratic go-

vernment and society, which they call the rainmaker hypothesis (Putnam, Pharr and Dalton in Cas-

tiglione, Deth and Wolleb, 2008: 255). In this rainmaker hypothesis, citizens are more likely to sup-

port their politicians and political institutions if they think they perform well, are open and fair, if

the party system is inclusive, if politicians are accountable, if government performs well and is stab-

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le and durable, and if civil liberties are protected (Newton, 2008: 260). However, we cannot observe

these attitudes for Bosnian citizens because the distinction of their voting behaviour is framed wit-

hin their ethnicity. As a matter of fact that the presidential system and political party system were

established on the ethnicity politics after the Dayton Peace Agreement. On the other hand, people

are aware of how much politicians are corrupt as we can see in the Bosnian politics. Bakir Izetbe-

govi who is the son of Alija Izetbegovi has declared victory in the Bosnian presidential elections

in October 2014 to become the Bosniak member of the tripartite Presidency of the Council. Howe-

ver, many Bosnian people call him as zlatne kaike which means a golden spoon. In addition to it,

when Bosnian people were addressed a question which included a scale with 1 means very bad; 10

means very good as Where on this scale would you put the political system as it is today?, they

answered it with a total 59.5 per cent of negative replies in their 1-4 scales (World Values Survey,

2001: 34).

Bosnian people have serious doubts about the political and economic arena. They had experienced

the protests against corruption and privatization process runned by the government in February

2014 and plenums in March 2014. The protests were defined as a 'Balkan Spring'. In the floods in

May 2014 which had serious effects on Bosnian people and economy, they looked with suspicion to

the government as it can be seen in the news:

The floods washed away many homes rebuilt after the war, and although Bosnian, Serbian,

and Croatian citizens rushed to help those affected, there are fears that post-flood reconst-

ruction will stall, just as post-war reconstruction did, on incompetence and corruption. As

Sadzida noted, "It said a lot that we were organising our own aid efforts among ourselves to

those affected by the floods, not donating to the emergency government fund, because no

one trusts them" (McRobie, Al Jazeera, 2014).

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In Bosnia and Herzegovina after the war, there is an ultra-rich elite who has the political, economic

and criminal networks. These people had gained higher amount of economic and political profit

from the war. Timothy Donais argues that there is a "collusion among Bosnia's criminal elements,

government officials, and members of the country's nationalist ruling parties" and also argues that:

A significant number of political decision-makers still benefit directly from the status-quo of

a largely unreformed economy, and that there remains within Bosnia a substantial constitu-

ency either directly opposed to the types of market-oriented reforms being promoted by the

international community, or willing and able to manipulate such reforms to their own advan-

tage (Donais, 2005: 67).

In Bosnia, there is an institutionalization of crime and corruption with the oligarchs who benefit the

conditions of war and also post-war period. Mary Kaldor generalizes the situation within the term

of mafia economy. "The mafia economy was built into the conduct of warfare, creating a self-susta-

ining logic to the war both to maintain lucrative sources of income and to protect criminals from

legal processes which might come into effect in peacetime" (Kaldor, 1999: 55). Timothy Donais

regards these oligarchs as "three ethnically divided and geographically separated cartels, which

group the nationalist political parties, organized criminal elements, and remnants of the socialist-era

nomenklatura" and argues that:

These cartels retain tight control of state-owned enterprises, running them largely as party

fiefs; they operate complex networks of illegal party financing; and they are implicated in

everything fron drug smuggling and customs evasion to the trafficking of women (Donais,

2005: 10).

Timothy Donais also examines the roles of paramilitary groups and gangsters in the corruption case

in this way:

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While much emphasis has been placed on the political and military objectives of the parami-

litaries, there was also a crucial economic dimension, and motivation, to their activities.

Payment often came in the form of being allowed to be first to loot, while many paramilitary

leaders, Arkan being among the most prominent, took advantage of wartime conditions to 2

engage heavily in smuggling and other black-market activities, often cooperating across

confrontation lines (Donais, 2005: 69).

On the other hand, the US General Accounting Office's report in 2000 shows that "having used ille-

gal networks for military and economic ends during the war, political parties are now inseparable

from criminal organizations" (GAO, 2000: 14).

For social capital theorists, corruption is assumed as a negative externality. They blame that urban

gangs, NIMBY (not in my backyard) movements, and power elites often exploit social capital to

achieve ends that are antisocial from a wider perspective (Putnam, 2000: 21-2). In addition to it,

they offer social capital again as a solution. Putnam argues that social capital makes us smarter,

healthier, safer, richer, and better able to govern a just and stable democracy (Putnam, 2000: 290).

The counter argument of this democracy building process within the social capital theory comes

from Stefan Sullivan. He claims that:

If poverty is the ugly face of unregulated capitalism, corruption is the ugly face of unfin-

ished democracy. Unfinished because, though the liberal tradition has often viewed democ-

racy as a set of freedoms from (most recently in the events of 1989freedom from tyranny

and the restriction of individual rights), the postcommunist experience has also exposed

democracy as a work in progress, a set of freedoms toward, a process of building institu-

tions that would ensure a more equitable access to the social surplus (Sullivan, 2002: 95).

eljko Ranatovi known as Arkan, was a Serbian career criminal and commander of a paramilitary force 2

in the Yugoslav Wars in Bosnia and Herzegovina and Kosovo.

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I argue that social capital theory has close connections with globalization and neocolonialism thro-

ugh the new institutional economics. I can explain it with McDonaldisation thesis which is created

by George Ritzer. He argues McDonaldisation thesis, in which the humble hamburger serves as a

model for understanding modern capitalism, and not just consumption (Ritzer in Fine, 2010: 19).

With social capital, like McDonalds, you can always find a local outlet unless you are very un-

lucky, even in the most unlikely of places. (Fine, 2010: 21-2) Here, we can examine the first Mc-

Donalds which was opened in 2011 in the capital city, Sarajevo. This topic was quite popular in

international media. They matched the McDonalds opening in Sarajevo with modernity, connection

to the West and a symbol of the Western world. They took the event as a becoming a part of western

Europe for Bosnia. One discursive example from these news is that nearly sixteen years after the

war ended, the Bosnian capital has attained the ultimate sign of modernity: a McDonalds on the

main central thoroughfare, Marshal Tito Street (MacDonald, Financial Times, 2011). The US am-

bassador who is Patrick S. Moon made a speech in the opening which was:

The opening of McDonalds is a visible symbol to the rest of the world that Bosnia and

Herzegovina is open for business. McDonalds represents a U.S. tradition of entrepreneurs-

hip, innovation, quality, efficiency, and corporate social responsibility. The McDonalds

story is a true testament to entrepreneurship one that I hope inspires other entrepreneurs in

Bosnia and Herzegovina to move forward with their own unique and innovative ideas

(Moon, US Embassy in Sarajevo, 2011).

These discursive domination of the social capital theory is common for communist and post com-

munist countries. When the first McDonalds was opened in Belgrade where was the capital city of

Socialist Federal Republic of Yugoslavia in 1988, in the international media, we can observe the

headlines such as Big Mac Takes Attack To 1st Communist Land in Chicago Tribune. For McDo-

nalds in Sarajevo, we can observe also the problems derived from the countrys institutions and the

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artificial system to have a foreign investment in Bosnian market. In Independent, we can see a pas-

sage which includes:

"We faced problems with a very complex system of government and administration, a diffi-

cult tax system and patent corruption," said Adi Hadziarapovic, McDonald's local marke-

ting director. "This is why the process took so long - four years!" he said (Independent,

2011).

To conclude this paper, I am criticizing the democracy building and state building process with the

context of social capital theory. In this way, international actors take into consideration of their own

interests in the market. Therefore, they frame Bosnian market within this perception. All in all, it

creates a high level of corruption in Bosnia and Herzegovina case as I mentioned hereinabove.

From a Marxist standpoint, democracy in the service of capitalism has equally degenerated to a

grand and general corruption (Sullivan, 2002: 96). I argue that the ineluctably increased corrupti-

on was derived from a package of of Washington Consensus style policies which includes the aim

to remove state from the market in Dayton Peace Agreement for Bosnia. It is one tremendous

example and as a failure of the liberal democratic state.

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