UT Economist Helping Bosnia Build Revenue System

 

KNOXVILLE, Tenn. — The March 31 budget deadline for war-torn Bosnia has passed — without a budget. Yet, University of Tennessee economist Bill Fox keeps trying.

Fox is the lead member of the World Bank team assembled to help Bosnian states, known as cantons, develop a revenue system that will finance basic governmental services.

At issue is the need to pay for education, health care, roads, police protection, pensions and other basic government services.

“The World Bank people have said to me repeatedly they think this is a key issue” in bringing a lasting peace to Bosnia, Fox said. But to maintain the peace, Bosnia will need stable government, and stable governments need stable economies, he said.

The Dayton peace accord — to end the ethnic war in Bosnia and create a new national federation — called for nine cantons plus the city of Sarajevo to replace the territorial divisions of the Bosnian-Croats and Bosnian-Muslims.

“The cantons will be responsible for delivering services that affect people’s every-day lives,” Fox said.

During initial visits to Bosnia, prior to the March 31 deadline, Fox was trying to estimate revenues for cantons that did not exist. The situation there has improved since Fox returned to UT in April.

“Now, the cantons have been formed, and their presidents have been elected,” Fox said. “Some good things are occurring there now; roads and buildings are being repaired. But the political situation is another matter.”

The next step, Fox said, is to meet with the Muslim-Croat federation’s prime minister. Fox tentatively is scheduled to return to Bosnia June 17.

“We met with the federation’s prime minister, Rajko Kasagic, and he was very cooperative and ready to move forward, but he was ousted two weeks ago by Radovan Karadzic, the unelected political leader of the Bosnian Serb rebels,” Fox said. “So I don’t know where we stand now on that.” The position apparently has not been filled.

“I suspect Karadzic could be a very big impediment to any additional work,” Fox said. “It’s certainly a possible scenario that the international community would choose not to work with the Bosnian Serb side of the government.”

Meanwhile, the United States is leading an effort to raise at least $1.8 billion from 50 donor countries to rebuild the Bosnian economy.

The war in the former Yugoslavia erupted in 1992 over the Serbs’ refusal to stay in an independent Bosnia, where they were outnumbered by Muslims and Croats. The Serbs have formed their own republic which controls 49 percent of Bosnia.

Fox is head of the UT-Knoxville economics department and director of the UT Center for Business and Economic Research.

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