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Last Updated: Monday, 13 August 2007, 22:02 GMT 23:02 UK
Bosnia's Serbs polish business image
By Nicholas Walton
BBC News, Sarajevo

Man cutting grass with scythe
Money will help drive modernisation
Twelve years after the end of the devastating war, and Bosnia-Hercegovina is still a divided nation.

Keen to shake off its troubled and violent past, the ethnic Serb half of the country now wants to promote itself as a good place to do business.

Deep in the forested hills of Republika Srpska - the Bosnian Serb Republic - forensic archaeologists excavate a mass grave containing the remains of civilians massacred during the war of the early 1990s.

Even now Bosnian Serbs are struggling to escape being associated with the ethnic cleansing and aggression committed in their name more than a decade ago.

The response has been to come out fighting.

"We have an image problem, with a stereotype that was imposed upon us a long time ago," says the Republic's Prime Minister Milorad Dodik.

"During the war bad things happened - terrible and horrible things. And of course there were those that committed atrocities on behalf of Republika Srpska.

"But nobody can hold either the Republic or its people responsible for those crimes. That would be the same as holding all nations that had dictatorships responsible for the crimes of those governments."

'Better environment'

Republika Srpska - known as the RS - was created by the Dayton agreement that ended the Bosnian war.

Bosnia map
It is still part of Bosnia but has its own semi-autonomous government.

In an effort to attract companies and investment, the government plans to make the RS a good place to invest and do business, by cutting red tape and introducing a 10% profit tax.

"One of the most important tasks in RS is to attract foreign investment," says Jasna Brkic, minister for economic affairs.

"So we are creating a better business environment, making it more stable and predictable, cutting administration and red tape, and unnecessary expenses."

You can go directly to the minister or even to prime minister to ask him for help
Aleksander Vasiljevic, factory director

Ms Brkic says there are already signs of success - more than 200 companies from the other half of Bosnia, known as the Federation, have now registered in the RS to save money and avoid bureaucracy.

One reason is that the Federation is divided up into 10 cantons each with a further level of government, while the RS has just the one government for businesses to deal with.

Cure all?

This lack of bureaucracy has already helped some foreign investment come into the RS.

Take the pharmaceutical factory on the outskirts of Banja Luka owned by Hemofarm.

Its workers, dressed from head to toe in sterile clothing, operate state-of-the-art machinery.

The company's products are then sold throughout Europe, and the factory is a valuable employer of skilled labour in a country with massive unemployment problems.

Man diving off Mostar bridge
Landmarks are rebuilt
Aleksander Vasiljevic, the factory director, explains that getting problems fixed takes less time because there are fewer layers of control and government to go through.

"You can go directly to the minister or even to prime minister to ask him for help," he says. "And they're fixing it in an extremely short period of time."

While most of the comments coming out of the RS are upbeat, they cannot drown out all the warnings about doing business in the area.

Corruption is pervasive, much of the existing industry is outdated, and infrastructure is poor.

Even the shape of RS - split into a remote, rugged eastern half and a better-connected north - makes economic progress difficult.

'Flush with money'

Kurt Bassuener, a political analyst based in Sarajevo, argues that the RS has many challenges to overcome for its rebranding to ring true.

"Right now the RS is flush with money from a number of large-scale privatisations," says Mr Bassuener.

"It remains to be seen whether that money is invested in something that's productive or squandered."

Stability is another problem.

Few observers are able to predict with confidence what Bosnia will look like in 10 years' time, and many in the Muslim population even argue that RS should be abolished altogether because of perceived links with the war.

Meanwhile, as long as the main two war crimes fugitives, Ratko Mladic and Radovan Karadzic, continue to evade justice, RS will have an uphill struggle to convince the outside world that it means business.

Country profile: Bosnia-Hercegovina
31 Jul 07 |  Country profiles
Timeline: Bosnia-Hercegovina
27 Jul 07 |  Country profiles

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