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Is bankrupting Republika Srpska a good idea?

Republika Srpska (RS) President Dodik has for years sliced the salami thin piece by thin piece. He is getting his sub-national entity, the 49% of Bosnia and Herzegovina’s territory that is majority Serb, closer to independence. With Russian backing, he is now taking bigger slices. The RS Assembly has passed a law that invalidates the authority of the Bosnian Constitutional Court on his entity’s territory. He has also declared his intention to hold a referendum on independence before the end of the year.

Ethnonationalism is the creed

I take these moves seriously. Elections in Republika Srpska are neither free nor fair. But there is no reason to doubt that Dodik has more than majority support there. He can’t go on promising independence forever. He needs to try to deliver at some point.

The popular appeal of independence to the people who live in the RS is mainly ethnonationalist. The RS conducted an ethnonationalist war against the Bosnian state in 1992-95, including the Srebrenica genocide and other instances of war crimes and crimes against humanity. The Dayton peace agreements preserved the RS and gave it, despite its criminal history, international validity as a subnational entity and a great deal of autonomy. Many people who live in the RS view it as protecting them from retaliation.

Dodik was not personally involved in the atrocities of the Bosnian war, so far as I know. At the time, he was an opposition member of the RS Assembly seen in the West as a relative moderate. But that does not diminish his present willingness to exploit ethnonationalist passions for political purposes. Since his campaign for the Bosnian presidency in 2006, he has made himself the leading nationalist voice in the RS.

But Dodik is not only interested in satisfying the ethnonationalist craving for security from revenge by those the RS once displaced, imprisoned, tortured, and killed. He has two other interests to tend.

Dodik’s other interests: impunity

The first is to keep himself out of the hands of any legal system, domestic or foreign, that will hold him accountable for corrupt practices. When it imposed sanctions on Dodik in 2022, the US Treasury alleged:

“Dodik is also being designated pursuant to E.O. 14033 for being responsible for or complicit in, or having directly or indirectly engaged in, corruption related to the Western Balkans. Specifically, he has established a patronage network in BiH from which he and his associates benefit. As one example of his corrupt actions, Dodik has provided government contracts and monopolies in the RS directly to close business associates. With his corrupt proceeds, Dodik has engaged in bribery and additional corrupt activities to further his personal interests at the expense of citizens in the RS.”

The Treasury also alleged that, using a company (ATV) he personally controls,

“Dodik has awarded ATV-related contracts directly to members of his family, which he has used as yet another avenue for corruption. He has funneled money directly from public companies to ATV for corrupt purposes. Dodik has substantially increased funding for ATV in recent years and engaged in malign social media influence campaigns through ATV to publish content that advances his political and personal goals.”

I too would want impunity, had I been credibly accused of these things. Too bad the Europeans haven’t followed the US lead on sanctions.

Dodik’s other interests: state property

The second Dodik interest is to ensure that state property in the RS is at his disposal. The RS is heavily indebted, to the tune of over $2 billion. A big slice of this amount, perhaps more than one-quarter, needs to be repaid or refinanced this year. State property is now the main collateral Dodik can pledge to creditors. Everything else is already hocked to the max. While the Finance Minister claims the debt is only 38% relative to GDP, RS officials are scrounging in Beijing for financing.

The US Embassy in Sarajevo has made its position on state property eminently clear:

“State property belongs to the state, and a state-level law is required to regulate it. This is not a matter of opinion; it is a constitutional and legal fact.”

Only saying it, however, won’t make it so.

Separating the court system could solve both problems for Dodik

These two interests, impunity and debt, are why Dodik, while pressing for independence, is trying first to block the Bosnian court system from the RS, whose Assembly passed the “Law on the Non-Enforcement of Decisions of the Constitutional Court of Bosnia and Herzegovina.” The international community High Representative has annulled that law, but it is unclear how he will enforce the annulment. Dodik will seek instead to force the HiRep into a negotiation on the state property issue. Once that happens, Dodik can hope for half a loaf.

That makes me wonder. Is refusing to negotiate and forcing the RS into bankruptcy a good idea? Won’t the debtor and the creditors cry for the Sarajevo, the central (in local terms the “state”) government, to intervene? The Chinese presumably won’t be interested in RS secession and would likely want central government intervention. The Russians, who are also creditors, might be interested in secession, but in current circumstances they would be unlikely to pick up the tab associated with bankruptcy. So why not let the RS go bankrupt and start the negotiation there?

I’ll welcome submissions to peacefare.net that argue the contrary case.