Conclusions

My research has concluded that four types of factors act as hindrances to local socio-economic development in Mostar: 1) hard socio-economic factors, 2) internal political factors, 3) external political factors, and 4) social factors. These four fields were established through the analysis of the interviews. Even though all of the interviewees mentioned all of these fields as being important, the individual importance of each factor is different.

The first field – hard economic factors - deals with the material reconstruction of the war-torn economy and business milieu, the process of privatisation in the context of transition and, finally, the quality of human resources and the demands and consequences of the labour market. The process of material reconstruction also includes the support and intervention of international aid organisations. During the first years after the conflict, these material (infrastructure) improvements were more important to local development

than the build-up of functioning administration capacities. Some interviewees mentioned the missing physical infrastructure to be an aspect that is somewhat responsible for the hampered local development, but in general the process of material recovery is almost complete and therefore not the most important limiting factor.

More important is the uncompleted and postponed process of privatisation. Many state-owned firms could not be privatised because of inefficiency or a lack of external investors. Also, non-transparent connections and informal networks are hampering the process of privatisation. Due to the low investment rate from domestic investors, foreign investment is needed for successful development. However, foreign investors are often difficult to find because the legal situation is unclear and the local industrial potential is low. Inefficient firms and a bad local image contribute to the difficulty for attracting foreign direct investments as well. Especially in a war-torn society that lacks domestic potential, foreign direct investment is needed to stimulate the local development.

When examining the labour market then, the changes of working regimes and the lack of skilled labour have a negative impact on local development. There is a serious lack of skilled labour especially, for example, in the city administration, but also in state-owned firms. On the contrary, the rate of unemployed people is very high and the emigration of young and highly-educated, and therefore of the potential labour force, is a response to the situation. So there are two opposite trends that have a limiting outcome: the lack of skilled labour and the enormous rate of unemployment.

The second field that plays a role in local social development in Mostar is the field of internal political factors, as part of the local governance structure. The focus of this field was problematic to study because local parties are nationalist and ethnically-defined. The local political scene in Mostar represents the ethnic composition of the city after the conflict. Each party, the HDZ or SDA, is ethnically-defined and tend to represent nationalist positions. Those positions can hamper the decision making process in the new city administration. Especially cultural or minority rights issues are often responsible for blocking strategies that affect other issues, which are frequently neutral.

Often the parties cannot agree on strategies for the entire city’s development because too many sensitive issues are unsolved. The unsolved problems at the local level and the mutual blocking strategies are often the reason for international organisations, in the form of the OHR, to intervene in order to ensure that urgent problems are solved. There is also a tendency to keep up the nationalist stances of each party. Personal gain and an insecure environment create fertile soil for the persistence of nationalism. Nationalist policies tend

to address historic issues rather than address local development issues. These radical national stances also block the process of reconciliation, which affect the build-up of civil society.

Overall, the political division along ethnic lines does not allow the occurrence of economically-oriented parties, which could solve the lack of development strategies. In general, political participation is decreasing and the people’s interest in nationalist local politics is decreasing. Even though the people’s interest in local politics is decreasing, the political parties are still very powerful with close and often informal connections to the business scene.

The third field is the impact of external political factors, namely the role of international organisations in Mostar. They are heavily involved in local politics and can be seen as an independent, third political actor besides the two locally-anchored parties.

There is a high degree of fundamental criticism of international intervention in local politics. The OHR’s mandate to intervene in local politics when a consensus in local politics cannot be reached is frequently applied and unacceptable to most politicians and residents. Therefore, the OHR’s deep involvement in the local governance does not support the process of democratisation and political participation. Its external action by authoritative and non-democratic means often causes dissatisfaction and mistrust among politicians and citizens.

Through this high degree of intervention in local politics the people’s sense of responsibility and public participation is not at all fostered; on the contrary, people’s willingness to participate in democratic procedure is decreasing through increasing external interference. Such a high degree of intervention can be seen as responsible for the so called ‘dependency syndrome’. This occurs when local authorities rely on the OHR’s intervention, instead of focusing on strategies that solve the technical and political problems of the city. The city administration of Mostar is an especially good example of how rigorous international organisations use the tool of quick decision-making process without democratic means. Whenever it comes to ‘hot topics’, such as cultural issues, international organisations tend to implement the reform without the support of the local political actors because it would take too much time to find a consensus. In addition to the consequences of the high degree of intervention, the unbalanced policies that are addressed towards one of the ethnic groups often cause more problems than solutions. The analysis of the interviews leads to the conclusion that external political factors are contribute to a high degree to stagnating local development.

The fourth and most important field that could be determined is the one of social factors in the context of local socio-economic development. Most importantly, there is a serious lack of civil society in Mostar among the ethnic groups, which is needed so that rational rather than ethnic decisions for economic activities can be made. This lack is responsible for the missing mechanisms of trust and positive outcomes of social capital;

therefore, the preconditions for economic development are missing.

Often war experiences and feelings of fear directed towards the other ethnic group are still deeply rooted in the people’s actions. Distrust of the ‘others’, frustration about the stagnating economic development and a lack of perspectives are often mentioned to be at the heart of absent ideas and initiatives. Especially among youngsters, ethnic division through divided education systems leads to distrust and the potential for nationalism.

Due to the lack of civil society there is also a lack of positive social capital. Positive social capital can be defined as interethnic and democratic. The so-called ‘Mostar-spirit’

that existed during Yugoslavian times was responsible for a special atmosphere in Mostar in which business and economic actions could take place. It is now replaced by a lack of perspective and a persistence of distrust against the other ethnic group. A surprising aspect that was revealed in this study is the fact that not only does distrust between ethnic groups hamper the development of economic activities, but likewise does the distrust between the

‘old Mostarians’ and recent arrivals. During the war the demographic composition of Mostar was radically changed through massive refugee movements and ethnic cleansing.

Therefore, distrust within each ethnic group between the ‘new’ and the ‘old’ residents was created and is often mentioned to be an additional cause for the lack of a civil society.

Without any external support reconciliation and the build-up of civil society seems to be doomed to fail. Furthermore, there is a certain gap between the decreasing international support and the urgent need for reconciliation programmes.

Even though these four fields are responsible for the stagnation in socio-economic development, it seems that the aspects of civil society and the role of international organisations are the most important. If these aspects were to see positive development, then the ground would be prepared for changes in local politics. When there is a functioning civil society there will also be a shift towards less nationalistic stances in local politics. However, there is a high degree of interconnectedness among all four factors:

economic, internal political, external political and social factors; Figure 7 shows how they are related. Every single field of factors contributes to local development and is

interconnected to the others. It seems impossible to explain a certain phenomenon of development by simply one single factor.

Figure 7: Interconnected factors of local socio-economic development, detailed display

Local post-conflict socio-economic development is a dense fabric of intertwined factors; economic, internal and external political, as well as social factors are responsible for the success or failure of local development. This figure also shows the detailed attributes that were examined in the case of Mostar in the analysis of 23 interviews and additional literature. Furthermore, the applied qualitative methodology is not well designed to weigh the different fields, but the quality and the quantity of the answers led to the conclusion that in a post-war situation, such as in Mostar, the aspect of civil society is the most fundamental for every development strategy.