by Boris Divjak
Key findings start with the simple conclusion that in their jurisdiction cantons are only slightly below entities, which have been targets of copious criticism lately. Every canton has a president, constitution, government, parliament, police, etc., and de facto also its armed forces and all other elements of statehood. Statements that Bosnia-Hercegovina has 280 ministries are simply wrong. Federation Bosnia-Hercegovina (BH) has 110, and the Republic of Srpska 16. There are also another 8 ministries on the state level - altogether 134. The remaining 146 are fiction. That implies 16 expensive limousines, drivers, deputies and secretaries, with the necessary personnel in the Republic of Srpska, and 110 identical financial outflows that need to be financed by the residents of Federation BH. Another lie: BH does not have 13 police forces. It has one in Srpska, one in Brcko and 11 in Federation BH. In Federation BH taxpayers will this year again take care of 481 overpaid political representatives, while Srpska will barely find money for 111 politicians crowding both chambers of the entity's parliament. Demands for financing are proportional to the number of representatives, and similar ratios can be found in police forces and all other services, which are so frequently criticized by the constitutional reform choir.
The taxation policy in cantons is not uniform leading to all calls for the harmonization of the taxation policy in BH. Obviously it is much easier to do that on the state level than within Federation BH. Taxes that will not be collected by the Indirect Taxation Directorate still vary within Federation BH. Public expenditures within Federation BH are three times larger than in Srpska. However, differences in revenue collected in different cantons affect the quality of work of legislative, judicial and executive authorities, as well as health, education, culture, and social security, all of which are under the jurisdiction of cantonal authorities. And while the Federation BH government has at its disposal 29 percent of revenue, the remaining 71 percent is split between cantonal authorities and social security funds, which are based in individual cantons. Even though Federation BH is economically more developed and its GNP has been recently growing at a higher rate than in Srpska, its economy cannot withstand these financial burdens. Thus the result is a payroll tax of 69 percent in Federation BH, significantly higher than already exorbitant 52 percent payroll tax in Srpska. Such exorbitant taxes imposed for the sake of maintaining privileged administration may be justified provided citizens were satisfied by services offered by that administration. To questions about corruption, residents of BH have been for years responding by saying that it is most rampant precisely in cantonal institutions. Bitter icing on top of the cake: only net salaries of the cantonal administration (ignoring their daily expenses) are almost twice as high as salaries for the Federation BH administration in the consolidated budget and almost equal to social security payments for all residents of Federation BH, and actually equal to the whole budget of the Republic of Srpska!
BH has never adopted the subsidiarity principle, which is the basis of the European Union, i.e. that only the most appropriate administration level deals with a particular problem avoiding duplication of jurisdiction. Instead, every company and taxpayer in Sarajevo or Mostar finances five levels of administration (municipality, city, canton, Federation BH, and BH), and every company is a subject of control of, for example, three market inspectorates (municipal, cantonal, Federation BH). In practice that means that if the owner bribes one, the other two inspections will drop by for a visit, and if he refuses all three will set up a camp in his offices, obstructing regular business activities. A similar pattern can be detected in the activities of most inspectorates, which is sufficiently scary in two-level Srpska, let alone in Federation BH.
Corruption has really imbued all levels of administrations, but is much more present in those cases where jurisdiction has not been defined precisely, and activities of executive authorities are less transparent and less clear. Municipalities in Federation BH are under tremendous pressure from other levels of administration, while they lack self-defense mechanisms even though they are much more transparent and closer to the problems facing citizens. On the other hand, some good solutions of the Federation BH government cannot be implemented in cantons, because based on the Federation BH Constitution they do not have to implement them, or in those cases where they are supposed to align their legislation with the Federation BH Constitution, they simply refuse to do so. Consequently, the Federation BH Constitutional Court has been swamped by cases filed by Federation BH ministries against their cantonal counterparts and it will take at least a decade to disentangle these cases. However, to tell the truth, even the final verdicts of the Constitutional Court haven't been implemented, so that Federation BH in the end usually abandons the judicial route. Federation BH authorities have no way to force cantons to implement federal acts, so that they are forced to come up with various "memoranda of understanding". The only instrument at Federation BH's disposal are various payment from the federal budget that serve as "inducements" for cooperation. Although it is possible to transfer jurisdiction in the triangle municipality-canton-Federation BH, that possibility is usually used to duplicate administration, so that identical institutions in different cantons end up doing totally different work. The Federation BH constitution is so flexible that it is "a dead letter on the paper" and its implementation is up to the mood of individuals and political parties.
Transparency International concludes its findings by saying that BH truly needs a constitutional reform and that it has a superfluous level of administration. Efficiency should be improved and public expenditures should be reduced from unbearable 70 percent [of GNP?] (disparity between Federation BH and Srpska is huge in this case as well). In such analysis, we should take facts as our starting point and consider which constitutional organization will be more frugal and make more sense: with cantons or with entities? When looking into some future concept, we should look into the very purpose of the controversial Washington Agreement and organizational-constitutional mechanisms for the protection of national interests, which will probably initiate a debate about the number of entities that are needed. Fiscally, it makes sense to have as few as possible. If it is claimed that it is impossible to have only two entities, than it would not be irrational to consider legalization of the true situation in the field, i.e. three entities as all that can be withstood by the impoverished economy and corrupt administration.
The author is president of Transparency International BH