SETimes.comRising food prices broaden crisis in BiH
13/12/2007
Prices in Bosnia and Herzegovina rose dramatically in November, including a 60% rise for flour and a 200% hike for oil. Some blame the world market, while others fault the domestic political crisis.
By Denis Dzidic for Southeast European Times in Sarajevo -- 13/12/07
Many experts feel that politics and domestic authorities are behind the dramatic price hikes in Bosnia and Herzegovina (BiH) this past month, but international officials link the increase to rising prices in the world market economy.
Whatever the reason, data collected by the Confederation of Trade Unions of Bosnia and Herzegovina in mid-November showed that in a matter of days, the price of basic foods skyrocketed. The first staple to increase was flour, which rose almost 60% compared to prices in October. The largest registered rise, however, was the price of oil, which jumped 200%. Milk, sugar and cheese prices are soaring, as are the prices of utility services, causing great concern among the public.
"The poor economic state in BiH is a result of the political crisis that has, to a lesser or larger degree, lasted since the Dayton Peace Accord," BiH Presidency Chairman Zeljko Komsic said, at a Southeastern Europe regional economic forum in Dubrovnik.
BiH Consumers Association chief Mesud Lakota agrees that politics and domestic authorities are behind this recent turmoil. "The European market can't reach us because of certain lobbies, and some of the problems are in the government. Now we are waiting for the government's response to this, but I hope it won't be to give veterans [5 euros] a month, because that is not enough."
Republika Srpska (RS) Prime Minister Milorad Dodik has refused to accept the blame for the crisis, explaining that a rise in general prices caused by increased oil prices is worldwide, not just in the region.
To control the crisis in BiH, the government will release basic food supplies from the reserves of RS and the Federation of BiH into the market to deflate prices.
Confederation of Trade Unions of BiH Chairwoman Ranka Misic has called on the government to form a fund for the most underprivileged, such as veterans or those without jobs. She also appealed to the Regulatory Agency for Electrical Energy to prevent any additional increases in electricity rates. That could lead to "a complete destruction of family budgets, and would bring down many companies", she said.
The World Bank, the IMF and the Office of the High Representative in BiH dismiss claims that the price hikes have been caused by retailers profiteering from the current political crisis.
"It is important to explain the underlying reasons for these price increases: they are primarily the result of higher prices on world markets," officials from the three international organisations said in a statement late last month.
"Bosnia and Herzegovina has an open economy, which ultimately protects BiH citizens against price increases above those on world markets," the statement added, noting that "price rises, which have been dramatic for some products, are not above those on the world market."