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U.S. DEPARTMENT OF STATE
BOSNIA-HERZEGOVINA: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS




                        BOSNIA-HERZEGOVINA



    Bosnia-Herzegovina remains a war zone with very little
economic activity beyond smuggling and distribution of
humanitarian supplies.  U.S. Embassy estimates place the
remaining industrial activity, which primarily supports the war
effort, at five percent of the 1991 level.  In a region which
once boasted world-class resorts, there are now destroyed
factories and burnt-out villages.  The Bosnian Serbs, who are
continuing their policy of "ethnic cleansing," have displaced
or killed hundreds of thousands of residents.

    Bosnia-Herzegovina receives its natural gas by pipeline
from Russia via Hungary and Serbia.  Adequate gas supplies were
restored to Sarajevo in February 1994.  The situation remains
unstable, however, due to maintenance problems, war damage, and
Bosnian Serb control of areas through which the pipeline
passes.  Electric energy supplies for greater Sarajevo fell
from a pre-war level of 250 MW to about 50 MW in 1993.  With
international assistance, the daily electric energy supply in
Sarajevo averaged 68 MW by mid-1994.

    Bad weather, fighting, and Bosnian Serb blockades often
block supply lines into Bosnia-Herzegovina, Sarajevo, and the
eastern enclaves of Gorazde, Zepa, and Srebrenica.  Sarajevo
and the eastern enclaves remain under siege and are currently
experiencing shortages of food, water, electricity, fuel, and
many other basic neccesities.  Humanitarian aid has been
intermittent and insufficient to meet full requirements. 
Bosnian Serb sniper activity regularly halts use of the
Sarajevo airport.  In the winter months, when the need is
greatest, land supply routes become impassable and airports
often close.

    The economic outlook for Bosnia-Herzegovina remains bleak. 
Even if hostilities ended at once, the infrastructure is
heavily damaged and a large part of the most productive segment
of society has been dislocated or eliminated.  No financial
reserves exist with which reconstruction could begin.  In March
1994, the U.S. and United Kingdom launched a joint initiative
to restore essential public services to Sarajevo.  While this
has resulted in some success, it will take many years for
Bosnia-Herzegovina to recover from the current crisis, and
massive donor support will be needed to continue the process.


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