2010-02-07 18:35:56 - Fast Market Research recommends "Bosnia-Herzegovina Defence & Security Report 2010" from Business Monitor International, now available

Bosnia and Herzegovina (BiH) in late 2009 still faced intense internal political divisions between the nation's two governing entities, Republika Sprska (RS) and the Muslim-Croat Federation. Although there is a three-man collective presidency, the central government is not considered strong enough to push through reforms required for EU and NATO membership. Serb Bosnians are still pushing for dominance of the country and have stepped up their demands for independence, refusing to accept any changes which could lessen their hold on power. The continuing recession is adding to instability and BiH is trailing behind its Balkan neighbours due to a lack of political consensus. Bosnia was elected as a non-permanent member of the UN Security Council for the first time, for

2010- 2011. The threat of terrorism is relatively low, but foreign radical terrorists targeting the Bosnian Muslim community may capitalise on growing unrest and ethnic tensions in the country, which provides an ideal breeding ground for terrorism to take root. Large arms caches and small arms/light weapons and black market and cross-border smuggling under the control of criminal organisations pose a real security threat within and beyond the country's borders. Many thousands of Kalashnikov machine guns ordered by the US and intended for Iraq's nascent armed forces are believed to have proliferated to insurgent groups in that country via a complex network of Bosnian private weapons brokers. Defence funding is declining year after year and is expected to stall further, with the recession biting hard. This will threaten progress already achieved with the army reforms and military modernisation programmes. Depending on the outcome or continuation of the mounting constitutional crisis, EU and NATO assistance may also decline. The preliminary draft budget for the period of 2009-2011 has had to be completely revised due to the effects of the economic downturn. As a % of GDP, defence spending was 1.04% of GDP in 2008 should fall to 0.94% in 2010, 0.85% in 2011 and 0.77% in 2012. Despite some reconstruction and renewal of defence facilities, the industry is still in the early stages of reentering the international market with arms exports of artillery, recoilless rifles, mortars, rocket launchers and, of interest to today's battlefield needs, electro-optical devices. Expansion of exports to Turkey is a start to furthering the defence industry's fortunes. Much will depend on how the recession will affect the indigenous, official industry in the medium term. The small defence industry currently meets the demands of the Bosnia & Herzegovinan armed forces but much depends on how far it can establish an exports market due to the limited internal demand.

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