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Wandering Managment Consultant - have computer, will travel - currently in Bosnia on behalf of the European Union


Neka sila bude s tobom...

the sentence above is the "local language" and means: may the Force be with you - local language, you might say - WHAT local language? Hmmm, lemme see: that is not so easy to be said, since most people here speak THE SAME language, they would just not agree on what this language is. Is it Serbian? Croat? Bosnian? See, since the war from '92 to '95 people here differ, like Mark Twain would have put it, by using the same language. The Serbs speak (obviously) Serb, the Croats (likewise obviously) Croat and the Muslims (or Bosniaks, as they refer to themselves) Bosnian. So, you (and any thinking person from outside the country) might ask: WHAT'S THE DIFFERENCE?

Well, actually there is none: Dick Holbrooke, the American, who bartered the Dayton peace agreement, tells the nice story from Dayton Air force base: when the warrying factions arrived (Milosevic for the Serbs, Tudjman for the Croats and Izetbegovic for the Bosniaks) of course everybody wanted a translator for THEIR language. Which was achieved by giving each of the factions different headsets: a set of headsets for each language. What the conflicting parties did not know was, that EACH headset was connected to just the same translator's booth.

Which brings me to one of the many paradoxes we (me and my team) encounter in this country... but perhaps I should start at the beginning:

Last year was one of midlife crisis for me: like every other person entering the forties I had a phase of utter senselessness, combined with a job I basically liked but didn't want to bear for the reason that I was just not born to live in a Corporate Environment - just did not see any sense in making a profitable Financial Services company even more profitable... so I felt somehow - how to put it - hollow?

Of course there are a zillion of ways to deal with that - cars, VERY young partners and what other abominations come to mind, still, I wanted to do something MEANINGFUL... having tried all kinds of things (I even worked in Iran last year) I sent an e-mail to a good friend of mine, teaching at Edinburgh University, with whom I did a lot of jobs in the late nineties, asking him whether he had a project somewhere in CEE that might be "meaningful".

TWENTY MINUTES later - to my own surprise - I got a call, asking me whether I wanted to do a project in Bosnia - an ideal place for someone with a meaning-deficiency and especially for me: when the war started in the 90ies, I did a lot of volunteer work, and even "adopted" some of the refugees - there was this Serb Bar in Zirkusgasse (where I still live), where this girl started to work, a refugee from Bosnia, Tuzla, and every male Balkan person's wet dream: she came there, aged 17, so Snezana (the owner of the bar) and I decided to make her my little "sister" - as prone as Balkan people might be to ethnic cleansing and slaughter, they still are very family-oriented, be they Serb, Croat, Bosniak or any mixture in between.

So Tanja officially became my little "sister" (my father worked with a Swiss company then who had branch offices in the Balkans, so it was not THAT implausible ;-)), and she was left alone,'cause nobody wanted to touch family, unless, of course, the person had honest motivations...

Anyway, I'm getting carried away, so back to Bosnia: the official project title is "Technical Assistance to the Reform and Modernisation of the Insurance Sector in Bosnia and Herzegovina" and that's exactly what we do her, and it is challenging, though by no means easy::

Following the war and the Dayton Peace Accord that put an end to it, Bosnia-Herzegovina has a complicated administrative structure:

There is the State of Bosnia-Herzegovina, referred to as BiH, which represents the whole country. It has a President, who rotates between the three ethnic groups: Bosnians (= Moslems), Croats (=Catholics) and Serbians (= Orthodox Christians), a Government and a Parliament, but virtually no power. BiH has responsibility for foreign trade policy, monetary policy, communications sector and air traffic control.

The country itself is split into two Entities plus one oddity. The two Entities are 1) the Federation of Bosnia and Herzegovina, FBiH for short, which consists essentially of the Bosnian and Croat parts of the country; and 2) the Republika Srpska, RS for short, which consists essentially of the Serbian parts of the country. The oddity is the District of Brcko, which is a law unto itself.

The two Entities and the District of Brcko have considerable fiscal and political autonomy and they have their own constitutions. FBiH is divided up into 10 Cantons, which themselves have significant administrative and fiscal autonomy. RS on the other hand is highly centralised.

There is also the Office of High Representative (OHR), the chief civilian peace implementation agency in Bosnia-Herzegovina, whose current incumbent is Britain’s Paddy Ashdown (written in the local language as Pedi Ešdaun). OHR has considerable power and is not afraid to wield it.

While speaking about the local language, there are, as said above, three: Bosnian, Croatian and Serbian. They are mutually understandable, but considered as separate languages. So as not inadvertently to offend someone, one refers to the “local language”.

Banking Supervision takes place on a BiH level, but Insurance Supervision is the responsibility of the Entities and the District of Brcko. Hence each Entity has (or will have) its own Insurance Supervisory Agency. Under the new Insurance Laws (one in each Entity, but they are essentially mirror images) the two Agencies have to co-operate with each other. Also under the new laws an insurance company licensed in one Entity can operate as a branch in the other Entity. This was not possible under the old insurance laws.

Amongst other things the Entity Insurance Supervisory Authorities (ISAs) have the responsibility for licensing actuaries who will carry out statutory duties. Every insurance company, whether life or non-life, is required under the new laws to have an actuary, who is so licensed. It is the intention to have mutual recognition of actuaries between the two Entities, but the Regulations implementing the licensing of actuaries have not yet been issued.

There are some 26 insurance companies operating in a country of some 4 million inhabitants. Most of these companies currently only operate in FBiH, but once the new insurance laws come fully into effect many of them want to set up branches in RS. Of the two Entities FBiH is more developed and has a higher per capita income. (For FBiH it is said that average income is €450 per month and average expenditure is €900 per month. The difference is largely due to remittances from family members working abroad, but also partly due to the black economy.)

Some 75% of all insurance business consists of compulsory Motor third party liability (MTPL). The rest is mainly property insurance and a small amount of life insurance. Most of the insurance companies only offer non-life insurance.

One of the reasons for the small amount of life business is where to invest. This may change with the new insurance laws as they will permit companies to invest outside the country subject to getting permission from the relevant ISA. The old laws did not permit this and within BiH there is very little opportunity to invest long term. Neither the BiH Government nor the Entity Governments have issued any bonds and the local share market is very illiquid. Exchange risk is not a major issue as the local currency, the Convertible Mark, is pegged to the EURO. As its name suggests it is the old DeutschMark in a local dress.

For the MTPL business there are tariffs set by the Governments, but these are not necessarily followed. There is a lot of what is known in the local language as “unloyal competition”. It is not clear what reserves the companies set up for their insurance business, but this should change when the relevant provisions of the new insurance laws come into effect. Data, i.e. lack of it, is a major problem. The new insurance laws are intended to comply with EU insurance directives, but they do not cover the content of accounts. This will be covered in Regulations, which are yet to be drafted, and again these will be compliant with the EU directive on insurance company accounts.

The pension system is State Pay-as-you-go and needs to be reformed. The life insurance companies are keen to see the pension system reformed, but when this will happen, nobody yet knows.

And I am right in the middle, trying to make this whole thing work. And - if I may say so - quite successfully so... We recently had the EU-Audit here (pure bureaucracy, but still it helps if one scores high with them). If I may (humbly) quote their report:

"The start date of the project was 9 February 2005. The project activities are to last until October 2006. The Inception phase of the project lasted for three months and the project is now in its implementation phase. The Inception phase activities have been executed in a timely manner. The project performance so far is exemplary and the project team by the end of the mandate, if conditionalities are met, may even overachieve expectations set by the ToR."

And on they go:

"There are 13 beneficiaries of this project. Out of these 13 beneficiaries, 5 are to be established during the course of the project. Although the project is only nearing the end of its Inception phase, services are already being delivered to existing beneficiaries. Beneficiaries’ perceptions of the project benefits are optimistic and the project has gained considerable support and trust from beneficiaries."

So I am more or less settled now, having established a fully functional project office including satellite connection to the Internet. For political reasons we are not situated in Sarajevo, Bosnia's capital, but in Banja Luka, the capital of the Serb entity "Republika Srpska" - and here everything is even more Balkan than in the rest of the country.

One example, a recent one, from today's lunch: we went to a small place, newly opened restaurant. We ask the waiter if there is anything he could recommend. After some hesitation he tells us, well, there is soup and there is goulash. We decide for goulash. Well, bad luck, because they have run out of goulash. We do not attempt to ask for an explanation why he did not tell us in the first place.

Banja Luka is a peculiar city in many ways: for example, it is the hairspray capital of the Balkans. One would not find a bigger concentration of big, artificial looking hair except for maybe Memphis/Tenn. around Graceland. Another thing: you can't get a single decent lighter in this city. Every one in three attempts of lighting a cigarette leads to the uncontrollable ejection of the spring, that then flies away in a random direction.

Last week I was sitting in a Cafe, ordering "duplo espresso i mineralni voda" (a double espresso and some mineral water) - the waiter tells me, there is no water ("njema voda"), so I tell him to bring me only the coffee. He answers, frowning: "Ne rasumes, NJEMA voda!" (you don't understand, NO water!). And there was actually no water, in all of the street. And hence: no water, no coffee.

Still, I have a nice li'l room in a wonderfully quiet hotel with a beautiful garden, where I have breakfast in summer, with sparrows sitting around me, waiting for breadcrumbs - idyllic, innit?