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The Looming Brexit Deadline: What to Expect in March 2019?

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On June 23, 2016, an historic vote in the United Kingdom forever changed the course of history.  The UK voted to break away economically and to a lesser degree politically from the ‘constraints’ of Brussels, and the EU. The media frenzy surrounding the Brexit referendum had pundits believing that there was no possible way Brexiteers would get their wish. They were considered a fringe group of extremists, but the media got it wrong. They have gotten it horribly wrong many times since then, more recently with the election of US President Donald J. Trump. But it’s the Brexit issue that lingers and presents the greatest challenges to Europe and the United Kingdom. Come Friday, 29 March 2019 at 11 PM, the UK will be required to leave the EU.

The issue of what to do with Britons living abroad and Europeans living in Britain is an important one. For starters, there are millions of people from both the EU and Britain living outside of their countries. This large expatriate population is already experiencing all manner of financial difficulties through the recent volatility of the GBP. Global transfers from Europe to the UK and the UK to Europe have been increasing in recent years, thanks to the Brexit issue. The list of service providers offering these international money transfers is currently populated by many non-bank financial institutions, Recall that its zenith, the GBP was trading around 1.47/1.48 to the USD. It soon plunged to 31-year lows, and only recently started to claw its way back to those levels. Expatriates can benefit from GBP weakness by sending EUR, USD, JPY, SEK and other currencies back to the UK. This results in boosted performance of the GBP, and has a lag effect on stock portfolios.

The Brexit issue presents as an unprecedented economic and political calamity for Europe, the likes of which it last encountered with the overhyped Grexit (Greek Exit) fears. According to the terms of the Lisbon Treaty, Britain had 2 years from the date it announced its intention to leave the EU for the formal ratification of a Brexit. Article 50 of the Lisbon Treaty is an interesting legal triggering mechanism, and the process got underway in March 2017. With approximately a year to go, the UK government must muster all the support it can to prepare for Brexit. The negotiations have been exceedingly difficult, with both EU and UK officials struggling to come to consensus on any number of issues.

What was the Final Vote Tally in Favour of Brexit in the UK?

According to the BBC, 72.2% of the UK electorate voted in the Brexit referendum. Of that, 51.9% voted to leave the EU, amounting to 17,410,742 votes. The Bremain (Britain remains in the EU) vote amounted to 48.1% or 16,141,241 votes. There were some 26,033 rejected ballots. It is interesting to point out which parts of the UK voted overwhelmingly in favour or against a Brexit. Scotland (62% to remain) was largely against a Brexit, as was Northern Ireland (55.8% to remain). But it was England (53.4% to leave) and Wales (52.5% to leave) with their large populations that swung the needle in favour of a Brexit.

And so, the Brexiteers got their wish and history was made. The areas in the UK overwhelmingly preferring a Brexit included Arun (62.5%), Northumberland (54.1%), Stoke-on-Trent (69.4%), Derby (57.2%), Northampton (58.4%), Cornwall (56.5%), Amber Valley (60.3%), Ashfield (69.8%), Lancaster (51.1%), Luton (56.5%), and many others. The listing of pro-Brexit cities and districts in and across England sent a powerful message to 10 Downing St., and Brussels alike. The British Prime Minister at the time, David Cameron was taken aback by the results, even though he was heading the Tory government. The London Mayor, Boris Johnson was spearheading calls for a Brexit, posing a serious challenge to the PM.

According to Article 50 of the Lisbon Treaty, ‘any member state may decide to withdraw from the union in accordance with its own constitutional requirements’. Once Article 50 has been triggered, the European Council is officially notified of the UKs desire to leave the EU and it will no longer be bound by EU rules. Of course, there are many complications inherent in the extrication process. These include the rights of EU citizens living in the UK, and vice versa. There are also existing business agreements, financial partnerships, and related deals between UK and EU companies that need to be consolidated, amended, or ratified.

Concerns for the UK Post Brexit

Other challenges to a successful Brexit include passports, travel, work permission, and borders. While the UK was part of the EU, residency requirements for all nationals in the single bloc were easier to understand. Now there is the issue of what to do with people post-Brexit. These are but a handful of the many challenges facing the UK government as it looks to carve out new alliances with Asia and the West, post-Brexit. Of course, one of the most urgent concerns is the UK economy, and the currency. The GBP has whipsawed wildly since the June 23, 2016 referendum. It plunged spectacularly from 1.47/48 prior to the Brexit and hit a 31-year low soon thereafter.

This has far-reaching implications for UK business, listed companies, and UK indices. Every time the GBP weakens, the FTSE 100 index strengthens, and vice versa. This well-established relationship saw the FTSE 100 index rising well above 7,000 as sterling continues to plummet. However, there has been a strong resurgence in the value of GBP, leading many to believe that the separation from the EU will not be as detrimental as once thought. Negotiations began in earnest, and both parties agreed to making significant headway in the Brexit discussions. However, the EU’s head negotiator Michel Barnierand his EU counterpart, David Davis have been at loggerheads many times.

Upcoming Meetings Prior to the Looming Brexit Deadline

According to Davis however, the UK has set March 29, 2019 at 11 PM GMT as the official date that Britain will depart from the EU. Some of the most important dates to remember moving forward include September 24 when elections in Germany will determine what becomes of Chancellor Angela Merkel, and then another meeting in October 2018. The latter is a crucial date to watch, since it is 6 months prior to the official divorce between Britain and the EU.

At that point, details of a final Brexit deal can be ratified. A big part of the reason Britain left was money. The UK was subsidizing Brussels to the tune of billions of pounds, and many UK conservatives commented that foreigners were using up valuable NHS resources and costing Britons a fortune. It’s a difficult predicament to be in, given that the UK is now negotiating to repay the EU a tidy sum in the separation agreement.

It was once thought that £350 million per week was sent by the UK to the EU. This according to Boris Johnson, is precisely what Britain pays the EU. However, the UK’s membership fee with the EU is £17.8 billion. Once the Treasury report was conducted, that figure was actually £375 million weekly, or £19 .5 billion. In November, The Guardian ran an article stating that the UK could pay upwards of £50 billion after UK leaders and EU leaders could not come to consensus. That’s the figure that was needed for heavy hitters like Germany and France to sign off on any new trade deals post-Brexit with the UK. Figures as high as £89 billion have been floated, but UK government ministers are insisting that the true figure will be approximately 50% of that. In any event, these are serious concerns for the UK post-Brexit, given that the burden will be brought to bear on UK workers.

Is the Brexit officially on?

According to Labour and Conservatives, the Brexit issue will move ahead as planned. However, several politicians and parties have threatened to derail any Brexit plans by requesting a snap referendum on the issue. It looks as if Britain will be leaving the EU in March 2019, preferably with a framework for Brexit in place. The British Prime Minister was against a Brexit during her early days, but promised to support a Brexit once she was sworn in. The UK economy has been in all sorts of turmoil since the Brexit saga became priority number one.

The GBP/USD pair is back at parity with pre-Brexit levels, but the GBP remains approximately 15% weaker against the EUR. UK economic growth remains robust, despite reports that the Brexit issue will destroy UK manufacturing and service industries. The purported single market refers to the EU bloc and if Britain leaves, it will no longer enjoy all of the privileges such as no customs duties, tariffs and trade fees. However, there is a customs union in place. The single market is a reference to broader integration and interaction between the EU and the UK.

In summary, it is important to manage personal finances well during this volatile period in Britain’s history. Britons with assets abroad stand to benefit significantly by repatriating their earnings, salaries, wages and so forth back to the UK. If the GBP strengthens, much the same can be said of Europeans living in the UK. Of course, banks will be having a field day with all the money changing hands, and the high spreads, fees and commissions they can charge on unsuspecting clients. After the dust has settled, it’s money transfer companies that will reap the rewards of these actions since they offer the best value to Britons.

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Whistleblower protection: EU Commission sets new, EU-wide rules

MD Staff

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Recent scandals such as Dieselgate, Luxleaks, the Panama Papers or the ongoing Cambridge Analytica revelations show that whistleblowers can play an important role in uncovering unlawful activities that damage the public interest and the welfare of our citizens and society.

Today’s proposal will guarantee a high level of protection for whistleblowers who report breaches of EU law by setting new, EU-wide standards. The new law will establish safe channels for reporting both within an organisation and to public authorities. It will also protect whistleblowers against dismissal, demotion and other forms of retaliation and require national authorities to inform citizens and provide training for public authorities on how to deal with whistleblowers.

First Vice-President Frans Timmermans said: “Many recent scandals may never have come to light if insiders hadn’t had the courage to speak out. But those who did took enormous risks. So if we better protect whistleblowers, we can better detect and prevent harm to the public interest such as fraud, corruption, corporate tax avoidance or damage to people’s health and the environment. There should be no punishment for doing the right thing. In addition, today’s proposals also protect those who act as sources for investigative journalists, helping to ensure that freedom of expression and freedom of the media are defended in Europe.”

Věra Jourová, Commissioner for Justice, Consumers and Gender Equality added: “The new whistleblowers’ protection rules will be a game changer. In the globalised world where the temptation to maximise profit sometimes at the expense of the law is real we need to support people who are ready to take the risk to uncover serious violations of EU law. We owe it to the honest people of Europe.

Whistleblowers can help to detect, investigate and sanction abuses of EU law. They also play an important role in enabling journalists and the free press to play their fundamental role in our democracies. That is why whistleblowers need proper protection against intimidation and/or retaliation.Citizenswho uncover illegal activities should not be punished as a consequence of their action. But in reality, many of them pay for their action with their jobs, their reputation or even their health: 36% of workers who reported misconduct experienced retaliation(2016 Global Business Ethics Survey). Protecting whistleblowers will also help safeguard freedom of expression and media freedom, and is essential to protect the rule of law and democracy in Europe.

Protection for a wide range of EU law breaches

Today’s proposal ensures EU-wide protection for blowing the whistle on breaches of EU legislation in the fields of public procurement; financial services, money laundering and terrorist financing; product safety; transport safety; environmental protection; nuclear safety; food and feed safety, animal health andwelfare; public health; consumer protection; privacy, data protection and security of network and information systems. It also applies to breaches of EU competition rules, violations and abuse of corporate tax rules and damage to the EU’s financial interests. The Commission encourages Member States to go beyond this minimum standard and establish comprehensive frameworks for whistleblower protection based on the same principles.

Clear Mechanisms and Obligations for Employers

All companies with more than 50 employees or with an annual turnover of over €10 million will have to set up an internal procedure to handle whistleblowers’ reports. All state, regional administrations and municipalities with over 10,000 inhabitants will also be covered by the new law.

The protection mechanisms will have to set up must include:

  • Clear reporting channels, within and outside of the organisation, ensuring confidentiality;
  • A three tier reporting system of:
  • Internal reporting channels;
  • Reporting to competent authorities – if internal channels do not work or could not reasonably be expected to work (for example where the use of internal channels could jeopardise the effectiveness of investigative actions by the authorities responsible);
  • Public/media reporting – if no appropriate action is taken after reporting through other channels, or in case of imminent or clear danger to the public interest or irreversible damage;
  • Feedback obligations for authorities and companies, who will have to respond and follow-up to the whistleblowers’ reports within 3 months for internal reporting channels;
  • Prevention of retaliation and effective protection: all forms of retaliation are forbidden and should be sanctioned. If a whistleblower suffers retaliation, he or she should have access to free advice and adequate remedies (for example measures to stop workplace harassment or prevent dismissal). The burden of proof will be reversed in such cases, so that the person or organisation must prove that they are not acting in retaliation against the whistleblower. Whistleblowers will also be protected in judicial proceedings, in particular through an exemption from liability for disclosing the information.

Effective Safeguards

The proposal protects responsible whistleblowing genuinely intended to safeguard the public interest. It therefore includes safeguards to discourage malicious or abusive reports and prevent unjustified reputational damage. Those affected by a whistleblower’s report will fully enjoy the presumption of innocence, the right to an effective remedy, a fair trial, and the right of defence.

Background

Protection given to whistleblowers across the EU is currently fragmented and uneven. Only 10 EU Member States currently ensure that whistleblowers are fully protected. In the remaining countries, the protection granted is partial and only applies to specific sectors or categories of employee.

The Commission’s proposal builds on the 2014 Council of Europe Recommendation on Protection of Whistleblowers, which recommends that “member states have in place a normative, institutional and judicial framework to protect individuals who, in the context of their work based relationship, report or disclose information on threats or harm to the public interest” and sets out principles to guide states when introducing or reviewing such frameworks.

The Council encouraged the Commission to explore the possibility of future EU action in its Conclusions on Tax Transparency of 11 October 2016. Civil society organisations and trade unions have consistently called for EU-wide legislation to protect whistleblowers acting in the public interest.

The Commission committed to take action to protect whistleblowers, as journalist sources, at the second Annual Colloquium on Fundamental Rights in November 2016, which was on the theme of ‘Media Pluralism and Democracy’.

Strengthening whistleblower protection also gives effect to the Commission’s commitment to put a stronger focus on enforcement of EU law, as set out in its 2016 Communication on EU Law: Better Results through Better Application

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Will the EU split into the East and the West?

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On March 1, 2018 the European Parliament has adopted a resolution initiating a disciplinary procedure against Poland. Warsaw is accused of violating a number of fundamental democratic principles of the EU. If the Polish government does not agree to make concessions, the country may for a time be deprived of the right to vote in the European Council.

The problem is that to implement such a decision, the consent of all EU member-states is needed. Meanwhile, Hungary, against which charges of the same kind have been brought, can block sanctions against Warsaw.

According to many observers the increased tensions within the EU reflect not just the “growth of nationalistic sentiments” across Europe. Analysts, as well as high-level politicians, including French President E. Macron, are already openly talking about the EU’s moving towards “Europe of two speeds”. How serious is the threat of increasing contradictions between Europe’s east and west?

The “right”, “anti-liberal” turn has been observed in Europe for the last 20-25 years and not only in the new EU members but throughout the continent. According to the BBC  in 2000 the average share of those who voted in the European countries for “populists” was 8%, at present it is about 25%. Michael Abramowitz and Nate Schenkkan of The Foreign Affairs note that now Islamophobia, “persecution of NGOs”, stiff rejection of EU policies  and fear of migration  play a key role in strengthening the positions of conservative and nationalist politicians -“populists” not only in Hungary, Poland, Austria and the Czech Republic. Similar ideas are spreading rapidly in the political discourse of almost every European country. More and more often “populists” are becoming potential partners in forming coalition governments. Thus, many political forces in Central and Eastern Europe, are increasingly rejecting the “EU pressure” because it is associated with sovereignty restrictions.

The embodiment of these trends was a series of political upheavals that occurred in Europe in 2017. First, both system-forming parties – the Socialists and the Republicans – suffered a crushing defeat in the French presidential and parliamentary elections. Then  to the unexpected surprise of most observers the “most serious political crisis since the unification” began in Germany – negotiations for the creation of the ruling coalition lasted more than 6 months, ending only in March 2018. Finally, in December 2017, a new government was formed in Austria, which included the conservative People’s Party and the far-right Freedom Party. Clearly there is no talk about Vienna’s withdrawal from the EU. Nevertheless, the new Austrian ruling coalition has its own idea of the ways of reforming the EU – a very different one from the approaches of Germany and France. Chancellor Sebastian Kurz does not conceal his desire to limit the EU’s spheres of influence. Some commentators say that by this he strongly resembles some of his colleagues in Central and Eastern Europe, also dissatisfied with attempts to centralize power, undertaken by Brussels.

The highlight of the clash between different concepts of the European Union’s future was the judicial proceedings initiated by the European Commission against Poland “for political interference in its justice system” on December 20th, 2017.

In these conditions, on the one hand, both the new cabinet of Merkel as well as the French president who is facing ever greater resistance to his ambitious reform plans have even more serious doubts regarding the ability to “initiate the process of renewal of the European Union”. On the other hand, “the events which happened in the end of 2017 in Brussels, Budapest, Warsaw, Prague and Vienna are the unambiguous alarming evidence that the EU encounters an existential dilemma in confronting the nationalist leaders of Central Europe led by Poland and Hungary“. Meanwhile, the Euro zone crisis and the Brexit remain on the agenda. As a result, the well-known Russian expert Fyodor Lukyanov says: Europe turns to itself, and “the future of the continent” has not been so vague from the middle of the 20th century. ”

Political contradictions are closely intertwined with the economic ones. The work of well-known economists Filip Novokmet, Thomas Piketty and Gabriel Zucman published in 2017 bluntly call Eastern European nations “foreign-owned countries”. On the one hand, a stable inflow of investment provides economic growth and high employment. On the other hand, such a high dependence on foreign capital in the economy is fraught with serious shocks, in case a country, for some reason, loses its investment attractiveness. As historical examples show, the “flight” of foreign investors, as a rule, provokes a surge of unemployment, a deep decline in the economy,  collapse of the banking system.

Meanwhile, after the UK leaves the European Union the annual budget of the EU will decrease by at least 10 billion euros. In this regard, the issue of decreasing subsidies to member countries, which will primarily affect the poorest countries, is being actively discussed. This “foreshadows yet another clash of the east and west of Europe.” Moreover, “some countries were told that their rejection of liberal values might be the reason to reduce their subsidies”. In response, the leading countries of Central and Eastern Europe “unequivocally say to Brussels: we are not your colonies”. In these conditions, “the Battles of Eastern and Western Europe threatens to slow down, or even completely slash to zero, a decade and a half of integration processes, and in a broader sense raises the question: is the EU united on the basis of common economic interests or common values?”

At the same time, the issue of Poland, Czech Republic or Hungary leaving the EU is not on the agenda. There are no objective reasons for this. The current CEE leaders largely owe their popularity to high rates of economic growth, the key factors of which are EU subsidies and foreign investments. Membership in the European Union is very beneficial for Eastern Europeans, as they receive more from Brussels than they give. Especially when it comes to issues of political and economic security. Formal belonging to the “West”, one of the main symbols of which is Schengen, is also very important for the overwhelming majority of citizens of these states from the psychological and philosophical point of view. The EU will also not give up Eastern European members, since the economic benefits of investing in growing economies, as well as export earnings to Central and Eastern Europe, are one of the main sources of growth for the whole Union. In addition, the experience of recent years has shown that with the problems of “Romanian corruption”, “Hungarian authoritarianism”, “Polish attacks on courts” and border disputes, like the Slovenian-Croatian one, “it is much easier to fight when the country is already included in pan-European structures,” Maxim Samorukov of the Russian Carnegie Center says.

The problem is that Brussels seems to have chosen a strategy that is very risky in the current circumstances, designed to “restore  the Union’s  self-confidence” – through a new expansion. In February 2018, the president of the European Commission, Jean-Claude Juncker, announced the strategy of joining the EU (until 2025) of at least some of the six states of the Western Balkans. According to Brussels’s plan the admission of new members should convince the rest  to abandon the privileges of individual countries and delegate more authority to the “center.” The question is about taking decisions not by consensus but by the majority, as well as about developing mechanisms for monitoring compliance with common rules by member-states and punishing violators. The ultimate goal is “supranational institutions that will gradually take away key functions from the least competent national governments“.

However, experts at the American think tank Stratfor say that “the enthusiasm for the EU enlargement has largely dried up”. Besides, the Eastern European capitals are hardly to like the real goal of the EU reform, for which the leading “old” members of the club advocate – to minimize the chances of the CEE countries to play on the contradictions between the world powers. And even if those who believe that “at the heart of all such games there is always a desire to knock out as many financial preferences as possible from the European Union are right,” the population of Central and Eastern Europe is experiencing a growing anxiety and irritation as a result of realization that, if such trends continue in the politics of Brussels, the dreams of “life as in the West,” under whose auspices people often had to give up their national interests, will never come true. Meanwhile, to succeed in global competition, there is a need to limit or even reduce the “main achievement of the European” welfare society “- its social systems. This is increasingly spoken about in the old EU members.

Only time will tell whether the trends analyzed above are long-term.

If most of the CEE countries will not get rid of the “restricted, one-sided point of view”, according to which their national interests do not go beyond their state borders, then the ideas of the “all-European home” will remain only beautiful slogans for both the society and a large part of the ruling class. The real policy will remain at the level of “tactical pragmatism”, which will focus on those slogans and ideas, which at the moment are most in demand by voters. Even if it is a question of EU-scepticism and national populism. Probably, in the center and the east of the EU, a “new Eastern bloc” will be formed – led by the countries of the Visegrad Group (Hungary, Poland, Czech Republic, Slovakia), but not limited to it. The countries of this “bloc” will promote the idea of the “Europe of Nations”: the transformation of the European Union into a confederation of independent states, united by a common free trade zone and “a few  supranational functions.”

Thus, tensions between the east and the west of the European Union threaten to become its main headache in the coming years. “Pessimists predict the emergence of situational alliances within the EU that threaten to paralyze the work of its political institutions,” the BBC said. Thus, the initiative to expel Russian diplomats in connection with the “Skripal affair” in the end of March 2018, among other EU member states, was not supported by Austria and Slovakia. On the whole we can assume that the evolution of the future European order has only just started and will continue for several decades.

First published in our partner International Affairs

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How Can Parity Be More Proportional?

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International diplomats located in Bosnia-Herzegovina have recently launched an initiative requesting the Parliament of one of Bosnia-Herzegovina’s two entities, the Federation, to reconstitute its upper chamber, the House of Peoples, in line with „more proportional representation“. Yet, how can representation in the House of Peoples be more proportional, when already based on the principle of parity? Sounds absurd, doesn’t it? Representation can be based either on the principle of proportionality or on the principle of parity. When based on the principle of parity, it cannot possibly be more proportional. Moreover, such an initiative encroaches on the sovereign right of that very Parliament to constitute and reconstitute itself, without external interference.

Indeed, what does sovereignty mean in the present-day Bosnia-Herzegovina? In the rest of Europe it has been adopted, almost axiomatically, in the traditions of both Locke and Rousseau, that sovereignty is indivisible and inalienable. For, the will of the people, as the expression of sovereignty, can not be divided; otherwise, it ceases to be the will of the people and becomes a collection of individual wills and then the people can only be a collection of individuals. Also, sovereignty can not be alienated from its bearer: power may be transferred, but not will; it is impossible for any organ to exercise the sovereign will save the sovereign body itself. The state, as a state, can no more alienate its sovereignty than a man can alienate his will and remain a man. There is but one possible bearer of sovereignty, the people.

In Bosnia-Herzegovina, it has been accepted, no less axiomatically, in the tradition of its long-negotiated partition sponsored by international envoys, that this country’s sovereignty can easily be divided, alienated from its people as a whole and transferred to its constituent ethnic elements and then consumed by its three ethnic oligarchies in the form of unrestrained political power over the pieces of territory assigned to them in the process of partition. Actually, such a divided sovereignty is treated as transferred to these oligarchies and consumed in the form of their private property over the resources found on the given pieces of territory.

Thus, whereas sovereignty is elsewhere treated as generated by a contract signed by free individuals, who thereby constitute themselves as the people and sovereignty as their general free will, in Bosnia-Herzegovina sovereignty is treated as dissolved by a contract signed, under the auspices of international envoys, by its three major ethnic groups, renamed for that purpose as ‘constituent peoples’, who thereby construct only a provisional state structure with no declared or acting bearer of sovereignty. ‘Constituent peoples’ are perceived as the contractors who should presumably be represented on the basis of the principle of parity in the parliamentary institutions, on the levels of both state and its two ‘entities’ (Federation of BiH and Republika Srpska), and it is only their three wills that are taken into account, although even they are not treated as sovereign, either, but only as dependent on each other’s acquiescence.

Moreover, yet another part of the country’s divided sovereignty has been transferred to the so-called High Representative (a diplomat appointed by major international powers), whose will may reign supreme over particular wills of the oligarchies claiming to represent their respective ‘constituent peoples’. In this sense, as a part of the country’s Constitution, the High Representative comes closest to the notion of the sovereign, although in practice this person rarely exercises his will and imposes his decisions on the three oligarchies in question. Still, the position in the Constitution makes the High Representative irremovable from the country’s legal structure, in spite of the permanent efforts of the three ethnic oligarchies to eliminate this potential threat to their unrestrained power.

Yet, is such a multiple division and transfer of sovereignty truly a part of the Bosnian Constitution, or it is rather an arbitrary interpretation of the country’s constitutional structure by both foreign diplomats and local politicians? In the preamble of the country’s Constitution one can really find its sovereignty divided among several different categories, positioned as sovereignty’s bearers:

Bosniacs, Croats, and Serbs, as constituent peoples (along with Others), and citizens of Bosnia and Herzegovina hereby determine that the Constitution of Bosnia and Herzegovina is as follows.(The Dayton Peace Agreement, Annex 4, The Constitution of Bosnia-Herzegovina)

A similar formula can be found in the Washington Agreement (1994), which preceded the Dayton Peace Agreement (1995) and served as the basis for creation of the Federation of BiH, as one of Bosnia’s two entities:

Bosniacs and Croats, as constituent peoples (along with Others) and citizens of the Republic of Bosnia and Herzegovina, in the exercise of their sovereign rights, transform the internal structure of the territories with a majority of Bosniac and Croat population in the Republic of Bosnia and Herzegovina into a Federation, which is composed of federal units with equal rights and responsibilities.

Here sovereignty is divided between Bosniacs, Croats and others – whatever their ethnic identity or a lack of identity – and they are all treated as possessing a double identity,first as constituent peoples and then as citizens of the Republic of Bosnia and Herzegovina. For, the form ‘constituent peoples (along with others)’ presupposes that ‘others’ – whatever their ethnic identity or a lack of identity – are also to be treated as ‘constituent peoples’, along with Bosniacs and Croats. By analogy, Bosniacs, Croats, and Serbs, along with Others, are to be treated as both ‘constituent peoples’ and ‘citizens of Bosnia and Herzegovina’ in the Dayton Peace Agreement’s Annex 4.But who can actually be proclaimed the bearer of sovereignty on the basis of these two constitutional acts?

Following the modern theories of sovereignty mentioned above, if sovereignty is to be regarded as indivisible and if, accordingly, there can be only one bearer, then the bearer must be the citizens of Bosnia-Herzegovina, acting as a whole. Then the ‘constituent peoples’ (Bosniacs, Croats, and Serbs, along with Others) are to be understood simply as the constituent elements of the whole, which cannot be treated as multiple bearers of sovereignty. And then the citizens may be represented in a unicameral parliament, founded on the principle of proportionality.

On the other hand, if we take sovereignty as divisible, the ‘constituent peoples’ maywell be regarded as its multiple bearers. Then, however, these ‘constituent peoples’ are not to be reduced only to Bosniacs, Croats and Serbs: the preambles used in both of these constitutional documents suggest that the category of Others is to be regarded as equal to the categories of Bosniacs, Croats and Serbs.

Constitution makers, obviously, had no clear answer to the question of sovereignty’s (in)divisibility in the case of Bosnia-Herzegovina: instead of a formulation that would follow the principle of sovereignty’s indivisibility (for example, „Bosniacs, Croats, and Serbs (along with Others) as citizens of Bosnia-Herzegovina“), they introduced the ‘constituent peoples’ as parallel to the citizens of Bosnia-Herzegovina and thus proposed a form of shared sovereignty between the citizens and the ‘constituent peoples’. This shared sovereignty is reflected in the structure of the parliamentary institutions of Bosnia-Herzegovina and both of its entities: all the parliaments are bicameral, the lower chambers representing the citizens on the basis of election results in accordance with the principle of proportionality, and the upper chambers representing the ‘constituent peoples’ on the basis of the principle of parity.

Yet, even such relative consistency has ceased to exist in the practical implementation of these two principles. In the the upper chamber of the Parliamentary Assembly of Bosnia-Herzegovina, the House of Peoples, the principle of parity is applied only to representatives of Bosniacs, Croats and Serbs (each represented with 5 seats), while Others are totally absent, as if they do not exist in the Constitution’s preamble among ‘constituent peoples’, along with Bosniacs, Croats and Serbs. In the upper chamber of the Parliament of the Federation of BiH, the House of Peoples, the principle of parity is again applied only to representatives of Bosniacs, Croats and Serbs (each represented with 17 seats), while the number of representatives of Others is arbitrarily reduced to only 7 seats, as if Others are not to be found among ‘constituent peoples’ in the Constitution’s preamble, along with Bosniacs, Croats and Serbs, and as if the principle of parity can be applied selectively or in some reduced manner. Similarly, in the upper chamber of the Parliament of Republika Srpska, the Council of Peoples, parity is applied again only to Serbs, Bosniacs and Croats (each represented with 8 seats), while Others are represented with only 4 seats, as if they have not been put into the category of ‘constituent peoples’, along with Serbs, Bosniacs and Croats. In other words, even if we theoretically accept the possibility that sovereignty may be divided between the ‘constituent peoples’ and the citizens of Bosnia-Herzegovina, such shared sovereignty is in its constitutional implementation distorted to such an extent that only Bosniacs, Croats and Serbs are recognized as ‘constituent’, whereas Others are sometimes treated as partially constituent, with a reduced number of seats, and sometimes as non-constituent, that is, practically non-existent!

Obviously, when the principle of parity is applied in such a selective manner, it ceases to function as parity. Otherwise, Others would be represented in all these parliamentary institutions on the basis of parity, along with Bosniacs, Croats and Serbs. And then, it only means that Others have been permanently discriminated in the political reality of Bosnia-Herzegovina and that such a constitutional discrimination must be removed if the model of shared sovereignty is to be applied at all. If not, then full sovereignty must be given back to the citizens of Bosnia-Herzegovina, regardless of whether they link their identity to any of its ethnic groups or not. And that has to be reflected in the structure of all its parliamentary institutions: the Houses of Peoples should be abolished and the parliaments should then become unicameral, so that only the citizens would be represented in the Houses of Representatives, based on the principle of proportionality and the principle one person/one vote. Of course, for that purpose the country should get a new constitution, adopted by its own Constitutional Assembly, instead of the one tailored in such an inconsistent (and theoretically problematic) manner by foreign diplomats as a part of the international peace treaty.

However, the international diplomats calling for „more proportional representation“  obviously do not distinguish between, and directly mix up, the principle of proportionality and the principle of parity. They assume that the House of Peoples in the Parliament of the Federation of BiH is based on the principle of proportionality, and ask for more proportionality, although it is clear that parity is its sole founding principle. For, political representation can either be proportional, reflecting the proportion of actual votes for actual political parties and candidates, or it can be based on parity, reflecting the parity between the constituent elements of the entire constituency (presumably, of the country’s population as a whole). As already noted above, it is the principle of parity in the House of Peoples that has been violated by under-representation of Others: while Croats, Bosniacs and Serbs are all represented with 17 seats in this House, Others are represented with only 7 seats. Yet, the diplomats do not pay any attention to this violation of the constitutional principle of parity. Instead, they suggest the Parliament to adopt even „more proportional representation“ in its upper chamber (which, in practice, can only be over-representation of one of the groups already represented in line with the principle of parity), so as to even further undermine its founding principle of parity, already violated by the existing under-representation of Others!

Such a legal absurdity is certainly unsustainable and can only lead to the total dissolution of the existing constitutional order in Bosnia-Herzegovina, already distorted by the abandonment of the principle of indivisibility of sovereignty and further undermined by the selective implementation of the principle of parity in the parliaments’ upper chambers. This brings us to a crucial point: either the parliamentary structures in Bosnia-Herzegovina will follow the logic of this request, abolish the existing provisional constitutional order and leave the country without any constitutional order whatsoever, or they will abolish this constitutional order and establish a non-provisional one, based on the principle of sovereignty’s indivisibility, reflected in a unicameral parliament, representing only the citizens of Bosnia-Herzegovina as a whole, regardless of their ethnic identity or a lack of it.

It is up to the parliamentarians. They may follow the principle of sovereignty as applied in the rest of the European countries, or obey the diplomats’ request, whatever the price for the country’s constitutional order. As for the diplomats, whoever they are, one should finally ask whether they would ever apply in their own countries any of the models they advocate for Bosnia.

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