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Bosnian economy set to suffer from Croatia's EU entry

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(SARAJEVO) - Bosnia's struggling economy could take a hit from neighbouring Croatia's EU entry next year as Zagreb will likely have to ban Bosnian imports that do not comply with strict EU quality rules.

Most Bosnian food exports go to Croatia and in the worst case scenario the loss in income for Sarajevo would be almost 200 million euros ($260 million), about half of the government's budget, according to estimates by the Bosnian chamber of commerce.

"If Bosnia does not set up a quality control that complies with European standards between now and January 1, 2013 (six months before Croatia is due to formally enter the European Union), we will not be able to export animal or vegetable-based products like milk, eggs, meat and honey," warned Duljko Hasic an economic expert with the Bosnian chamber of commerce.

On Sunday, Croatians voted for EU entry in a referendum which paves the way fro Zagreb to join the 17-nation bloc on July 1, 2013. This gives Bosnia only a year to overhaul its food quality control infrastructure.

"We are already too late... it would be a miracle if we make it by the deadline," said Yuri Afanasiev, the Bosnian coordinator for the United Nations Development Programme (UNDP) which is helping Sarajevo implement the reforms.

In 2010, the Bosnian government adopted a plan to push through the needed changes but the country then plunged into a deep political crisis which hampered the process.

That year, 15 percent of all Bosnian exports, worth some 560 million euros, went to Croatia.

Bosnian milk and dairy product producers, which make up one of the rare sectors where Bosnia exports more than it imports, will be the hardest hit.

"These companies will literally be ruined if the authorities do not act," Hasic said.

The Milkos dairy plant, close to Sarajevo, which produces 12 million litres of milk annually, just signed a contract with a Croatian company worth three million euros.

"This year we should export some 5,000 tonnes of products to Croatia with plans to send more in 2013. But if exports are halted we will be doomed from the start", Milkos export director Fahrudin Kurtagic told AFP.

According to Kurtagic, his company is already "almost 100 percent" in line with European production and hygiene standards and is waiting for the government here to get its affairs in order.

The authorities will need to adopt new EU-backed legislation on quality control, help accredit local laboratories with European institutes and assure Brussels that the quality control system in Bosnia works properly.

"From the European Commission's perspective, it is really urgent that Bosnia establish very clear competencies, and chain of command regarding the official control system, that it harmonises procedures for veterinary and phytosanatory policies as well as food safety," said Jurgis Vilcinskas who worked for the EU delegation in Bosnia.

He warned against the "high fragmentation of competencies" in the country.

Bosnian agricultural policies are formed by the two semi-autonomous entities that make up the country since the end of the 1992-95 war: the Muslim Croat Federation and the Serbs' Republika Srpska, both of which have established agriculture ministries.

There is no central ministry and Bosnian Serbs, who cling to a relatively broad autonomy, resist the creation of a national ministry that would strengthen the central government.

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