Even from Extreme Right-Wingers: Desperate Borrowing by the Government of RS
Photo: Pixabay
Powerless due to the shutdown of funding sources in the global market, the Government of Republika Srpska, whose numerous members are under sanctions, including the President of RS and the Serb member of the Presidency of Bosnia and Herzegovina, has sought salvation in borrowing, specifically in loans from the extremely right-wing and conservative Saudi Arabia and its Development Fund, which will lend us money for major infrastructure and energy projects.
Written by: Andrijana Pisarević
The Saudi Development Fund, which has been widely discussed by the global public for using its oil wealth to invest large sums in other countries, has raised concerns that the power derived from money will be used for future political goals. However, in Republika Srpska, it has been presented merely as a partner for the future, eager to invest and assist. Our portal investigated where the Saudi money is planned to be invested within this entity and what political consequences it may have.
Insiders familiar with these projects told eTrafika that the underlying issue is a clear lack of sources for borrowing and financing the government's survival needs, especially in an election year. This has led the Government of Republika Srpska to seek cover by pushing ministries and municipalities into taking loans whenever an opportunity arises, even from those notorious for human rights violations, rigid laws, and harsh punishments of their citizens.
The political connotations of the Saudi Fund's engagement with Republika Srpska are evident as they require repayment guarantees from Bosnia and Herzegovina. Consequently, all projects, alongside the approvals from the Government of RS and municipalities, must also be approved by the Council of Ministers of BiH. Additionally, there's a mandatory condition that these projects must not be connected with the veterans of Republika Srpska.
Photo: Pixabay
First Projects Expected in Less Than Three Months
In February this year, the Saudi Fund was the catalyst for a major meeting between the Government of Republika Srpska and all mayors and city leaders, as well as directors of public enterprises. They were encouraged to propose projects and request loans, resulting in 77 proposals worth a total of 2.5 billion BAM, of which the first nine were selected, totalling 161 million BAM.
According to eTrafika's sources, this is just the first package of projects approved for loans with an interest rate of 1.5 per cent. A new package is expected in the fall, which will extend financing, specifically loans, to other projects, mainly infrastructure and energy projects.
“The second package of projects is expected to be considered in the fall. These are loans with an interest rate of 2.5 per cent over a period of 20 years and a grace period of five years. They are interested in transportation and other infrastructure projects, and loans will also be offered to those where the state is a partner, as they are interested in Bosnia and Herzegovina as a whole, not in parts”, said a well-informed source from eTrafika.
He explained that communication with the Saudis began when their company approached the Government of Republika Srpska regarding a solar power plant in the Bijeljina area.
“They then offered to expand the cooperation to include this fund, which would discuss projects for Republika Srpska. They had previously cooperated with the Federation of Bosnia and Herzegovina (FBiH) and financed their projects, so they decided to offer the same to us because they are interested in Bosnia and Herzegovina as a whole”, our source said.
Council of Ministers Already Approved Two Projects
Last week, the Council of Ministers approved an initiative from the Ministry of Finance and Treasury of Bosnia and Herzegovina (BiH) and appointed a delegation to negotiate a Loan Agreement between the Saudi Development Fund and BiH. This agreement pertains to the construction of a student dormitory at the Faculty of Medicine, University of East Sarajevo, amounting to 13 million US dollars (23.6 million BAM). This project involves adding 380 accommodation units by expanding the space and constructing a new pavilion at the “Boriša Starović” Student Center in Foča.
“The loan is allocated to Republika Srpska, with a repayment period of 20 years, including a five-year grace period with an annual interest rate of 1.5 per cent”, said representatives from the BiH Council of Ministers.
In the same session, the initiative from the Ministry of Finance and Treasury of BiH was accepted, and a delegation was appointed to negotiate a Loan Agreement for the construction and equipping of a science and technology park. This project also includes the adaptation of the existing area next to the building into a modern parking facility within the campus of the University of Banja Luka. The total usable area is 7,758.02 square meters over five floors. The loan for this project is approved under the same terms and conditions.
“The total borrowing amount for Republika Srpska for these two projects is 26 million dollars (47.2 million BAM)”, stated representatives from the BiH Council of Ministers.
According to information from the Government of Republika Srpska and the Ministry of Finance, projects are proposed twice a year, and in the April term, nine projects were approved to be proposed to the Saudi Fund for financing.
They also mentioned that ministries submitted 44 project proposals worth a total of 2.2 billion BAM, out of which four projects worth 116.9 million BAM were selected. Analyzing the structure of submitted applications, the highest values were from the energy sector (945 million BAM) and transportation (1 million BAM). Municipalities proposed 33 projects worth 264 million BAM, and five were selected worth 44.8 million BAM. Selection criteria included investment value, sectoral representation, regional representation, borrowing capacity, and project readiness (technical documentation).
In response to eTrafika, the Ministry stated that the project for the regulation of the Križevica River bed in Srebrenica, valued at 11.5 million BAM, proposed by the municipality of Srebrenica, was selected.
Additional Eight Million for the Controversial Student Dorm in Vlasenica
“The second phase of the construction and equipping of the student dormitory in Vlasenica, valued at 8.2 million BAM, proposed by the municipality of Vlasenica, has been approved with the aim of improving the quality and standards for students and pupils in the region”, stated the Ministry of Finance of Republika Srpska.
Foto: Nezavisne
Interestingly, this concerns the “Serbia” Student Dormitory in Vlasenica, whose construction began in 2018 and has yet to progress beyond the concrete structure. Serbia donated 1.5 million BAM for this project under the “Serbia for Srpska” initiative, which eTrafika has previously reported on.
Envisioned as a grand building of 7,500 square meters with 130 rooms and over 300 beds (in a town with barely 150 students, if not fewer), this dormitory was to include all the necessary facilities for a student centre and be completed within 200 days. Instead, it has become a shelter for stray dogs and a dumping ground for garbage.
Insiders at the time said that most of the donated money was spent on election campaign financing.
The third project to be submitted for Saudi approval is the construction of the Secondary School Center “East Ilidža”, worth 9.7 million BAM. The fourth involves building infrastructure projects in Prijedor, valued at 9.4 million BAM, including a kindergarten, sports halls, and regional sanitary landfills.
The Saudis are also expected to finance the modernization of the waste management system in Gradiška with a loan of 5.9 million BAM, addressing the issue of illegal dumps. Additionally, there will be the reconstruction and equipping of four psychiatric institutions in Republika Srpska (Banja Luka, Sokolac, Modriča, and Višegrad) worth 23.2 million BAM. This project is backed by the Ministry of Health and Social Welfare, which has already borrowed 15 million from the Development Bank of the Council of Europe for this purpose.
Đokić: We Are Reconstructing the Network in Trebinje
A loan will be used to reconstruct and rehabilitate the distribution network by replacing transformers and equipment in 35/10 substations, with a budget of six million BAM for the Elektroprivreda Trebinje area.
The project, proposed by the Ministry of Energy and Mining, includes replacing equipment in the main distribution substation in the municipality of Gacko, replacing transformers in substations in Gacko, Ljubinje, Trebinje 2, Plana, Berkovići, and Volujac, as well as rehabilitating and reconstructing the medium and low voltage distribution network.
“In the first package, we will work on the reconstruction and rehabilitation of the distribution network in the Elektroprivreda area of Trebinje. Other energy projects were not considered this time, but this one received our support. Other projects will be considered in the second package”, Minister of Energy and Mining Petar Đokić told eTrafika.
The last two projects to be financed by the Saudis include the rehabilitation and reconstruction of the “Križevići” tunnel (Republika Srpska Railways) valued at 62.5 million BAM, and the reconstruction of road network tunnels (JP Putevi) which will add another 25 million BAM to our debt.
“Specific details will be known once the negotiation process is completed. For local government unit projects, guarantees are issued by the city or municipality, while for projects proposed by ministries, guarantees are issued by the Government of Republika Srpska”, Đokić explained.
Igor Crnadak, a member of the PDP in the National Assembly of Republika Srpska, stated that he personally has nothing against construction and investments but is concerned about the lack of information on terms and financing, as well as potential political concessions.
“It is clear that the Government of Republika Srpska cannot get money elsewhere, and now the Saudis are offering it, which is an opportunity for them. The only question is what the terms are and how high the interest rates are. The problem is that we have no concrete information about the terms and financing, which is their typical way of operating. Our biggest problem is that no one wants to invest healthy money in healthy projects. Who would invest in this area where there is so much corruption and daily threats of war? Of course, one cannot be against investment. If some fund, without special political conditions, supports the construction of a science and technology park and the terms are good, why would anyone be against it? But I am against not knowing anything about these projects”, Crnadak said.
He added that a solar power plant in Bijeljina makes sense to the Saudis, who have no shortage of sunlight in their country, probably because they have made a favourable arrangement for the purchase and sale of that energy.
“The fact is that of all sources of money from Arab countries, these are the most radical and conservative people. There is no one worse than them. I don't understand why the Republika Srpska authorities didn’t seek money from the Emirates, Dubai, where such arrangements are more active and frequent”, Crnadak concluded.
Cooperation Between Republika Srpska and “Masco” Company
On March 1st of this year, Republika Srpska and the Saudi company “Masco” signed a memorandum for the construction of a 60 MW solar power plant in the Hase local community area, located five to six kilometres from Bijeljina.
Miloš Stevanović, a lawyer from Bijeljina and the legal representative of the Arab company, explained at the time that this was a concession agreement and that the construction of the solar power plant would take about three years.
“The power plant will be built on a site previously occupied by Radio Yugoslavia transmitters, which is currently used by the Republika Srpska Ministry of Interior. The ‘Masco’ company plans to invest around seventy million euros in the construction of the 60 MW solar power plant. The construction of the plant is expected to be completed by 2027”, Stevanović stated at the time.
What Is the Saudi Fund Involved In?
According to information from international investigative media, since 2015, Saudi Arabia has been using its oil wealth to invest massive amounts in other countries, raising concerns that the power derived from this money might be used for future political goals. Interestingly, this fund owns stakes in major global companies such as “Amazon”, “Google”, “Visa”, “Microsoft”, “Disney”, “Nintendo”, “Uber”, “PayPal”, “Zoom”, “Starbucks”, and many others.
The fund also owns “Carnival”, a cruise vacation company, the British football club “Newcastle United”, and is connected with “Blackrock”, the largest international asset management company. Through another Saudi firm, this fund holds a stake in Twitter, now known as “X”. It also has a stake in the game “World of Warcraft”. The acquisition of the football club and involvement in financing the LIV Golf tournament and Formula 1 races in Saudi Arabia have sparked concerns, with Amnesty International noting that Saudi authorities use these channels to “sportswash” their human rights violations.
According to a 2019 report by the Center on Global Energy Policy at Columbia University regarding the Middle East, Crown Prince Mohammed bin Salman (commonly known as MBS) set a goal for this fund to become the most influential and largest in the world by 2030, with assets exceeding two trillion dollars. His idea is for this fund to become the central base for the country’s modernization and economic diversification, moving away from its heavy reliance on oil, which it has profited from significantly during the energy crisis. He has even sold state assets to increase the fund’s value.
