Eurasia Press & News
‘Autocrats help autocrats’
At the end of 2021, Hungarian Prime Minister Viktor Orban pledged 100 million euros for Republika Srpska. At the time of the announcement, the aid sparked public debate in Bosnia and Herzegovina about whether the funds would come with strings attached, a possible quid pro quo from Milorad Dodik, the then-president of Republika Srpska.
The most obvious donor-imposed condition was that only agricultural machinery, tools and equipment manufactured in Hungary could be purchased. In addition, 70 per cent of the cost would be covered by the project, while the remaining 30 per cent, plus VAT, would be paid by the farmer.
Orban justified the aid by stating that Serbia and Republika Srpska are key to maintaining stability in the Western Balkans, and referred to Dodik as a democratically elected representative – an allusion to the sanctions previously imposed on Dodik and his associates.
Dodik was first sanctioned by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) in July 2017 for “actively obstructing the Dayton Accords” which ended the Bosnian War in the mid-1990s. At the beginning of 2022, Dodik and the associated media platform, Alternativa televizija d.o.o Banja Luka, were sanctioned by OFAC in response to Dodik’s alleged corrupt activities and continued threats to the stability and territorial integrity of Bosnia.
Similar action from the EU never happened because Orban blocked coordinated sanctions by Brussels. Orban is known as a key ally of Dodik, whose presidential mandate was finally revoked in August following a court verdict sentencing him to a year in prison and imposing a six-year ban on holding presidential office for defying decisions made by the High Representative, Bosnia’s international peace overseer.
Stefan Blagic, president of the NGO Restart Srpska and a journalist from Banja Luka, tells BIRN that when “autocrats help autocrats” it is always driven by a strong sense of self-interest.
Republika Srpska has taken out two loans, one in 2022 and the other in 2023, from Hungary’s Export-Import (EXIM) Bank totalling 140 million euros, which were intended to help finance the entity’s budget deficit and refinance part of its debt.
In August 2022, the Hungarian company Lugos Renewables admitted that Elektroprivreda RS, the major electricity company in Republika Srpska, had sold it 70 per cent of the region’s largest solar power project in Trebinje (Solar Power Plant Trebinje 1) without a tender. Lugos Renewables later withdrew from its 70 per cent ownership stake and its share was taken over by another Hungarian firm, MAYER NRG Kft, which, according to information obtained by Transparency International in Bosnia and Herzegovina and the local media outlet Capital, has no employees and no significant revenue.
Blagic also believes that the Hungarian aid served Dodik’s public image in Republika Srpska, as it demonstrated to citizens that they had a “friend” in the EU and that they were not isolated.
“As is usually the case, Radio Television of Republika Srpska and Alternativna televizija heavily amplified that narrative. So now, if you ask someone in Doboj or East Sarajevo whether those funds reached the people, they’ll say yes, because the last thing they heard was that it did. But the reality is that the full investment hasn’t been carried out and people don’t know that,” Blagic explains.
The 100-million-euro aid project announced by Orban was officially launched in mid-2022 when Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto visited Banja Luka. At a press conference, Dodik and Szijjarto announced the first grants would amount to 35 million euros.
“Thirty-five million euros will be allocated to fund small and medium-sized companies in the country,” Szijjarto declared after the meeting in Banja Luka on July 1, 2022.
However, just a few months later, the then-leadership of the “Progressus” Foundation for Sustainable Development, a Banja Luka-based non-profit in charge of coordinating the grants, stated that only 28 million euros had been approved by Hungary for the first phase.
BIRN contacted Progressus to enquire how much of the funds have been used so far, whether the remaining aid will be allocated soon, and what the project’s completion deadline is. We eventually received answers to our enquiries, but only after the Hungarian partners – listed on the website as the government of Hungary and the government-backed Central European Economic Development Network Nonprofit Ltd – had authorised them, according to Progressus.
As stated in the written response from Progressus, through the two public calls (BTP-22 and BTP-23) to date, a total of 1,832 projects were implemented for the procurement of agricultural equipment, tools and machinery produced in Hungary. In the first public call 641 contracts were signed and in the second 1,191. The non-refundable funds disbursed amounted to 25.8 million euros or 50.5 million Bosnian marks.
When we asked about the discrepancy between the 28 million euros initially approved and the 25.8 million euros reported as spent, Igor Pozaj, the president of Progressus, explained that the difference in the amount was due to “some of the Foundation’s operational costs and exchange rate fluctuations”, as the contract was signed in Hungarian forints. The grant agreement was valued at 10,967,448,275 Hungarian forints.
When asked about the reasons why Progressus did not announce any public calls this year, the plans for the use of the remaining funds and whether there is a deadline for the project, the foundation stated that it is an implementing body that executes only the contracts approved by the government of Hungary.
“The Foundation does not make decisions nor does it influence the grant providers regarding the amount of support or the disbursement schedule. The Foundation can announce a new public call only if it receives funding for it,” it stated in its response.
Progressus emphasised that it has no insight into either the future intentions or plans of the grant provider.
The same inquiry was sent to the government of Republika Srpska, which did not respond.
