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Fleeing the Plague of Corruption and Bureaucracy in the Post-Yugoslavia Era



By Jadranko Brkic

What do you do when you grow old enough to realize that the society you were brought up in runs on deep, institutionalized corruption? What do you do when the realization of your own dreams is dependent upon throwing your own moral principles out the window and playing in that same unethical game?

My story begins back in the Summer of 2005, just after I had completed a nine-year education in the United States and returned home in my native Bosnia and Herzegovina. Armed with two science degrees and four years of work experience, I was eager to be back at home, to look for opportunities and to begin changing the world around me.

Heritage Foundation Index of Economic Freedom

Back then Bosnia and Herzegovina was just ten years behind its recent bloody war, and I felt that what my country needed the most was fresh, young talent and energy to rebuild the country’s economy. Those individuals would inject positive, new attitudes and heal the wounds of a still deeply divided society. The pressure from family and friends for me to prove myself was on too, as they all had great expectations of me.

After a short recuperation, I embarked on a search for my first job back at home. Naturally, the job market was not very encouraging, due to still-recovering infrastructure and poorly executed privatization. I encountered a small and underdeveloped private sector, to say the least.

Most of the functional companies that were hiring were state-run monopolies. Those companies were the in hands of the ruling political parties, and I quickly learned that those jobs were reserved for extended family relatives and cronies of party officials and for others who would either swear party loyalties or buy a job.

Regarding the latter, that means bribing party affiliated company management officials with large sums of money. State company jobs were and still are the most secure and by far the highest paying jobs in the country. Given an official unemployment figure of over 45 percent, paying to get a job becomes rational and normal. Ironically, the process has a free market element, where the highest bidder wins the privilege of a job.

This oddity was not my first encounter with immoral practices in any society, so I did not think much of it at the time and instead refocused my attention solely on the private sector, which I believed was more technology oriented than the old school state-run organizations. In short, after many months of searching, I was not successful in finding any suitable job that would have been challenging enough for me.

Concerned with my prolonged gap between jobs and with my ever-changing technology skills growing outdated, I made the difficult decision to put my dreams on hold for the time being and join my university sweetheart in her native Hong Kong. Our original plan had been for her to join me in Bosnia once my feet were firmly on the ground.

My Hong Kong and greater China experience over the next several months deeply impressed me — and I saw economic opportunities left and right. Fast forward a year, and I found myself married and together with my wife fully enjoying the benefits of Hong Kong’s economic freedoms. Not only that, after seeing the opportunities coming out of China, I realized that I could bring those opportunities with me back to my country and fulfill my dream of living and working at home.

I remember telling myself that if I can’t find a job back at home, I would create it by becoming an entrepreneur.

Jadranko Brkic appeared on the May 27, 2013, episode of The Stateless Man, on the “Dissolution of Yugoslavia,” from 21:15 (stream or download the mp3).



[audio:http://thestatelessman.jellycast.com/files/audio/TSM-2013-05-27.mp3|titles=Jadranko Brkic on the Dissolution of Yugoslavia]

So I spent some more time exploring China for opportunities, finding business contacts, and writing a business plan. It was to start as a small retail and service company for electronic equipment, computers, and office supplies imported from China, with expansion into manufacturing to come later. Several years earlier I had worked for such a company in the United States, and I had a sound idea of how and what I wanted to provide for my future customers.

While this would have been very difficult to accomplish and stay afloat in the already highly developed, competitive, and capital-intensive Hong Kong, it made perfect sense to do back in the Balkans. The computer and electronics industry was very underdeveloped, and quality goods and services were difficult to come by.

Armed with business contacts, details on the latest technology products and materials, a business plan, and an initial investment, I went back to Bosnia to iron out any details of my plan. I would do so in accordance with business practices in my country and begin the process of registering my business.

As I went through the steps one by one, I began to realize how difficult it was to actually run any business in Bosnia and Herzegovina. In particular, huge expenses related to various and seemingly unnecessary government regulations and enormous taxes meant that I would not be able to afford any extra resources to invest in my employees to provide high quality services to my customers.

Though somewhat deterred by these new findings, I paid a visit to the town’s regional business registration office to begin the process of company registration. After some thirty minutes of fast paced and detailed explaining by an elderly lady in charge, I managed to grasp only that it takes about 3 inches of paperwork, over a dozen of approvals from multiple government institutions, a few thousand dollars in fees, and two months to complete.

After finally being allowed to interrupt and ask for a written form of procedures and the forms I was supposed to fill in for submission, I was told that the bureau used to have them in the past but not any more. What? A business registration office with no forms? “What about downloadable online forms?” I asked. Not Existent!

She sympathized with me and then told me that I needed to “somehow find my way around it,” that is to find the forms through some other means, just like other applicants whose manila folders with applications were on her desk.

“So how did they do it?” I asked. She told me that, as in the other cases, she would go out of her way to help me, and in such a way as to suggest that she was not responsible for the fact that the forms were not available in the first place. She instructed me on how I would need to come to her office for a dozen or so times in the coming two months, reassuring me that she would do her best to acquire the forms one by one and give me the specific instructions as we go along with the registration procedure.

In disbelief that they would not even have simple forms and puzzled by this supposedly generous and help from the registrar official, I left to think it all over. I promised to return at a later date with my new company name, as that was the first step in any business registration procedure.

A trusty companion accompanying me at this meeting later told me that I did not understand why things were the way they were and what was to come. “Well, what is to come later?” I asked. “You will eventually be able to see it and you will understand how things are done here,” she replied.

Next was a visit to the government’s Department of Land Use and Urban Development, to ask about how I would go about getting a construction permit. My family owned a large plot of land on an attractive location next to a busy highway. I reasoned that if I could build a small storage facility and a front shop, I could make great savings in not having to pay any rent and owning all of my assets outright — not to mention the fact that the facilities could easily be expanded as the business grew.

After briefly explaining my intent to the office lady in charge, she laughed back at me and told me that it was foolish of me to even come back to my home country. Never mind how I felt at that moment, the answer to my request came back negative.

I quickly became furious with the fact that a government bureaucrat could tell me what I could and could not do with my own property. I told the lady how my father had previously tried to get his own business going on that same land during the previous communist regime forty years ago and that he was denied. Communists had crushed his dream, and the new “democratic” regime was crushing mine.

I did manage to leave the department with a sign of encouragement, though, having been told to come back alone at another time and that we would “see what can be done.” My trusty companion again reassured me that I would be able to settle things once I understood how it was all done.

I must say that with this second encounter something inside me broke that day. Before it, I reasoned that I could still rent a place for my business in case I could not get a construction permit — no big deal. However, after hearing flat in my face that the government would decide what I could and could not do with my property was a whole different ball game. I had big emotions tied to that land, not the least because of my memory as a kid working side by side with my father in that field and learning the importance of hard labor.

The other emotional memory was a bitter one of government encroaching on that land many times and using it temporarily for whatever purposes it deemed necessary. They only informed us about it after they’d settled on it — too late to protest. Similar things are going on there today, with my aging mother watching helplessly and continuously swallowing the government’s arrogant insults. Being able to finally take full charge of that which was rightfully ours would have solved our problems.

After sharing my experiences with the government bureaucracies to friends who were well versed, they reassured me that there was a method to the madness. It is with them that I found out that the subtle language and the way that things were done in the country were there for the purpose of maximizing corruption. I finally understood that cryptic language with which my trusty companion had earlier tried to carefully prepare me for the reality and not sound discouraging at the same time.

I learned that my step-by-step, tedious company registration procedure was supposed to maximize my contact with and dependence upon the government officials. That way I would have to pay for all the services that were within their powers to provide. The fact that those were some of the best paying jobs in the country was irrelevant; these bureaucrats hold decision making powers that were worth a lot of pocket money.

Merely picking up the forms and following registration procedures on my own would not have yielded the many bribes that flowed when the information was not available. Essentially, I was constantly paying for a babysitter, and a similar scenario was awaiting me in the office of Lands and Urban Development.

Paying bribes to get through government obstacles was out of the question for me. Without training in such an immoral craft by any of my American employers and holding my principles close to my heart, I was determined to do things the right way.

Before I would even think of going back to any of those government bureaucracies for a fight, I wanted to find out ahead of time whether it would be worth doing so — as opposed to a never-ending battle with bureaucratic obstacles even once I had my business fully registered and ready to roll.

Many conversations with business leaders soon painted a picture of total government corruption. I found out that the government had its fingers in every aspect of businesses through an army of regulatory agencies that enforced thousands of vague and ridiculous regulations, designed to fill government coffers and inspectors’ pockets with cash from arbitrary fines. So many and so vague were those laws that inspection agencies were guaranteed to find irregularities each and every time.

Well aware of their powers, they grew accustomed to expecting bribes from businesses just to leave them alone. For example, imagine an import-export business whose containers of shipments were delayed at customs because the government officials inspecting the goods had not received a blue envelope with cash in it. This remains a very common practice that all import-export businesses have to deal with or risk enormous financial losses with their often seasonal and perishable goods delayed.

With this simple example of such outrageous arrogance and power of government agencies, you can imagine what other possibilities for corruption exist in a country where the government employs fifty percent of the workforce.

People carrying out corruption in present day Bosnia and Herzegovina and its neighboring countries inherited them from the previous regime of communist Yugoslavia. Since everyone in Yugoslavia was supposedly received equal treatment and care (equally poorly that is), people had developed means of getting treated a little more equally than others.

I have many personal memories of these kinds of stories from the times of former Yugoslavia, which I absorbed as a kid listening to adult conversations in the neighborhood’s weekend gatherings. If an individual needed to have a surgery and spend some time in a hospital, for example, the family members were advised to present gifts to doctors and nurses during their relative’s stay. All hospitals were government run and hospital staff were paid by universal health care, not by their patients. There was no incentive for them to do better than average job, so the bribery became the great equalizer.

The types of gifts given varied upon the professions and personal fortunes of those who were giving them. Other than the obvious cash, these gifts often included agricultural products such as barrels of cheese, dry meat, sacks of potatoes, and the like. This one example of the deeply rooted corruption still runs to the present day. Though, I should pointed out that the wants of hospital workers have grown more sophisticated, and they are accepting only cash nowadays.

In any case, if you want things done in Bosnia and Herzegovina, there is no doubt that you have to know someone or push the right buttons, or else it won’t happen through the normal channels of operation. You won’t get a job, have your application processed, register a business, get a construction permit, receive proper care in hospital, or get basically anything done that has to do with government.

Considering that the government in Bosnia and Herzegovina directly takes 5o percent of the fruits of an individual’s labor and racks up another 20 percent in various taxes, not dealing with the government is extremely difficult.

As for me, all of the above examples described up to this point, plus many others that I encountered and was told about, became more than enough reasons to throw in the towel and give up on my business plans. Yes, I was well aware of what separated a good businessman from a bad one — his ability to adapt to the changing business environment and get over difficult obstacles. However, what if those obstacles are above all else deeply moral ones?

Those were not just a few isolated incidents. Had they been, the extra energy fighting the corrupt bureaucrats in order to get things done might have been worth the expense. I knew, though, that in such an environment with deeply institutionalized corruption, pretty soon any honest entrepreneur would have to give in to the constant demands of bureaucrats and engage in corruption or close down one’s business.

My defeat bore heavily on me, exacerbated by the lack of understanding of critics who did not have sympathies for my unwillingness to bend over and conform. Yet as I retreated back to my Galt’s Gulch in Hong Kong, I realized that I still had a victory to celebrate. It was the moral victory of unwavering principle to do what I believed was right, regardless of how much at odds those actions may have been with my old community.

Though it was the kind of victory not easily shared, it felt good because it was something I knew that no one could take away from me. That whole experience was the beginning of my personal transformation that would eventually set me on the path of lifelong dedication to the cause of liberty.

Jadranko Brkic is managing director of Sloboda i Prosperitet TV (Freedom and Prosperity TV), a libertarian media network in the Western Balkans.

