Bosnia & H.

Bosnia and Herzegovina (pop. 3,982,000; GDP/cap US$2,581) is on the Adriatic Sea, next to Croatia. After Macedonia, it is the poorest republic in the old Yugoslav federation.

Foreign investors are still reluctant to invest in the country. Most of the older political parties in all three ethnic communities—Serbian, Croatian, and Muslim—are linked to organized crime. For example, the Bosnian Croat member of the three-man presidency, Dragan Covic, has been indicted on charges of fraud and bribery.

The rule of law remains virtually nonexistent and local courts are subject to substantial political interference and lack the resources to prosecute complex crimes.

Foreigners enjoy the same rights as Bosnians. They may acquire private property. But the country does not protect property rights adequately. There are no commercial courts and no efficient way to resolve commercial disputes. Property registries are unreliable because property transfers, which should be recorded by the municipality, are not recorded at all because the transfer tax is high.