Tag: History

Bosnia

In my last blog I condemned the US’s illegal attack on Venezuela and worried about what might follow given the apparent lack of a broadly considered and agreed plan. In this blog I will contrast it with the approach taken at the end of the vicious civil war between the Croat, Serb and Bosnian populations of Bosnia and Herzegovina.

The fighting in Bosnia and Herzegovina ended with the signing of the Dayton accords. “Three decades ago, in November 1995, the U.S.-brokered Dayton accords ended the Bosnian war, a three-and-a-half-year ethnic conflict that killed roughly 100,000 people and displaced two million. The settlement imposed a complex power-sharing structure on a divided country, promising the state of Bosnia and Herzegovina a new start.” This quote is from an excellent assessment of that agreement and the new constitution for Bosnia and Herzegovina that it created by Elmira Bayrasli in Foreign Affairs: “Bosnia’s Unfinished Peace”

I drafted the monetary section of that constitution, which established a central bank bound by currency board rules (i.e. no monetary policy as the money supply is determined by the public’s demand for and willingness to purchase its currency). I also led the IMF teams that drafted the Central Bank Law that merged the existing three central banks (Croat, Serbian and Bosnian) into one national bank and currency. The negotiations with the three (obviously) future governors of the Central Bank of Bosnia and Herzegovina (CBBH) lasted for over a year of heated discussions of the CBBH’s powers and the details of its currency notes. For details see my account in “One Currency for Bosnia”  Surprisingly to many the CBBH’s currency board rules were accepted instantly by all three with no debate. The reason was that the three didn’t trust one another and currency board rules eliminate an monetary policy discresion.

The Dayton accord was the product of intense negotiations between the Presidents of Croatian, Serbian and Bosnian provinces of B&H and diplomates from the US, UK, EU and Russia culminating with the agreement at the Wright-Patterson Air Force Base in Dayton Ohio—the Dayton Accord. To lay out the sharp contrast between these negations and the lack of them in the current “take over” of Venezuela, I will quote extensively from Wikipedia:

“During September and October 1995, world powers (especially the United States and Russia), gathered in the Contact Group, pressured the leaders of the three sides to attend settlement negotiations; Dayton, Ohio was eventually chosen as the venue.

“Talks began with an outline of key points presented by the US in a team led by National Security Adviser Anthony Lake in visits to London, Bonn, Paris and other European stops 10 – 14 August 1995. These included Sochi, to consult Russian Foreign Minister Andrei Kozyrev. Lake’s team handed off to a separate US inter-agency group led by Assistant Secretary of State Richard Holbrooke, who went on to negotiate with Balkan leaders in their capitals. The Holbrooke crew conducted five rounds of intense shuttle diplomacy from August to October, including short conferences in Geneva and New York that resulted in the parties’ adoption of principles for a settlement on 8 and 26 September respectively.

“The Dayton conference took place from 1–21 November 1995. The main participants from the region were the President of the Republic of Serbia Slobodan Milošević (whom the Bosnian Serbs had previously empowered to represent their interests), President of Croatia Franjo Tuđman, and President of Bosnia and Herzegovina Alija Izetbegović with his Foreign Minister Muhamed Šaćirbeg.

“The peace conference was led by US Secretary of State Warren Christopher, and negotiator Richard Holbrooke with two co-chairmen in the form of EU Special Representative Carl Bildt and the First Deputy Foreign Minister of Russia Igor Ivanov. A key participant in the US delegation was General Wesley Clark. The head of the UK’s team was Pauline Neville-Jones, political director of the Foreign and Commonwealth Office. The UK military representative was Col Arundell David Leakey. Paul Williams, through the Public International Law & Policy Group (PILPG) served as legal counsel to the Bosnian Government delegation during the negotiations.”

The history and situation of Bosnia and Herzegovina was dramatically different than Venezuela. Ending its civil war required extensive negotiations and considerable international oversight of compliance to the agreed arrangements. As noted in the Foreign Affairs article sighted above, a serious mistake was holding national elections far too earlier. The intense hatreds of the three national groups were not given enough time to soften resulting in the election of hardliners and the continuation of the war by other means. The second mistake was the failure of international oversight (the UN High Representative) to fully exorcise its powers. None the less the three nation country has held together peaceably for three decades following its civil war.

While the political situation in Bosnia remains fragile (see the excellent article sited above in Foreign Affairs) the central bank itself has been a great success, widely trusted and respected by most citizens from the three provinces. I attribute this to its enlightened leadership and the central bank law with its currency board rules. Tragically the DOGE chain saw seems to have eliminated US capacity for effective diplomacy. “At the breaking point”

Trade

Without trade each household/family would have to be self-sufficient, i.e., would only have to consume what they themselves could make, grow or do. No one would doubt the dire poverty the world would endure. Even trade limited to your neighborhood, with each household specializing in a few things to trade with other families specializing in other needs or wants would significantly increase everyone’s income. The wider the range of trade the greater the degree of specialization and increased income possible.

Expanding the potential for trade requires the ability to transport goods and serves over longer distances. The benefits of such connectedness extend well beyond higher incomes. Quoting from George Will’s wonderful book The Conservative Sensibility: Referring to the:

“Erie Canal. [Dewitt] Clinton [the sixth governor of New York] saw this project as a means of preventing states in the West from detaching themselves from the Union. The canal would “bind the union together by indissoluble ties” because the people would be “habituated to frequent intercourse and beneficial inter-communication,” and all Americans would be “bound together by the golden ties of commerce and the adamantine chains of interest.” The canal also, and inadvertently, helped to bring down the old order in Europe. By bringing cheap wheat from America’s Great Plains, the canal struck at the roots of Europe’s landed aristocracy.”

Implicit in the above is private ownership of one’s production. People work hard for their own benefit but to benefit from trade they must take account of the needs and wants of others. Trade must be win-win or it will not take place. I benefit from selling my production and you benefit from buying it. Communism—communal production—lacks the personal (selfish) incentive to work hard and has broadly failed as a system. Also from George Will: “In China, once collective farms were disbanded in 1978 under the leadership of the reformer Deng Xiaoping, agriculture output doubled in the space of just four years.”

The topic of trade keeps returning and I have written about it often. Rather than repeat myself, yet again, I will share some of those earlier blogs:

Econ 101—Trade in very simple terms
The politics of Trade
Econ 101: Tony Judt on Trade

Our President

When our government functions properly, each President is elected because the majority of voters trust his/her leadership and largely agree with his/her policy proposals. When he/she assumes office he/she appoints department and agency heads and senior management who agree with his/her policies and are committed to implementing them. However, the vast majority of government employees (the civil service) hold their jobs because of their nonpartisan competence to execute the regular functions of government. Though elected to implement his/her promised policies, the President heads the government for the benefit of all Americans, not just those who voted for him/her.

Our current President, Donald Trump, has adopted a very different approach. At Charlie Kirk’s memorial service in Arizona on September 21, 2025, President Donald Trump gave a eulogy that stated his approach clearly. Following a speech by Charlie’s widow— Erika Kirk– who said she forgave her husband’s alleged killer and urged love for one’s enemies—Trump said, “That’s where I disagreed with Charlie. I hate my opponent, and I don’t want the best for them. I’m sorry, Erika. Maybe you and the group can convince me otherwise, but I can’t stand my opponent”. 

Since returning to office in January 2025, Trump has launched a sweeping campaign to use the federal government against those he perceives as political enemies, fulfilling his campaign promise of “retribution.” His actions have combined formal Justice Department prosecutions with broader administrative, financial, and regulatory retaliation against critics and opponents.​

Justice Department Prosecutions

Trump’s Department of Justice (DOJ), led by Attorney General Pam Bondi, has indicted several high-profile critics including former FBI Director James Comey, New York Attorney General Letitia James, and former National Security Adviser John Bolton. Many of these cases were initiated shortly after Trump publicly urged prosecutions on Truth Social or in speeches.

Expansion of Presidential Control

Under a broad interpretation of the “unitary executive” theory, Trump has expanded direct presidential control over previously independent agencies. He dismissed thousands of career employees in agencies such as the IRS and DOJ, replacing them with loyalists, and ordered investigations into opponents across multiple sectors, including education, media, and civil society. His administration’s “Weaponization Working Group” reportedly monitors and investigates state and federal officials who previously investigated or criticized him.​ Most concerning he has fired all Inspector Generals who monitor the executive’s compliance with the law.

Use of Financial and Regulatory Power

Trump has also leveraged federal contracting and tax policy to punish critics. Liberal law firms, universities, and media outlets that opposed him have been subjected to audits, funding withdrawals, or bans on federal contracts. The IRS—restructured under his direction—has reportedly targeted nonprofit organizations and universities seen as left-leaning, threatening to revoke tax-exempt status for political reasons.​

Broader Campaign Against Civil Society

The administration’s actions have extended to immigration and education systems. Activists, international students, and visa-holders accused of criticizing Trump’s policies have faced deportation or visa revocations, according to multiple reports. Tourism and foreign students are important exports. Their reduction is adding to our trade deficit. Federal oversight of university curricula and media licensing has been tightened.​

Political and Legal Reactions

Democratic lawmakers like Senator Chris Murphy have called these measures an “authoritarian use of presidential power,” warning that Trump’s systematic punishment of dissenters marks “one of the most dangerous moments America has ever faced”. Foreign governments and legal scholars have echoed fears of democratic backsliding as independent institutions are subordinated to presidential control.​

In sum, Trump’s second administration has explicitly weaponized federal agencies to investigate, prosecute, and financially damage those viewed as enemies, blending legal action with bureaucratic pressure in what observers describe as an unprecedented campaign of political retribution.  Trump’s spread of hate is intensified by his frequently claimed authority “to do whatever I want as president” based, he claims, on Article II of the US constitution.

Trump’s bullying has not stopped at our borders. He has attacked our friends with tariffs and sanctions losing allies right and left. The American beacon on the hill has sunk to the bully in your face. America’s place in the world is sinking fast. Will the Republicans on the Hill wake up and stop him. The Supreme Court has been a mixed bag.

European Vacation Musings

Following a very enjoyable river cruise from Amsterdam to Budapest, and three days in Prague, Ito and I are now relaxing in Munich for three weeks before traveling on the Bob Mundell’s annual gathering of economists at his home near Siena, Italy.

This afternoon, while reading my first book on an iPad (my friend Michael Lind’s new history “Land of Promise: An Economic History of the United States”) in our hotel lobby, I was intrigued by overhearing the hotel manager discussing some repair work with two tradesmen in English. Obviously the workers were not German. After the manager left, I was further intrigued by the fact that the workers continued to convers with each other in English even though English was obviously not their first language. However, as is common in Europe, it was the common second language shared by them.

Several hours later a third worker joined the first two and all three conversed in English. I overcame my natural reserve and called out to one of them. “Excuse me. You are all speaking English to each but English is obviously not your first language. Where are you each from.” “I am Iranian,” the obvious leader of the group replied. “The electrician over there is from Spain, and our IT guy there is also from Iran.”

I love such things. It makes the world more interesting. But it has also made Germany, two Iranians and a Spaniard better off as well.

It reminds me of a conversation I had a few years ago in Dubai with an Arab citizen. Less than twenty percent of the residents of the United Arab Emerates (UAE) are Emeratis. Over 50% are Pakistanis, Indians, Filipinos, and Bangladeshis, whose second language is English. “Why is it,” I asked, “that you Arabs all speak such good English.” “We have to,” he replied in his pristine white thawb. “English is the language of international business and we are businessmen. In addition, it is the only way we can talk to the help.”