Tourist Trapped: How foreign money is changing Bosnia and Herzegovina

Our guide had pulled up his van in the Nedžarici district in the east of Sarajevo, opposite to a broken, overgrown building with faded pastel colours blotched across its crumbling structures. An old nursing home he said, or rather, a new nursing home, never used, recently completed before the war broke out. It rests now, its story functioning as a parallel narrative to Bosnia’s wartime experience, destroyed before it even had a chance to fully develop. When confronted with this fact, it is impossible not to notice that the skyline of Sarajevo is awash with contradictions, dominated by buildings still wearing the mark of war against buildings that are new and pristine. The decrepit nursing home was not actually the building that caught my attention as I sat there. It was the building about half a mile to the west of it, gargantuan enough to catch my eye from the background. It was a large modern hotel set imposingly into the Sarajevo sky. 

When asking the guide about it, he complained bitterly about foreign investors buying up cheap land and converting it into exclusive islands of luxury. He spoke about hotels and resorts acting as self-contained hubs for their residents, most of whom refused to face what he termed ‘real Sarajevo’. 

Indeed, the city and its surrounding area has seen massive investment and development projects emerge in the last 20 years. To the west sits one of the most apparent examples of this, the town of Ilidža, famous for its spas, hotels and resorts. The town is close enough to Sarajevo to be considered a suburb and near enough to the city’s airport for it to be a tourist hotspot all of its own. Ilidža is mainly marketed toward Arabs from Gulf countries, particularly Kuwaitis. It is adorned with Arabic signage, offers special services for Arab visitors and relies heavily on Arab money.

Ilidža is a microcosm of a recent trend, which has seen Bosnia become the centre of a new wave of Arab tourism and investment. Figures show that the number of visitors from the UAE have exploded from only 65 in 2010 to 33,000 in 2019. Holidaymakers from Saudi Arabia more than doubled from 2018 to 2019 and Kuwait is ranked among the top 30 nations that make up BiH’s tourism demographics.

Why Bosnia? 

Many see the arrival of Gulf Arab investment and tourism in Bosnia as down to the Arab spring in 2011, which led to the destabilisation of traditional Arab tourist spots such as Egypt, Tunisia and Lebanon. Although this is certainly true, Arab-Bosnia relations go further back. 

Bosnia and Herzegovina experienced an influx of fighters from Saudi Arabia during the height of the Bosnian War 1992-1995, who arrived in an attempt to support Bosniak forces. Although it is not clear how effective these forces were, it shows that Arab Muslims believed they had a religious and political link to Bosnia. This was followed by aid, to help rebuild in the aftermath of the conflict, strengthening these bonds. 

Saudi officials claim that they have given more than $6 billion to BiH over the past twenty years, however, until recently these funds were almost entirely directed towards the reconstruction of religious buildings. According to Saudi figures, they spent $1 billion on “Islamic activities” in BiH between 1992-1998. It was Saudi money that built the King Fahd Cultural Centre in Sarajevo, completed in 2000, which is the biggest Mosque in the Balkans and offers, among other things, free Arabic classes to willing students.  As a result of aid provided in the Bosnian War and its aftermath, Saudi Arabia and BiH’s cultural, political and economic ties were strengthened, ties that would later prove pivotal to Arab investors and holidaymakers. 

Although initially viewed as a strategic and religious priority, BiH has shifted in Gulf Arab nations’ estimations, with the Arab Spring kickstarting the trend. In searching for new locations to holiday and invest BiH presents a unique opportunity. Bosnia is cheap, has a Muslim majority, and its summer weather is much cooler than in the Gulf states.

Also, the long standing political and religious ties with the Saudis specifically and Arab states more generally mean that proactive steps have been taken by the Bosnian government to make Arab tourism easier. This means ending visa restrictions for most Gulf nations, not enforcing land ownership rules too aggressively and creating more long distance flight paths between the countries’ major airports.

Although tourism and investment are separate, it is hard to see one happening without the other. The most high profile cases of Arab investment in BiH are residential real estate projects, generally intended and marketed towards Gulf Arabs either looking for a holiday home or a place to retire. Arab shell companies have bought up huge swathes of land around BiH, especially in the hills surrounding Sarajevo. Massive projects such as the Sarajevo Resort in Hadzici, the Poljine Hills above Sarajevo and Buroj Ozone in Trnovo are currently under construction, with the Dubai development Buroj Ozone being the largest, contracting 3000 villas, a hospital, a sports stadium, and what would become the largest shopping mall in the Balkans. In this regard, Buroj Ozone has earnt itself the title of a luxury tourist city. It constitutes a £2 billion investment in Bosnia and is anticipated to create over 10,000 jobs by the time of its completion in 2025.

Construction projects are not restricted to new developments. Urban redevelopment has also seen interest from Gulf Cooperation Council countries. Sarajevo has seen the erection of two large malls, the BBI Center in 2009 and the Sarajevo City Center (SCC) in 2014: these have been built specifically to cater to Arabian customers with Arabic signage and no alcohol and pork products. The Novotel Sarajevo Bristol, formerly Hotel Bristol which was bombarded during the Siege of the city in the 1990s and restored in 2010, is another example of an urban space specifically designed to accommodate Arab tourists and also observes shari’ah.  

Most of these redevelopments are led in part by the Saudi Al Shiddi Group who were said to bring in over £25 million to Bosnia’s tourist industry in 2017. They are very influential and have lobbied the Council of Ministers of Bosnia and Herzegovina to ease visa restrictions on visitors from the Gulf (visitors from Saudi Arabia still require a visa though). Their most recent development is the alcohol-free Swissotel in central Sarajevo. 

These projects exemplify Arab tourism and investment promise to breathe new life into underdeveloped or dilapidated parts of Bosnian cities and transform Bosnia’s countryside, creating new opportunities for employment and income for everyday Bosnians. It does not come, however, without critics. 

Strings attached

A growing sense of Arab influence has made some Bosnian commentators uneasy about its potential impact. There are worries there might be a push to enforce stricter religious practices, investment could inflate land prices and expanding Muslim presence might increase interethnic tension. 

One of the unique draws of Bosnia as a travel destination to Gulf Arabs is its Muslim majority demographic. However, it deviates heavily from the Muslim majority Gulf states in a number of fundamental ways. Bosnian Muslims are not known to be conservative. Drinking is openly tolerated, pork products are available in supermarkets, and the multi-ethnic, secular nature of the state means that religious diversity is part of the country’s fabric. Seemingly to compensate for these differences, Arab developments are often characterised by their adherence to shari’ah and sometimes insular nature. This has led to the creation of urban spaces and huge resorts catered entirely around a particular nationality or cultural and religious group. Some have become little enclaves for Arabs holidaying or residing in BiH and some alienate other groups through their use of non-native languages and pricing.  

An important thing to note is that it is not just the legacy of Yugoslavia that means BiH is a secular state. It is a crucial aspect of the country’s pragmatic governmental structure, which is designed to prevent religious tensions that have inflamed ethnic disputes in the past. The Federation and Republika Srpska maintain this sometimes uneasy balance by necessitating a somewhat flexible and tolerant attitude towards religious practice. However, some commentators, including the outspoken Esad Durakovic, a professor of Arabic studies at the University of Sarajevo, have written of their concern about the Islamification of Bosnian spaces. He expressed a concern that Bosnian Serbs (who are mainly Eastern Orthodox Christians) might feel marginalised and resentful if Bosnia’s political and cultural development was guided by conservative Muslim values and money.

Durakovic is also concerned about how cheaply land is being sold to Arab developers, stating that ‘“I can guarantee we will have problems, if not now, then in 10 to 15 years”. Echoing the fear that Bosnia might have sold off its ability to fully determine its economic future. A potential consequence of this type of exchange is the gentrification of Sarajevo, where cheap underdeveloped land is bought up and converted into lucrative real estate. As Arab projects find more success, the price of underdeveloped land will continue to go up until ordinary people (most likely Bosnians) find property completely unaffordable.

Many have also been critical of the way land transactions have been carried out. Jasmin Imamovic, major of Tuzla (BiH’s third largest city), declared in 2016 that the city and its surrounding area was not for sale and attacked Bakir Izetbegovic, Bosniak president of BiH from 2010 to 2018, for allowing a lax enforcement of laws against foreigners purchasing land. He said that Arab investors were ‘establish[ing] a firm for 1000 euros and buy[ing] parcels of land’. This claim has been corroborated by a Žurnal (an online resource focused on conducting research) investigation which found a number of improprieties in the purchase of land by Arab shell companies. The unregulated channels being used to buy up land means that many of the protections against disproportionate foreign land ownership have not been enforced. 

Although potentially offering BiH a reinvigorated tourism industry, Arab money risks pricing Bosnian nationals out of their own cities. For instance, already many Bosnians do not have the money to go to the SCC mall to shop. The millions and billions pumped into major construction work by Arab companies like the Al Shiddi Group are mainly focused on providing luxury accommodation and high-end shopping for tourists, not affordable housing for Bosnians. As a concrete example, villas at Buroj Ozone aim to be sold for more than a million euros. Generous estimates place the average wage in BiH around £1000 a month. Even with agreements that allow Bosnians the right to first refusal (the option to buy property before their foreign counterparts), no average Bosnian citizen could afford to buy a property at that price. 

BiH is thus in a precarious situation: with the value of its tourism industry estimated at 2 billion euros (10.2% of the country’s GDP) in 2018, it is fair to say that tourists are not just welcome in BiH, they are critical to its economic well-being. BiH’s reliance on tourism means it is more beholden to foreign visitors’ demands than nations with more diversified economies. With a current unemployment rate of 18% and one of the lowest GDPs in Europe it does not have much power to resist money when it is offered by huge Arab developers, even if it means making concessions.

Perhaps the most heart-breaking consequence of these types of projects, Arab and non-Arab, is they stubbornly and intentionally decontextualise the places they inhabit. They turn a place like Sarajevo, a city brimming with history, into a sanitised resort. No one builds a luxury tourist city in isolation, from scratch, enclosed in the middle of the countryside as a way to absorb the culture of a place, to meet the people, to hear their stories, to understand their perspectives, to see how they live. The SCC mall, which utilises a different alphabet to the one commonly used by locals in its signage, adheres to cultural practices anomalous to its surrounding and prices out the average citizen, signifying a lack of genuine interest in integrating these projects with BiH itself. Therefore, both investment and tourism become completely circumstantial and detached from society, displaying a caustic attitude that sees Bosnian land as separate from Bosnia. 

Wanting an island of familiarity when visiting a foreign land is not an exclusive phenomenon to Arab tourists. Indeed, Western tourists have done the exact same but in reverse, encouraging the building of hotels that serve guests alcohol in the UAE, for example. It is simply the scale of Arab projects that is so gobsmacking. It is estimated that since 2012, 160 Arab associated companies have bought 15.3 million square metres of land around Sarajevo. There is a certain myopic understanding on the part of both Bosnian citizens selling the land and the Arabs buying it. With these projects swallowing up huge portions of green land and converting it into purpose-built, self-contained communities there is no sign of consideration for either the environment or the potentially negative impact on locals. 

The attitude of those involved in these projects means that they are blind to their possible consequences. BiH is a place characterised by its historical and cultural context. In fact, one may argue that it is far more politically prescient to have an understanding of the structure of the BiH state than it would be in somewhere like Britain, France or even Egypt. When architecture is constructed with a certain agenda on a wide enough scale, it can begin to change a place’s identity. 

By superimposing an outside orthodoxy onto this transformative process, pressure is put on the fault lines of a society where historically there was a legitimate threat of cultural erasure and the destruction of ethnic identity. Arab gentrification has the potential to provoke an economic and social backlash. By viewing Bosnian land simply as an instrument for the expansion of capital or a slice of cheap luxury or an alternative to London or Cairo, Arab projects risk ambiguating its underlying value. By reducing BiH down to a set of superficial pros and cons, Arab developers are missing a key contextual dimension: Bosnian land is only Bosnian land because people fought for it to be. 

The creation of these ahistorical spaces means that many from the Gulf States are likely to miss out on the best elements of the country they are visiting: its stories and its people. As a person that has visited Bosnia, delighted by its contrasts and eccentricities and immersing myself as best I could in the tales of its citizens, this feels like a great shame.

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Published by AsfarEurope in London, UK - ISSN 2055-7957 (Online)