Energy Power Play: Bosnia and Herzegovina Between Resources, Monopolies and Geopolitical Pressures

Written by: Kenan Hodžić

There are many interesting aspects to consider when we think critically about the diagnosis of the situation regarding system management and strategic planning in the construction of energy infrastructure. If the text before you were satirical in nature, I would say that the political elite cares about their country, the population, needs, living standards, socio-economic recovery, security, pronatalist measures and the overall strengthening of democracy and institutions.

The energy system is recovering, investments are being made in new capacities, and expert staff are being trained and employed to work on a long-term positive perspective for the benefit of all of us.

The text below is not satirical in nature, but rather a separate opinion on opinions about where we are and how to move forward. Certain highlighted theses are not sorted by their importance but by intuition and the criterion of relevance or so-called trending.

There is no shortage of new and old problems that require precious attention. After the summit of the Shanghai Cooperation Organisation in Tianjin and the military parade in Beijing, it is completely clear that the old integrated system of supply and trade is giving way to regionalised ecosystems, each developing its own rules, currencies and security architectures. Meanwhile, for example,
the closer rapprochement between Russia and China (see: Power of Siberia 2), and parallel separation from the West, confirms the enduring historical truth that natural resources are never just economic goods but decisive geopolitical instruments.

Energy, water, rare raw materials, arable land and advanced technologies today determine the strategic competition of global powers. Access to, control and use of these resources have become increasingly contested, prone to conflict and driven by sophisticated
mechanisms of power. The fragmentation of the global energy market best illustrates this dynamic. This process is unfolding in parallel with the return of the logic of former bloc confrontation. The war in Ukraine has reactivated the bipolar West-East framework, here and there consolidated Euro-Atlantic West (NATO, EU, G7), and on the other side an informal Sino-Russian bloc, further strengthened through formats like BRICS or SCO. The geopolitics of resources today goes beyond oil and gas.

Security of supply of water and food, rare minerals and semiconductors are strategic levers of power. In parallel, digitalisation has turned into a new battlefield. Digital sovereignty, network control, dominance in AI technologies and disinformation are increasingly used as weapons, while building the resilience of critical infrastructure becomes the first line of defence in the 21st century.

In this shaped landscape, Bosnia and Herzegovina occupies a unique strategic place. With significant hydropower capacities, potential in renewable sources and a geographical position at the crossroads of European energy transit routes, the country has a chance to become a regional energy hub. However, this potential depends on two key factors: accelerated
investments in infrastructure and the application of advanced technologies that would integrate BiH into European and transregional energy networks. If these resources are used in the right way, Bosnia and Herzegovina can become a key energy player in the region. It can, but will it?

For example, the European automotive industry, a pillar of the European economy, is facing a crisis in the supply of critical ores. Whoever controls bauxite, lithium or steel, in a certain way shapes the European economy. The same applies to electricity.

Power plants, mines, electricity grids and gas pipelines are instruments of political pressure. Bosnia and Herzegovina, as a fragmented and institutionally weak state, is particularly vulnerable to such pressures and it is truly worrying that we have not
moved from the deadlock for the third decade. The resulting vacuum in the “overnight” transition is used by geopolitical intermediaries with foreign state-backed capital for expansion into peripheral regions. Take, for example, Hungary, led by Viktor Orbán and the approach of a sub-imperial power that only deepens dependence.

Not every Hungarian investor is part of Orbán's narrow circle of loyal oligarchs. The recent case has laid bare the “courting” of foreign investments. The rough sketch of the “SE Trebinje 1” project and the abandonment by Hungarian businessman Roland Lugos, while the concession is taken over by a company with no revenue or employees, shows that it is often not the political-economic elite that comes to BiH, but third-tier investors, which certainly further increases the risks.

It seems that the hubs through which we enter certain arrangements do not strengthen resilience at all and are indicators of the catastrophic state we are in.
However, the key problem is not just foreign capital. In BiH, a layer of domestic tycoons has emerged, grown from post-war illegal networks. Ownership of energy capacities, mines, and strategic industry, of which there is not much, to everyone's credit, warns that various figures are continuously building parallel chains of capital in which energy, mining and heavy industry are turned into private monopolies.

They are not just businessmen, they are levers of the political system. They manage regulatory institutions, influence negotiations on EU integration and use public companies as their own ATMs. In such a system, the energy sector is not a pillar of development, but an instrument of private rent.

Concessions are awarded in secrecy, contracts contain arbitration clauses that expose the state to enormous financial risks, and public companies take on debt without a strategic vision. The result is arbitration awards that bring millions in losses. These are not just economic costs, they are security shocks, because they specifically threaten the stability of supply and the financial sustainability of the energy system. The thesis that BiH is a hostage makes sense only if action is taken towards
its liberation.

Finally, the public discourse is dominated by rhetoric about the “green transition”. And on the ground, private capital invests in short-term, speculative projects. Reclassification of forests and state land for new projects is carried out non-transparently and often illegally. At the same time, investments presented as renewable energy sources are often used only as a front for short-term profits, while the real energy system remains unprepared for the transition. Increasingly, various
experiments of this puzzle show the face of profit and control, not sustainability and security.

Meanwhile, the announced increase in gas tariffs by more than 100% by 2026 changes the entire picture. While prices rise, BiH's industrial base, already decimated by transition and privatisation, enters a new cycle of weakening. Instead of using the price increase for strategic investment in diversification and industrial renewal, we risk energy insecurity becoming the main brake on development and integration.

If we want to avoid a scenario of permanent dependence, urgent measures are needed. By order of importance, the adoption of the Law on Critical Infrastructure Resilience
with clear plans and security standards would be a great step forward and hope that the political elites are not deaf-mute and completely alienated. In addition, screening mechanisms for foreign investments in the energy sector with impact assessment and greater transparency of concessions with public disclosure of contracts and registers of beneficial owners, along with the fundamental carrying capacity of BiH in all strategic energy projects, would be premises for recovery and greater trust in processes of the highest importance. A database with reviews of arbitrations and contracts, and active work on preventing harmful awards, moves us away from a new deepening of the crisis we are in.

Bosnia and Herzegovina is today unique in its fragility. Energy security and all its components cannot be reduced to the issue of the market or investments at any cost. Without rules of the game that will protect resources, prevent debt and ensure diversification, we risk losing not only energy but also the state, because in the 21st century, energy security is state security.