Turkish firms to build and finance US$3.5 billion Sarajevo-Belgrade highway

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Turkish firms to build and finance US$3.5 billion Sarajevo-Belgrade highway

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The Ministers of Transport of Bosnia and Herzegovina and Turkey have signed a Letter of Intent to construct a new highway between Sarajevo and Belgrade, the capital cities of Bosnia and Serbia, respectively.

The project will be implemented through a build-operate-transfer model, at an estimated cost of EUR3 billion (US$3.5 billion).

Turkish firms will construct the highway using domestic labor force and partly finance the project. Turkey's Eximbank will also provide financing.

The project has been in development for over two years, having failed to progress out of initial planning stages due to disagreements over the route. With no sign of an imminent resolution, this stalemate threatens to override the progress made this week.

The power of the central government of Bosnia and Herzegovina is highly limited as the country is largely decentralized, comprising two autonomous entities: the Federation of Bosnia and Herzegovina and Republika Srpska (RS). The two entity governments both want the highway to run through their jurisdiction.

Turkey has said it would finance both proposed routes. The ministries are now aiming to agree technical details by the summer, so that tenders can be launched.

However, the RS Minister of Transport has stated that the Letter of Intent has no importance before an agreement with the RS is reached, threatening the central government's plans and the proposed schedule.

Representatives of the central government have not yet publicly responded to this, so it is not yet known how the project will proceed. As well as the route of the highway through the country, it seems reasonable to presume that the entity governments of Bosnia and Herzegovina will want a say on Turkey's leading role.

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