Every now and again one sees a Balkan story of truly excellently bewildering folly.

Take this one:

The latest portion of benefits for war veterans paid on May 12 has left the two Bosnian entities with a budget crisis, FBiH Finance Minister Vjekoslav Bevanda said at a press conference on May 13. Out of the required 50 million Euro currently there is only 7.5 million Euro left in the budget of the Federation of BiH.

Bevanda advised a restructuring of the budget. A few weeks back, he warned that BiH is facing bankruptcy by this September, due to the excessive spending on social benefits for mainly Bosnian war veterans and invalids.

And indeed, a few weeks later:

24 June 2008 Sarajevo: Just 434 Konvertible Marks (€221) remains in the budget of Bosnia’s bigger Federation entity as a result of excessive public spending, a Sarajevo daily reports.

This difficult financial situation may result in major social unrest and have significant political consequences ahead of October’s local elections, reports Dnevni Avaz .

Despite repeated warnings by local and international financial experts, the Federation government has kept increasing public spending, including the recent purchase of a motor boat for its exclusive vacation resort in the town of Trpanj on the Croatian peninsula of Peljesac, the paper claimed.

So now in July:

International overseers are calling for crisis talks in Bosnia-Herzegovina this week after one of the country’s two entities finished May with just €221 ($346, £175) in its treasury.

The acute state of the Muslim-Croat federation’s finances has raised questions about the long-term stability of the Balkan state, which relies on a complicated system of inter-ethnic checks and balances.

Don’t you just hate a job left unfinished? Why did they not take the €221 and have a slap-up lunch properly to celebrate the complete defeat of intelligent budgeting? 

The other BH Entity Republika Srpska is not an obvious choice for a champion of rational public spending, yet the FT acknowledges that its performance is far better:

The country’s other entity, a Serb-dominated republic fiercely protective of its autonomy, has fared better. It finished last month with 150m convertible marks (€75m) left in its coffers, according to officials …

The Serb republic faces similar welfare demands, but has fewer ex-soldiers and fewer disabled or missing.

After years as a “black sheep” associated mainly with suspected war criminals, the Serb republic has streamlined its bureaucracy and earned hundreds of millions of euros from privatisation sales in the past two years.

All this after twelve years of close and intrusive international oversight of the Federation’s affairs.

This sort of dismal irresponsibility (obviously compounded by international unwillingness to deal firmly with high-level Federation incompetence) undermines the otherwise plausible Bosniac-led general case for more centralising more functions at the BH level, to help Bosnia and Herzegovina move faster towards eventual EU membership.

The Republika Srpska leadership credibly can say that it is not fair to expect them to tie their fortunes more closely to its partner Entity run in such a poor way.

Back in 1996 Carl Bildt warned that the readiness of the Bosniac leadership to throw public money at their ‘veterans’ for crass political reasons – regardless of whether they had the money to throw – was a recipe for disaster.

Greetings, disaster.

What kept you so long?