By Gordana Katana
BROD, Bosnia (Reuters) - A row between Croatia and Bosnia on the ecological impact of a Bosnian oil refinery across their river border reflects a growing discrepancy in environmental standards in the EU candidate and its neighbors.
All Western Balkan countries want to join the European Union and will have to harmonize ecological standards. But modernizing or closing polluting socialist-era industries could be very costly or boost unemployment in fragile economies.
The contrast is especially apparent on the two banks of the northern Sava river, a natural border between Croatia and Bosnia that also divides the two towns, Slavonski Brod and Brod.
In Slavonski Brod, Croats complain about the smell and pollution coming from the Bosnian refinery and urge action. Bosnians on the other side of the border, in Brod, deny that any smell or pollution comes from their major employer.
"I live by the Sava river and on some days the smell coming from the refinery is unbearable," said Marinka Babic, a pensioner from Croatia's Slavonski Brod. "I have problems with breathing on such days and flowers in my garden tend to die."
On Tuesday, Croatian and Bosnian environment ministers met at the Brod refinery, owned by Russian company Neftegazinkor, a unit of state-owned Zarubezhneft, to discuss reducing emissions of what Croatia says are harmful gases.
Bosnian officials said the refinery operates according to the laws and regulations of the Serb Republic, a Bosnian autonomous region where the refinery is based.
But they acknowledged the laws are based on different environmental standards than in Croatia, which expects to join the European Union in 2013 and has adjusted its standards to those in the wealthy bloc. "The standards have not been harmonized," Mladen Zirojevic, Bosnia's minister for foreign trade and economic relations, told reporters after the meeting.
EX-YUGO STANDARDS
Croatia started modernizing its two oil refineries in Rijeka and Sisak in 2005, and expects to complete the overhauls this year. The Serb Republic is using the standards inherited from socialist Yugoslavia, allowing a higher presence of harmful gases in the air, according to Predrag Ilic, the director of the regional ecology institute.
The Brod refinery, which resumed production in late 2008, has modernized one production line and pledged to refurbish another, moves expected to take five years. Until then, Slavonski Brod will have to cope with harmful gases, which Mayor Mirko Duspara says are four times higher than is allowed.
"It would be good that the refinery starts production at a new plant," Duspara told Reuters. "This pollution is equally damaging for the both parties."
Bosnia and Croatia were parts of Yugoslavia before its 1990s wars, along with Slovenia, Serbia, Macedonia and Montenegro. All these states today have ecological problems related to old industries.
AGRICULTURE IMPACT
In Serbia, the Pancevo oil refinery, just outside Belgrade, and copper mine and smelter RTB Bor in the southeast pose major ecological problems.
Pollution from the Pancevo refinery, part of Serbia's oil producer NIS that is majority-owned by Russian group Gazprom Neft, is so high that authorities had to install devices triggering alerts when emissions of harmful gases reach dangerous levels.
Last October, local health authorities declared a state of emergency following a massive increase in toxic fumes in the air and ordered people to stay indoors.
NIS said last month it would invest $740 million to complete the overhaul of its refineries in 2012 and harmonize the quality standards of the fuels with those in the European Union.
In the Bor mine area, scarred over decades by mining with Soviet-era technology, the riverbed of the Borska Reka river is so polluted with heavy metals that more than 60 percent of fertile soil is irreparably damaged, studies show.
Similar agricultural damage occurred in Montenegro, where the KAP aluminum smelter occupied some of the most fertile land in the mountainous Adriatic country.
KAP was privatized by Russian tycoon Oleg Deripaska, who along with the government owns a majority stake in the smelter, but has not addressed the environmental conditions of its privatization agreement.
In the area of neighboring Albania around the Elbasan steelworks, the Communist-era giant is mostly dismantled. Yet pollution has resulted in some deformities in animals there.
(additional reporting by Miran Jelenek in Brod; Igor Ilic in Zagreb; Aleksandar Vasovic and Una Sijacic in Belgrade; Petar Komnenic in Podgorica and Benet Koleka in Tirana; Writing by Daria Sito-Sucic; Editing by Adam Tanner)
