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Nov 16, 2015 | 10:34 GMT

Has the Dayton Accord Run Its Course?

(ELVIS BARUKCIC/AFP/Getty Images)
Forecast Highlights

  • Bosnian stakeholders' inability to agree on a replacement for the Dayton Agreement will allow the country's divisions to persist.
  • Political fragmentation will continue to undermine Bosnia's economy, meaning new episodes of social unrest and ethnic-related violence cannot be ruled out.
  • The European Union will continue to have some influence over Bosnia, but probably not enough to unite the country's competing communities.

November 2015 marks the 20th anniversary of the Dayton Agreement, the milestone deal that ended the three-year Bosnian civil war between Serbs, Croats and Bosniaks that cost around 100,000 lives. But two decades after the conflict's end, the interethnic hostilities that generated the war persist.

Critics of the agreement say it froze rather than solved the conflict, leaving each ethnic group unsatisfied with the results. Others say it created a political system that, in addition to being extremely complex, put too many decisions in the hands of foreign actors unaccountable to Bosnians. Most Bosnian politicians and foreign officials now agree that the Dayton Agreement has run its course, but they cannot agree on how to modify or replace it. So while the deal has been remarkably successful at securing peace in Bosnia, it may also contribute to new conflicts in the future.

No Replacement for an Aging Agreement

The Dayton Agreement divided Bosnia into two substates, the Federation of Bosnia-Herzegovina (home to large Bosniak and Croat populations) and the Republika Srpska (home to a large Serbian population). A third, smaller entity, the Brcko District, was created in the late 1990s as a self-governing unit. A council of ministers on which the three main ethnic groups share equal representation officially governs the whole country, but the two substates enjoy significant autonomy over most political and economic issues.

Complicating matters, the Dayton Agreement also established a Peace Implementation Council, a special commission with oversight of the implementation of the peace accord that enjoys governmental and legislative powers. The Peace Implementation Council includes representatives from 55 countries and international agencies and can annul legislation that violates the Dayton Agreement. It can also remove officials who violate the peace accord.

While this system has brought some stability to Bosnia, it has also perpetuated ethnic divisions and complicated decision-making. Bosnian politics are still divided along ethnic lines, with each group afraid of losing power and influence relative to the other two. Many voters still support parties that represent their ethnic, rather than general, interests. This in turn causes a resurgence of nationalist rhetoric every time there is an election. And the ability of the three main ethnic groups to veto decisions made at the national level makes the Bosnian policy process extremely slow and ineffective.

Bosnians also have different views regarding the future of their country, with Bosniaks generally supporting a unitary state with a strong central government and Croats and Serbs generally demanding more autonomy for their substates. (There are internal divisions, however: Some Croats are demanding a new substate in which they are the majority, while some Serbs demand full independence.)

As a result, each group feels the Dayton Agreement has become obsolete, but they cannot reach a consensus on a new system to replace it. Inertia, fear among local elites of losing influence and prerogatives, and a large international presence are the glue keeping Bosnia together. This political and ethnic fragmentation has offered fertile ground for separatist feelings in the Republika Srpska.

Serbian Separatism

Since becoming the Republika Srpska's president in 2010, Milorad Dodik has repeatedly threatened secession. Over the past five years, Dodik has frequently promised to call for a referendum on the Republika Srpska's future, vowing to protect ethnic Serbians from alleged attempts by the Bosniaks to take control of the substate.

More recently, Dodik has focused his rhetoric on the Bosnian judicial system. In July, the Republika Srpska's parliament authorized a referendum to decide whether Bosnia's state-level courts have power in the Republika Srpska's substate territory. The vote was scheduled for November 15, but it did not take place. Dodik has accused Bosnia's state-level judiciary of being biased against Serb victims in war crimes cases. While Dodik has argued that the referendum is aimed solely at defining judicial powers, opposition parties have said that it represents a de facto declaration of independence.

Russia has supported Dodik. In July, a Russian Foreign Ministry official criticized the inefficiency of Bosnia's justice system and praised Dodik's referendum plan. Moscow is in fact one of the main political allies of the Republika Srpska, which Moscow sees as a way to maintain a political foothold in the Balkans. By contrast, the European Union and the United Staves have criticized the referendum, warning against its impact on Bosnia's political and ethnic stability. And even the government of Serbia, traditionally one of the Republika Srpska's main supporters, said the vote should not be held.

The Peace Implementation Council could annul the referendum results, but even so, political friction between the Republika Srpska and the rest of Bosnia will continue. Dodik, for example, has said the Serbian substate will hold an independence referendum in 2018. Clearly, changes to the Dayton Agreement's architecture of the Bosnian state are needed if such tensions are to be reduced.

Obstacles to Change and Stability

Bosnia's extremely complex political system and ethnic configuration make change very difficult to achieve. None of the main ethnic groups is likely to make concessions in what has become a zero-sum game, meaning political and ethnic friction is likely to persist.

The resulting political fragmentation will continue to undermine Bosnia's economy. According to the International Monetary Fund, Bosnia's GDP will grow by 2 percent in 2015 and by 3 percent in 2016. However, the country's large public sector, where corruption and nepotism are commonplace, will prove difficult to reform. Attempts to do so will face strong resistance, both from interest groups and from workers and people who depend on the state.

As a result, Bosnia will continue to depend on foreign aid to function. The European Union, for example, has allocated some 166 million euros ($178 million) in financial assistance to Bosnia for the 2014-2017 period, while the United States has promised $37 million in assistance for 2016. Bosnia also receives significant aid and investment from Turkey.

A Snapshot of Bosnia

Unemployment will remain quite high, with the gray economy offering only partial relief for the unemployed. According to the World Bank, almost a third of Bosnia's active population is unemployed (with almost two-thirds of those under 24 unemployed). This means that Bosnia will continue to see sporadic episodes of social unrest and anti-establishment protests. In February 2014, the country was rocked by street demonstrations against state corruption and high unemployment. The protests were notable because they were not fuelled by ethnic issues, but by social and economic problems.

On top of these structural challenges, Bosnia faces fallout from the European refugee crisis and from organized crime and Islamist militancy. As more countries along the Balkan route start closing their borders and building fences, a larger number of asylum seekers from the Middle East and South Asia will get stuck in the Western Balkans in the coming months. This will increase the likelihood of violence in the region, whose pre-existing problems (which range from ethnic tensions to high unemployment) could worsen as the number of involuntary migrants rises.

Meanwhile, organized crime will continue to plague Bosnia for the foreseeable future since the country's weak judicial system and feeble border controls continue to make it an attractive transit route for drug and human trafficking into Western Europe.

Religious extremism is another source of concern for Bosnian and international officials. In November, a Bosnian court sentenced a Muslim preacher to seven years in prison for inciting terrorism and recruiting fighters for the Islamic State. Several hundred Islamic State fighters are believed to have traveled to Syria and Iraq from Bosnia, Serbia, Albania and Kosovo over the past three years, and some have returned to the Western Balkans.

Making matters worse for Bosnian stability, the stabilizing influence the European Union has played in Bosnia is waning.   

The Risk of Declining EU Influence

The European Union still wields some influence in Bosnian politics. In 2003, the European Union identified Bosnia and other countries in the Western Balkans as potential candidates for membership in the Continental bloc. A stabilization and association agreement, a document that establishes a series of economic, political and social reforms that Bosnia must implement before it can become an official candidate country, entered into force in 2015. In broad terms, the Bosnian establishment supports EU accession.

A recent report by the European Commission said Bosnia is "back on the reform track," but stressed that cooperation and coordination between all levels of government remain problematic. More important, the combination of Bosnia's difficult reform process and the European Union's political crisis will slow down Bosnia's EU accession. As the prospect of membership dims, so too will EU influence in Bosnia wane, with serious consequences for the country.

If local politicians feel that Bosnia does not stand a real chance of eventually joining the European Union, they will probably lack the incentive to implement reforms. In this scenario, populist and nationalist rhetoric would continue, making ethnic conflict a permanent threat. At the same time, high unemployment and a lack of meaningful prospects for economic growth will continue to create a fertile ground for social unrest and protests against the establishment.

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