Ian Bancroft in Belgrade -

Though Bosnia-Herzegovina has finally got a new government - after more than 14 exhaustive months from the general elections in October 2010 - there is little cause for optimism that an end to the country's political paralysis is in sight.

An economist and former finance minister of the Bosnian Federation (the Croat-Muslim part of the country's two entities), Vjekoslav Bevanda, is the new chair of the new Council of Ministers. Zlatko Lagumdzija of the Social Democratic Party (SDP), who dropped his previously determined bid to become prime minister, will serve as foreign minister. As in the previous government, Serb parties will control the main economic portfolios - with former prime minister Nikola Spiric as finance minister - whilst the ministerial posts of defence and security will be filled by Bosniak parties.

By finally securing agreement on the 2011 budget, Bosnia's political elites averted a potentially catastrophic crisis that would have left state institutions - which had already been functioning on temporary financing - without money for salaries and other expenses. This is likely to provide only a short-term fix, however.

Government minimalism

The new government's policy platform will resemble something of a minimalist masterpiece, with agreements on the 2012 state budget and the 2012-2014 general fiscal framework - prerequisites for much-needed EU and International Monetary Fund (IMF) financing - one of the few major realms in which a sustainable consensus is viable.

Nonetheless, as Anes Alic, executive director of ISA Intel consulting in Sarajevo, tells bne, "there will be numerous clashes over the funding of various institutions and organisations. The new government has already lost a year and a half of its mandate and there is little in the way of a strategy for the remainder."

Despite some short-term momentum on issues such as the census, state aid and the budget, Obrad Kesic, a political analyst from Washington, DC and a senior partner with TSM Global Consultants, says there are many signs "that 2012 will not see any major breakthroughs on the deeper and more fundamental problems plaguing the country."

One of those fundamental problems concerns the balance of power between the "entities" and the "State", with the Republika Srpska (Bosnian Serb Republic) favouring a scaling-back of the latter's role (if not outright secession from the state). As Kesic emphasises, "the continued deep dissatisfaction within the Republika Srpska over the cost, anti-Serb bias and poor efficiency of state institutions and agencies will lead to increased efforts to restore competencies, especially financial and economic, which in turn will lead to additional confrontations between the Serb and Bosniak political elites."

The centrifugal forces ripping the fragile state apart have been further raised by tensions between Bosniaks and Croats within the Bosnian Federation. An SDP-led push to centralise the Bosnian Federation - including a proposed law that would transfer police authority from the cantonal to the entity-level - is further straining relations with the main Croat party, the Croatian Democratic Union (HDZ), which still harbours grievances from their exclusion from the Bosnian Federation government formed early last year.

The predominantly Croat city of Mostar is likely to be the focal point for such confrontation, with continued disputes over power sharing following a November 2010 Constitutional Court ruling that certain provisions concerning the City Council's electoral system were unconstitutional. With local elections ahead in the autumn of this year, the prospects for a stable political environment remain extremely dim.

In such a context, Alic believes that it is "fairly certain that they will not be able to implement a crucial EU requirement to amend the constitution", in order to bring it into line with the European Court of Human Rights' ruling in the Sejdic-Finci case that Bosnia's electoral stipulations were unconstitutional. With much of the initial optimism that the ruling would leverage profound constitutional change having largely dissipated, it is hoped that the parties can, at best, agree upon minimal amendments that would satisfy the EU.

Badmouthing

With unemployment rising and dissatisfaction mounting, Bosnian politicians are increasingly turning to nationalist rhetoric to distract from the problems at hand. The recent 20th anniversary celebrations of the foundation of the Republika Srpska, for instance, led to an outpouring of claims that the Republika Srpska is a "creation of genocide" and therefore illegitimate. Many of the reactions served to demonstrate the extent to which ethnically-based hatred persists.

Looking ahead, the profound economic crisis has exposed the inherent contradictions that continue to blight the country. Bosnia is one of the few countries in Europe where - in the age of austerity - budget increases are actually being proposed - not as a stimulant of growth, but as a means of funding new and/or expanded state institutions.

Policy, however, is often shaped not on the basis of objective considerations, but by ideological stances on how Bosnia-Herzegovina should be structured. This leaves its cumbersome and expensive cantonal framework in the Bosnian Federation immune from criticism and reforms, particularly in the face of rising Bosniak-Croat tensions.

In the absence of any consensus over the nature of the state, however, Bosnia-Herzegovina will continue to lurch from one crisis to another.