Ian Bancroft in Belgrade -

Bosnia-Herzegovina ended a dismal 2009 fearing the dawn of a new decade. And so it should.

Last year saw Bosnia denied visa liberalisation over a lack of key reforms, refused a Membership Action Plan (Map) by Nato and remain trapped between competing conceptions of the state between the three ethnic groups. Now general elections and a planned referendum by the government of the Bosnian Serb Republic on decisions by the West's representative in the country threaten to further shake an already fragile political climate. But as is often the case in the Western Balkans, such high politics serves to conceal deepening socio-economic problems. With this fusion of factors fuelling friction and fragmentation, 2010 promises to be Bosnia's most challenging since the country emerged from the Balkan wars in the mid-1990s.

Amidst misplaced fears about the country's impending disintegration and the possibility of war, the US and the EU convened Bosnia's main political leaders at Butmir military camp near Sarajevo in a determined effort to secure constitutional reforms before the end of 2009. Haphazard in both their conception and implementation, the talks were quickly extinguished in the face of divergences over the issue of entity competencies; with the Bosnian Serb Republic eager to safeguard, and even reclaim, the powers granted to it under the 1995 Dayton Peace Agreement, which ended the Bosnian war.

Constitutional reform, however, is now a legal imperative after a binding ruling by the European Court of Human Rights that Bosnia's constitution - by preventing, for instance, Jews and Roma from standing for high elected office - is discriminatory. Though Dimitris Kourkoulas, head of the European Commission delegation in Bosnia, has threatened sanctions - including the possible suspension of the Stabilisation and Association Agreement (the first step to joining the EU) or the country's membership in the Council of Europe - if changes are not made before October's general elections, the present stalemate is unlikely to abate, with politicians reluctant to make contentious compromises that would expose them to criticism from competing parties.

The international community's capacity for imposing reform, meanwhile, faces its severest test following the Bosnian Serb Republic's decision to organize a referendum on the Dayton Peace Agreement, in response to the decision of the high representative, Valentin Inzko, to extend the mandate of international judges and prosecutors working on war crimes cases. The Bosnian Serb Republic government continues to insist that Inzko's mandate does not permit the annulment of decisions taken by Bosnia's parliamentary assembly, which voted against the extension in October.Citizens of the Bosnian Serb Republic are now likely to be asked, "do you support the Dayton Agreement, and do you oppose the High Representative imposing decisions?"

Though EU member states have reiterated their support to the high representative and denounced all challenges to his authority, competing interpretations of the powers of the Office of the High Representative (OHR) - which was previously slated for closure by the end of 2009 - will ensure further confrontations should the Bonn Powers, as they are commonly known, be employed again.

Same old faces

Such political wrangling continues to mask the country's dire economic situation. With growth of only 0.6% expected for 2010, following a 3.5% contraction in 2009, jobs continue to evaporate. The International Monetary Fund, meanwhile, reiterated that it may not approve the release of the second tranche of Bosnia's €1.2b stand-by arrangement until its two entities pass disputed laws curtailing transfers of public money to social groups, especially war veterans. The Muslim-Croat Bosnian Federation, with its convoluted cantonal structure and distinct lack of reforms, faces particularly vehement protests as electioneering intensifies.

As Aleksandar Trifunovic, editor-in-chief of Buka magazine, emphasises to bne, "the pre-election campaign has already begun and it is immediately clear that economic issues are not a priority for our politicians, who instead almost exclusively choose to fuel nationalistic intolerance and hatred, which will reach a peak only towards the end of campaigning. The citizens of Bosnia have for years opted for the worst from amongst their 'own' national ranks, in order that they would protect them from the worst from the ranks of the 'others'. Hence, the majority of citizens will continue to vote for the same politicians; the ones who have created this political and socio-economic environment."

Whilst neighbours Croatia, Serbia and Montenegro make steady progress towards membership of the EU, Bosnia-Herzegovina risks languishing even further behind by the end of 2010. Though a consensus remains around integration itself, the conditions, costs and concessions associated with key reforms, particularly constitutional, conflict with the diverging conceptions that various domestic actors have of Bosnia's structure. The international community, having reverted to imposition as opposed to inducement, faces its most direct challenge in the form of a referendum on the nature of its engagement. With elections fast approaching and the socio-economic situation deteriorating daily, Bosnia poses a serious challenge for international policy towards the entire Western Balkans.