Republika Srpska’s flirtation in June 2011 with a referendum is a reminder that Bosnia’s smaller entity still threatens the stability of the country and the Western Balkans. It is highly unlikely that the RS will secede or that the Bosniaks will attempt to eliminate it, but if its Serb leaders continue driving every conflict with Sarajevo to the brink, as they have done repeatedly to date, they risk disaster. The agility of leaders and the population’s patience need only fail once to ignite serious violence. Over the longer term, RS’s determination to limit Bosnia and Herzegovina (BiH) to little more than a coordinator between powerful entities may so shrivel the state that it sinks, taking RS with it. RS also suffers from its own internal problems, notably a culture of impunity for political and economic elites and a lingering odour of wartime atrocities. Its leadership, especially its president, Milorad Dodik, needs to compromise with Sarajevo on state building and implement urgent entity-level reforms.

The RS threatened a referendum early in 2011 that could have provided support for a Serb walkout of Bosnian institutions and brought BiH back to the brink of war. The situation was defused in June, when the European Union (EU) offered a dialogue process on the judiciary, whose reform the RS was demanding. State and entity officials sat down and began to review the county’s complex judicial system with an eye to harmonising it with the EU body of law (acquis communautaire). The process will be long and painstaking, but RS can achieve effective change only by working through the BiH Parliamentary Assembly and Constitutional Court.

The international community has wrestled with RS for years. Given a free choice, many in the entity would prefer independence, but this is unacceptable to the rest of Bosnia and the international community. The RS is too weak to fight its way to independence and would not achieve international recognition as a state. Its leaders reject much of the internationally-led state-building project that has given Bosnia its current administrative structure. Some Bosniak and international observers believe international will has flagged, giving Serbs room to sabotage the state, while other international and Serb observers argue international interventions keep Serbs in a bunker mentality. The EU’s response, aided by the U.S. and others, to the political and legal challenge the RS posed in June offers a non-coercive alternative from which it will be difficult for any party to walk away.

Bosniaks, Croats and the international community have little choice but to engage with RS elites, especially President Dodik. He is the most populist and difficult leader the RS has had for years, but he and his party have strong support. The opposition did better than expected in the October 2010 elections, especially in the contest for the Serb position in the BiH presidency, but Dodik’s Alliance of Independent Social Democrats party (Savez nezavisnih socijaldemokrata, SNSD) controls the RS government and presidency, as well as the Republika Srpska National Assembly (RSNA). Nationalism and protection of the RS remain the entity’s unifying idée fixe.

The RS is divided into east-west halves. The SNSD appears invincible in the politically and economically more influential western portion, controlling every municipality either directly or in coalition with a smaller party, and is encroaching on the traditional eastern stronghold of the Serb Democratic Party (Srpska demokratska stranka, SDS). Dodik’s government decides all budgetary issues, as well as much of the investment that goes to the east. Many eastern municipalities, especially those run by the opposition, feel deprived and are slowly beginning to seek greater economic and political decentralisation, but this takes a back seat to concerns about protecting RS as a whole.

Corruption and weak rule of law undermine economic growth. The RS, like the rest of Bosnia, is only slowly emerging from the recession that resulted from the global financial crisis. Privatisation of RS Telecom and an oil refinery gave the RS a cash bonanza in 2006-2008, creating a false glow of prosperity. But these funds have done little to further growth, and recent tax increases and expected cuts in social services may breed social dissatisfaction.

Many Serbs believe that they are asked to shoulder all blame for the 1992-1995 war, accused of being occupiers and aggressors. An overwhelming number of the war’s victims were Bosniak civilians, who suffered vicious ethnic cleansing and, most horrifically and prominently, mass murder in Srebrenica. Serbs worry that the RS will be taken away from them if they admit they carried out a genocide at Srebrenica. But this is an empty fear. Rather, RS elites should acknowledge the responsibility of their wartime leaders and support reconciliation efforts so as to become more respected and trusted authorities throughout Bosnia.

Sarajevo/Istanbul/Brussels, 6 October 2011