Tension remained too high for Brcko to be awarded to the Bosnian Serbs, the Muslim-Croat federation, or the joint government of Bosnia-Herzegovina, in which all three nationalities are represented. "We are not convinced that any of the three candidates are sufficiently stabilised to take on the situation."
The ruling lessened the danger of an immediate crisis over Brcko, but illustrated the bitterness and suspicion that fester in Bosnia more than a year after the Dayton peace deal was signed. Brcko was the focus of such a fierce contest for control at the Dayton talks that the issue was left unresolved and turned over to an arbitration panel.
Muslim and Croat leaders said it should be awarded to their federation, which occupies 51 per cent of Bosnia, because it had a Muslim and Croat majority before the Serbs seized it in May 1992. The Bosnian Serbs insisted on keeping control because Brcko provides a land link between the two halves of Republika Srpska, the Serb entity occupying 49 per cent of Bosnia.
Some Western officials feared that the issue could ultimately cause the entire Dayton peace structure to collapse. When rumours circulated in Sarajevo that Mr Owen intended to award Brcko to the Serbs, the Bosnian Muslim leader, Alija Izetbegovic, threatened to pull out of the three- nation collective Bosnian presidency. "I think that there is no one who could explain to the Bosnian people that it should calmly endure this final injustice," Mr Izetbegovic wrote in a letter to the major world powers. He said political chaos would break out if Brcko were left in Serb hands, because no Muslim politician would agree to serve on the collective presidency.
No less single-minded, the Bosnian Serbs see control of Brcko as an essential guarantee of their republic's survival. They have threatened to go back to war if the Muslims and Croats are awarded the town. Mr Owen said one possible solution was to turn the town into a special district of Bosnia, with a status similar to that held by Washington DC in the United States.
However, Brcko is not the only dispute still simmering in Bosnia almost five years after the war broke out.
The southern town of Mostar, split into Croat and Muslim sectors, has in the past week experienced its worst violence since the war ended in November 1995.
The presence of Nato troops is perhaps the main reason why war has not returned to Bosnia, but they are due to leave by mid-1998.
The United States welcomed the mediator's decision to defer the final decision on the status of Brcko.