The US-brokered agreement between the Muslims and Croats represents a mixed blessing for the Muslims, a partial defeat for the Croats and a potential source of satisfaction for the Serbs. It envisages a Muslim-Croat federation composed of cantons, with the central government responsible for foreign affairs, defence, energy and the economy.
The cantons will share responsibility with the central government for human rights, but the cantons alone will control police forces. A Muslim and a Croat will alternate for one-year terms in the presidency and vice-presidency.
The Bosnian Muslims gain because they no longer face the prospect of being penned into scattered and vulnerable enclaves that could have been surrounded by a Greater Serbia and a Greater Croatia. That was the way a Bosnian settlement was shaping up under the Geneva negotiations sponsored by the European Union and the United Nations.
But the Muslims lose because the agreement may have the effect of establishing permanent Serbian control over areas that had Muslim majorities before the war, particularly in northern and eastern Bosnia. Towns such as Foca and Visegrad in the east and Prijedor in the north were subjected to ruthless Serbian 'ethnic cleansing' in 1992, but it seems clear that they would not form part of the new Muslim-Croat federation. The exact boundaries of the federation, and the ultimate status of Sarajevo, have yet to be settled.
The agreement dashes the ambitions of President Franjo Tudjman of Croatia, who had hoped to create an enlarged Croatian state merging Croatia proper with tracts of central and southern Bosnia. Mostar, the city that Bosnian Croat nationalists regard as their capital, will be placed under European Union administration for two years. The Croats will also be unhappy with the fact that the new federation is unlikely to include the Posavina region, a part of northern Bosnia that was mainly Croatian before the war.
But the Croats do not lose out completely. There is the prospect that the Muslim-Croat political unit will be administratively linked to Croatia, and the US has also signalled that, if the deal sticks, Croatia can expect economic support and an effort to integrate it into Western European institutions.
The Serbs also have incentives to support the agreement. Although US diplomats are indicating to the Bosnian Serbs that they should merge with the Muslim-Croat political unit and form a highly decentralised Bosnia in its pre-war frontiers, there is no sign that the Americans intend to force this solution on the Bosnian Serbs. Russian support for the Serbs may in any case rule out such an option.
The dream of a Greater Serbia, espoused by President Slobodan Milosevic and Mr Karadzic, could therefore be at least partly fulfilled, and the message would go out across the Balkans that war can bring territorial gains.
But the Serbs still have reasons to be suspicious of the Muslim-Croat deal. One fear is that the Americans, Muslims and Croats may draw the new federation's borders in such a way that the Serbs would be obliged to give up many of their conquests. Another fear is that the Muslims, increasingly well-armed and with more troops at their disposal, may take the war to the Serbs in a spring offensive. It is here that the deal struck in Washington on Tuesday may come unstuck. For if the Serbs conclude that they are being asked to make unacceptable concessions, or if they come under Muslim attack, then they are likely to push even more strongly for a Greater Serbia.
That, in turn, will undermine the incentives for Mr Tudjman and Bosnian Croat nationalists to abandon their vision of a Greater Croatia. The agreement covers Bosnian matters alone and therefore leaves unsolved the problem of the 30 per cent of Croatia that has been under Serbian occupation since 1991.
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