Despite the political efforts of the international community and the more than $5 billion that had flowed into the country over the previous six years, Bosnia and Herzegovina in 2002 remained enmeshed in a profound economic and social crisis. In October nationalist parties won in general elections organized without international supervision for the first time since war broke out in 1992. The elections were held for the multiethnic three-member presidency, the legislatures for the Croat-Muslim Federation and the Bosnian Serb Republic entities, the president and vice president of the Bosnian Serb Republic, and the cantonal governments. Electoral turnout was low. According to High Commissioner Paddy Ashdown, the elections met international standards, and the results suggested a backlash against reforms by moderates over the previous two years rather than a victory for nationalists.
The nationalist-oriented parties—the Muslim Party of Democratic Action, the Serbian Democratic Party, and the Croatian Democratic Union—had little room to maneuver, because of new election laws and constitutional changes handed down in April by then high commissioner Wolfgang Petritsch. Muslims, Serbs, and Croats were now politically equal throughout the federation, and government positions were expected to be filled more equitably. The newly elected government representatives would also rule for four years rather than two, as they had previously. In keeping with an ethnic-quota system based on the 1991 census, the changes attempted to undercut the foundations of the ethnic-oriented political entities. After the election, however, nationalists quickly made it clear that they would not be intimidated. Bosnian Serb leaders reiterated that the Bosnian Serb Republic had to remain Serb.
Ashdown also issued a series of decrees after the elections aimed at improving the country’s business climate and at strengthening his own powers. In keeping with the constitutional changes, his approval would henceforth be required for many ministerial appointments and decrees on the formation of governments. The move also anticipated the formal withdrawal of the United Nations peacekeeping mission at the end of the year.
The situation remained bleak in both entities as the economy continued its downward spiral amid frequent labour and civil unrest. Almost 50% of the active labour force remained unemployed, and the average monthly wage of workers stood at about $250. Foreign capital investment was lacking because of the region’s political instability, rampant corruption, and confusing tax codes and business regulations that forced much economic activity underground.
Reforms had also so far failed to unite the separate and antagonistic educational systems, and widespread ethnic distrust remained. In July, when several thousand people gathered in Srebrenica to mark the seventh anniversary of the massacre of as many as 8,000 Muslim males by Bosnian Serb forces, none of the invited leaders of the Bosnian Serb Republic attended, and local Serbs reportedly jeered the mourners and held up pictures of indicted war criminals Gen. Ratko Mladic (who had commanded the Srebrenica forces) and Radovan Karadzic.