Bosnia’s Serbs, Muslims and Croats differ over how to change a governing structure enshrined in their 1995 peace treaty dividing it into a Serb Republic and a Muslim-Croat Federation with a weak central government in Sarajevo.

The last internationally-sponsored effort to advance constitutional reform foundered three years ago because rival communal leaders could not agree on any notable measure.

This is why Washington, main sponsor of the Dayton peace deal, commissioned independent Bosnian experts to draft constitutional amendments but this time applied only to the Federation, according to U.S. Ambassador Patrick Moon.

“The structure of the federation is the most complicated and expensive of any government structures in Bosnia,” he said.

Divided into 10 cantonal administrations, the Federation is a complex web of ethnic power-sharing symptomatic of Bosnia’s unwieldy ruling system that encourages political gridlock.

The experts proposed cutting the number of deputies in both houses of the federation parliament as well as their salaries, now among the highest in the Balkans.

This could speed up decision-making in parliament, where smaller parties now trade votes for benefits, and trim government spending that accounts for an onerous 45 percent of the Federation’s GDP.

The experts also recommended abolishing the posts of federation president and two vice-presidents and replacing them with the existing parliamentary presidency.

Political parties will debate the proposals and deliver their verdict in the autumn, but some senior political figures were quick to come out against the blueprint.

Bosnian Justice Minister Barisa Colak, a Croat, said that scrapping the positions of federation president and two vice-presidents would disadvantage Croats, the smallest of the three main ethnic groups in the ex-Yugoslav republic.

“This is a good step in the right direction but I don’t think there will be the political will to push the changes forward,” said Jakob Finci, president of Sarajevo’s Jewish community in Sarajevo.

Finci, along with Sarajevo’s Roma community, won a case at the European Human Rights Court in 2009 ordering Bosnia to amend its constitution and allow members of minority groups to run for top government offices.

That was a major condition set by the EU for Bosnia to apply for membership, but has become hostage to political maneuvering by Serb, Croat and Muslim leaders seeking concessions in negotiations with the EU.

On April 11, the EU enlargement commissioner warned that Bosnia’s EU accession bid faced being “frozen” and a planned election next year declared invalid without urgent reform of its constitution.

(Additional reporting by Maja Zuvela; Editing by Zoran Radosavljevic and Mark Heinrich)

The raid on Zivko Budimir’s Sarajevo office and the regional government in the southern town of Mostar is the most high-profile anti-graft operation in Bosnia since independence more than two decades ago.

“Budimir and 19 other federation officials have been arrested,” spokesman Boris Grubesic told Reuters by telephone. “The group will be handed over to the prosecutor who will decide on further proceedings,” he added.

During the six-hour operation, police searched the offices of the federation president and government as well as a number of private apartments of the region’s top officials, said Grubesic.

The police also searched the premises of the regional commission in charge of pardoning convicted criminals and arrested the head of the commission.

Local media have previously reported that Budimir was suspected of taking bribes in exchange for granting amnesty to a number of convicts.

Federation Vice President Mirsad Kebo said on Friday he had earlier asked the region’s Constitutional Court to examine the legality of procedures by which some criminals have been granted amnesty over the past two years.

Budimir is at the center of a political crisis in the Muslim-Croat Federation that blew open last year. He is refusing to approve a reshuffle of the regional government and delaying the appointment of judges to the constitutional court.

Under a U.S.-brokered peace deal to end the war, Bosnia was split into two autonomous regions joined by a weak central government. The Federation is dominated by Bosnian Muslims, known as Bosniaks, and Croats. The other region is the Serb Republic. Both have a high degree of autonomy. (Editing by Matt Robinson)

It appeared to be the most high profile raid of its kind since Bosnia seceded from federal Yugoslavia and descended into war in the early 1990s.

Bosnia’s state-run Federation TV reported that Zivko Budimir, president of the autonomous Muslim-Croat Federation, had been arrested.

Reuters could not independently confirm the arrest and Laura Bosnjak, an adviser to Budimir talking on Federation TV, dismissed the reports. She said Budimir was still in his Sarajevo office as police searched the premises.

Budimir is at the center of a political crisis in the Muslim-Croat Federation that blew open last year. He is refusing to approve a reshuffle of the regional government and delaying the appointment of judges to the constitutional court.

Bosnian radio reported that a strong police presence had cordoned off the Federation government building in the southern town of Mostar.

“The goal of these investigative activities is to uncover criminal acts of corruption committed by top officials in the Federation,” said Boris Grubesic, spokesman for the prosecutor’s office.

Under a U.S.-brokered peace deal to end the war, Bosnia was split into two autonomous regions joined by a weak central government. The Federation is dominated by Bosnian Muslims, known as Bosniaks, and Croats. The other region is the Serb Republic. Both have a high degree of autonomy.

(Editing by Matt Robinson)

“I’m on my knees,” President Tomislav Nikolic told a television interviewer. “I am on my knees and asking for a pardon for Serbia for the crime that was committed in Srebrenica.

“I apologize for the crimes that any individual has committed in the name of our state and our people.”

The contrite statement by Nikolic, once a disciple of the Greater Serbia ideology that fuelled the Yugoslav wars of the 1990s, marked a sharp change of tone that could help the slow process of reconciliation between Serbia and Bosnia as they edge towards a common goal of European Union membership.

Serbia’s relations with its neighbors are under close scrutiny from the EU, which gave it a tentative green light on Monday to start accession talks this year.

Bosnian Muslim leader Bakir Izetbegovic publicly upbraided Nikolic on a visit to Belgrade this week and said he should face the truth of what went on in Bosnia before the region could move on.

Zeljko Komsic, the Croat member of Bosnia’s tripartite presidency, told Bosnian state radio he was “positively surprised” by Nikolic’s apology and said it should help improve ties between the two countries.

Some 8,000 Muslim men and boys died in Srebrenica, a former U.N. “safe haven” that fell to Bosnian Serb forces under wartime commander Ratko Mladic. The victims were rounded up, executed and bulldozed into pits over five days in July 1995.

GENOCIDE COMMENTS

A former member of an extreme nationalist party, Nikolic has previously upset Serbia’s neighbors and drawn fire from the West when speaking of what went on during Yugoslavia’s collapse. After taking power last year, he denied that the Srebrenica massacre constituted genocide, as a United Nations court has ruled.

Pressed in the new interview on that issue, he replied: “Genocide must be proven.” But he added that “everything that happened during the wars of the former Yugoslavia had the characteristics of genocide”.

Bosnian media reported that Nikolic had also pledged to visit Srebrenica, but not on the July 11 anniversary of the worst mass killing on European soil since World War Two.

Around 100,000 people were killed during Bosnia’s 1992-95 war, when Mladic’s forces, using the big guns of the Serb-dominated Yugoslav army, seized swathes of land and drove out non-Serbs. Fighting between Serb, Croat and Muslim forces tore the country apart.

Nikolic’s predecessor as president, Boris Tadic, visited Srebrenica and pushed through a parliament resolution in 2010 apologizing for the massacre. That text also stopped short of calling it genocide.

Nikolic made his comments in a short video trailer released on a Sarajevo web portal by independent Bosnian production “Interview 20″. The full interview is due to air on Bosnian state television on May 7.

(Editing by Matt Robinson and Mark Trevelyan)

Like the bears and other big cats, they starved to death after the zookeepers who risked their lives to feed them were killed or wounded in the bombardment by Bosnian Serb forces in the first months of the 1992-95 war.

Two decades on, the king of the jungle is back in the Bosnian capital.

A donation from Bulgaria, two lions arrived this month at the zoo’s new “wild garden”, a 225,000-euro ($293,000) enclosure built after four years of lobbying and fundraising by zoo workers and officials.

The lioness of the pair died shortly after arrival of unknown causes. An autopsy is pending.

But Esad Tajic, the zoo’s general manager, said he expected the remaining big cat, a 3-year-old African lion, to help double the number of visitors to about 1 million a year.

“The king of the jungle remains here. The queen unfortunately died, but we’ll make every effort to get a new lioness as soon as possible and start our own reproduction cycle next year,” he told Reuters.

The lion’s arrival has been big news in Sarajevo, where the zoo, nestled near apartment buildings half a mile from the city center, was once trapped on the frontline of a siege that raged for 43 months, killing more than 11,000 people.

The animals slowly succumbed to hunger, their carcasses left to rot. Some 100,000 people would eventually die in the Bosnian war, the worst of the conflicts that erupted with the collapse of federal Yugoslavia.

The zoo reopened two years after the end of the war, cleared of landmines and unexploded mortar shells. Some surrounding buildings still bear the scars of the war.

The gift by the Sofia zoo has been welcomed as a rare sign of normality in a country still grappling with ethnic division and political crisis.

The lion is as yet nameless. The zoo plans to invite suggestions from the public once a new lioness arrives, but officials have yet to find the donors to pay for a trip to check prospective mates.

“Until now, our children could only see lions in the films, in cartoons,” said Kenan Memisevic, a Sarajevo resident visiting the zoo with his son after school.

“This is a big news for them,” he said, as the lion prowled behind a wall of stone and glass.

Visitor Irfana Trampa added: “The presence of such a beautiful animal in our beautiful city is a ray of hope for us, the citizens of Sarajevo.” ($1 = 0.7668 euros)

(Reporting by Daria Sito-Sucic; Editing by Matt Robinson and Alison Williams)

The lawmakers from autonomous Bosniak-Croat federation, which makes Bosnia along with the Serb Republic, approved a law that unifies pension rules for veterans of the 1992-95 war with 56 votes for, 12 against, and 12 abstained.

The law must also be approved by the parliament’s upper house, which will convene on Thursday, so that the IMF’s executive board can release a 40 million euros (34.2 million pounds) loan tranche at the end of April.

The IMF has disbursed 120 million euros of a two-year 405 million euro ($518 million) loan approved in September to plug the budget gaps of Bosnia’s two regions.

“Without the (law) adoption, the Federation budget will get into enormous problems,” Bosniak-Croat Federation Prime Minister Nermin Niksic told the deputies. “We shall indirectly jeopardise the budgets of the state and the Serb Republic.”

The 2.2 billion marka (916.3 million pounds) Bosniak-Croat budget has a 418 million marka deficit, and 300 million are expected from the IMF and the European Commission, which also insists on the terms of the standby programme.

The legislation has divided ex-soldiers, with some groups protesting against pension cuts after 6,000 new beneficiaries have been given the pension rights. Other groups have pushed to be included in the law to have their status finally resolved.

Niksic said that an average pension for more than 29,000 military pensioners will be cut by around 211 marka (105 euro), and that total amount allocated in the budget for such pensions must not exceed 197 million marka, under the IMF terms.

Without the IMF cash, the Federation would have to cut benefits and wages by 31.4 percent from May, and its 10 cantons would not be able to re-programme their 126 million marka debt to the lender under the previous loan arrangement, Niksic said.

He also warned that Bosnia’s credit rating would slide down, driving away already cautious investors.

“We are all aware the Federation is in the deepest political crisis since the end of war,” Niksic said, referring to a prolonged government crisis in the region.

(Reporting by Daria Sito-Sucic; editing by Ron Askew)

Eighteen years since the end of Bosnia’s war, the Balkan state continues to wrestle with deep ethnic rivalry that has left it languishing behind its fellow former Yugoslav republics on the long road to EU accession.

It must reform its constitution to remove a restriction on ethnic minorities running for office before it can even apply for EU membership, but political leaders have still to agree how to do so.

“The political leadership here has not prioritized the EU agenda and translated its declared commitments on the EU into concrete action,” Enlargement Commissioner Stefan Fule told reporters in Sarajevo.

“This is very disappointing,” he said before talks with Bosnia’s main political leaders. “Without an agreement (on the reform) and then a Stabilisation and Association Agreement (SAA) fully in force, (Bosnia’s) EU path would be frozen.”

Bosnia signed the SAA, a stepping stone to EU candidacy, in 2008, but a lack of progress on the constitutional reform means the agreement is not yet fully operational. It had hoped to apply for membership of the EU this year.

The country will watch neighboring Croatia become the EU’s 28th member on July 1. Montenegro has begun talks and Serbia and Macedonia are both candidates for membership. Kosovo, a former province of Serbia, has also yet to apply for accession.

DISCRIMINATION

The European Commission, the EU’s executive arm, will issue its latest progress report on the Western Balkans next week, when it will consider whether to recommend the start of accession talks with Serbia and possibly Macedonia.

Bosnia has already missed an end-of-March deadline to overhaul its constitution and electoral law to address a 2009 ruling by the European Court of Human Rights.

Under the U.S.-brokered 1995 Bosnia peace treaty, only Bosniaks (Bosnian Muslims), Croats and Serbs are regarded as “constituent peoples” with the right to apply for top state jobs such as president. The court ruled that this discriminated against other ethnic groups, such as Bosnian Jews or Roma.

Without the reform, the Council of Europe says Bosnia’s presidential and parliamentary elections due in 2014 will be considered in violation of the European Convention on Human Rights.

But the reform has become hostage to political maneuvering by rival Serb, Croat and Muslim leaders, who analysts say are using the negotiations to try to extract other concessions.

“Another election violating the European Convention on Human Rights would be unacceptable, seriously undermining the legitimacy and credibility of the country’s elected bodies,” Fule said, quoting Council of Europe Secretary-General Thorbjorn Jagland.

Bosnian Foreign Minister Zlatko Lagumdzija said he held out little hope of the country’s main political parties agreeing on how to reform the constitution.

“I don’t believe there is even a theoretical chance that seven political leaders can agree on the judgment,” he said.

(Editing by Matt Robinson and Mark Heinrich)

Ukio Bankas is controlled by Vladimir Romanov, owner of
cash-strapped Scottish soccer club Hearts.

The loss-making Birac plant, located in the eastern Bosnian
town of Zvornik, is struggling to pay off mounting debts.

“The confiscation of business documentation is underway, on
the orders of the regional prosecutor’s office to determine if
there has been illegal spending of loans from the Investment
Development Bank as well as tax evasion,” said Mirna Soja, a
police spokeswoman in Bosnia’s autonomous Serb Republic.

A Birac spokesman said the plant’s managers were in
Lithuania and were expected to arrive in Bosnia on Wednesday,
without commenting directly on the allegations.

The Serb Republic Interior Ministry said the government had
formed a team on Monday to investigate reports of irregularities
at Birac, and the police probe was part of their investigation.

The Serb Republic’s Investment and Development Bank said it
had not approved loans to the company, so it was not immediately
clear which loans were being investigated.

The company is a major employer in the Zvornik area but
recorded a loss of 5.4 million Bosnian marka ($3.5 million) in
2012, bringing total losses over an unspecified number of years
to 735.3 million marka, a financial report it published in
February on the Banja Luka Stock Exchange (BLSE) showed.

Romanov last month blamed problems at Birac on the woes of
Lithuania’s No. 4 bank, Ukio Bankas, whose operations were
frozen by the Lithuanian central bank in February, citing too
much risk-taking and not enough financial certainty.

Romanov has said that Birac’s problems were due to the loss
of current assets at Ukio and that the situation at Birac would
improve after Lithuania’s Siauliu Bankas took over
Ukio’s assets and liabilities. [ID: nL6N0BO1J3]

Romanov has called an assembly of Birac’s shareholders on
April 5, during which a new managing board will be appointed and
tasked with drafting and adopting a new business plan, a company
spokesman told Reuters.

Birac, which produces mainly alumina, the intermediate
material used to make aluminium, and some zeolites and hydrates
used in the chemicals industry, has struggled due to falling
prices for aluminium and alumina on world markets and a rise in
the price of gas.

Bosnia’s main gas distributor, BH Gas, cut gas supplies to
Birac two weeks ago over a 5 million euro ($6.42 million) debt.

(1$=1.527 Bosnian marka)
($1 = 0.7784 euros)

(Additional reporting by Gordana Katana in Banja Luka; Editing
by Helen Massy-Beresford)

Political and ethnic rivalry in the Federation, one of two regions in Bosnia along with the Serb Republic, is symptomatic of the complex and unwieldy system of rule in the Balkan country under the peace accords that ended its 1992-95 war.

Lawmakers from the largest Bosnian Muslim, or Bosniak, party, the SDA, rejected as inappropriate a proposed Bosniak judge for the Federation’s Constitutional Court, citing “vital national interest”, a mechanism designed to safeguard important ethnic rights.

The move means that the court’s seven-judge panel dealing with issues of ethnic rights, which has been left without a Bosniak or Serb judge for years due to political obstruction, will not be able to handle cases.

The parliamentary vote was supposed to fill the court’s panel of judges with new Serb, Bosniak and Muslim judges, but only a Serb candidate was approved. The parliament rejected a Croat candidate with a majority vote.

“With this move, the Federation has been totally blocked,” said Radoje Vidovic, the parliament’s upper house president.

“The most important institution that should decide on vital national interests has not been manned – primarily because of the use of vital national interest,” he said.

The court will not be able to rule on the case of a disputed Bosniak judge, who was approved by parliamentary majority, nor on a confidence vote in the government that was also blocked by the SDA on the grounds of “vital national interest”.

Last month, the SDA blocked a government reshuffle initiated by a new parliament majority to prevent the sacking of its ministers who were part of the previous coalition.

“We need new proposals for the judges so that we can approve them by the summer,” said Amir Zukic, the head of the Bosniak caucus in the upper house.

But Vidovic said that he expected Bosnia’s international peace overseer, Austrian diplomat Valentin Inzko, to use his sweeping powers and intervene to end the impasse.

Inzko, who has rarely intervened to impose laws or fire obstructionist officials, reflecting a Western hands-off approach to Bosnia in recent years, has warned lawmakers they needed to assure that the court can fully operate.

“Given the current disputes in the Federation, the need for functioning institutions – especially the Constitutional Court – has never been greater,” he said on Wednesday.

Bosnia has lurched from one political crisis to another since the end of the war, stalling reforms and leaving it trailing its fellow former Yugoslav republics in the long road to membership of the European Union.

(Reporting by Daria Sito-Sucic; Editing by Hugh Lawson)

Dzeko, who turned 27 on Sunday, acknowledged the Bosnians would have to be at their best in the cauldron of Zenica stadium to overcome the 2004 European champions, with the two teams leading Group I on 10 pojnts from four games each.

“This game is not decisive but a home win would take a lot of weight off our backs because Greece are the group favourites and being three points ahead of them after Friday’s fixture would put us in the driving seat,” Dzeko told reporters on Wednesday. 7

“A draw would also be a good result because we mustn’t forget that Greece are a very strong team who’ve qualified for many major tournaments while we are trying to make a maiden appearance on the big stage,” he said.

The Bosnians, eliminated by Portugal in the playoffs for the 2010 World Cup and Euro 2012, will miss injured midfielder Sejad Salihovic, and playmaker Miralem Pjanic is doubtful with a sore ankle.

GOOD GAME

Bosnia coach Safet Susic, a versatile forward who scored 21 goals in 54 appearances for the former Yugoslavia, said he would ask Pjanic to declare whether he is fit to play several hours before the match.

“We naturally expect a good game and victory against Greece,” Susic told reporters.

“It is our goal to remain top of the group and we will do our best to achieve that, although it’s not going to be an easy task,” he added.

The sides drew 0-0 in the reverse fixture in Athens and Bosnia will feel their optimism is well-founded having scored 15 goals in their campaign compared with Greece’s five, although the bulk came in an 8-1 rout of Liechtenstein.

Greece coach Fernando Santos, who gave his players a day off on Monday, acknowledged the winner of Friday’s clash would have the upper hand halfway through the battle to qualify for next year’s 32-tournament in Brazil.

“Whoever wins the match, if there is a winner, will be very close to clinching the direct qualification spot,” he said.

“But there is a long way to go and we mustn’t forget that that Slovakia will keep chasing the both of us and the equation is not just about Bosnia and Greece.”

The Greeks will miss injured Nikos Spyropoulos and Kyriakos Papadopoulos and uncapped 22-year old goalkeeper Juri Lodigin has been given a surprise call-up.

Central defender Avraam Papadopoulos is expected to return to the starting line-up for the first time since he limped out of Euro 2012 with a knee injury.

(Additional reporting by Graham Wood in Athens, Writing by Zoran Milosavljevic in Zagreb, Editing by Ed Osmond)

(Editing by Ed Osmond)