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US sanctions are failing to prevent Bosnian Serb peace violations

I am pleased to publish this piece by Ajdin Muratovic, a Washington, D.C.-based Security Fellow at the Truman National Security Project. He has extensive experience working, studying, and living across Eastern Europe.

Targeted sanctions—an increasingly popular item in Washington’s Western Balkans toolkit—are supposed to change behavior and deter future malign conduct. Yet the sanctions the US has leveled against Bosnian Serb leader Milorad Dodik for violating the peace agreement that ended the Bosnian war are failing to achieve either objective. The results could be catastrophic. Failure to maintain peace and stability in Bosnia risks triggering another war in Europe. That could lead to untold human suffering, while sapping resources and bandwidth from strategic priorities such as the war in Ukraine. Such an outcome is easily preventable. US policymakers should modify a sanctions regime that is insufficiently tough, poorly targeted, and lacks multilateral support.

How we got here

In late 1995, the US-led Dayton Agreement ended nearly four years of extreme violence in Bosnia-Herzegovina. The Bosnian war introduced the term “ethnic cleansing” to the world. It featured genocide, concentration camps, mass rape, and hundreds of thousands of dead and wounded for the first time in Europe since the Second World War––all less than an hour’s flight from Germany. The Dayton Agreement succeeded in reconciling warring parties and preserving Bosnia’s territorial integrity, but at a price. Postwar Bosnia became a highly decentralized state with two powerful subnational “entities” – the Bosniak-Croat dominated Federation of Bosnia and Herzegovina (FBiH), and the Serb-dominated Republika Srpska (RS), the latter currently led by Dodik.

Dodik has led Bosnian Serb politics for most of the almost three decades since the end of the war. He was initially seen as a moderate with whom the West could work rather than a hardline Serb nationalist. He started his political career as a State Department darling. But he eventually came to undermine the Dayton peace agreement by creating illegal parallel government institutions, seizing Bosnian central government property, ignoring Bosnian constitutional court orders, and obstructing policies that would improve the Sarajevo government’s ability to function, all while promising unification with Serbia.

Sanctions and the reaction

In response, the US sanctioned Dodik, twice: in 2017 for “actively obstructing the Dayton Agreement” after he defied constitutional court rulings; and again in 2022 for numerous “corrupt and destabilizing activities,” including accumulating “personal wealth through graft, bribery and other forms of corruption.”
Yet Dodik has only become bolder and more extreme since being sanctioned. A recent report to the UN Security Council stated that “secessionist rhetoric and action” has “intensified” during the past six months. The report cites as evidence Dodik’s March 2023 proclamation that “our goal is unification, meaning leaving Bosnia-Herzegovina and joining Serbia.” He added that he and his allies “are just waiting for the moment to do that.”

Rather than idly waiting, Dodik and legislators from his party are acting, implementing a stealth secession. In June, they voted to suspend all rulings of Bosnia’s constitutional court, effectively removing Republika Srpska from the court’s jurisdiction. This and similar moves by Republika Srpska officials violate the Dayton Agreement and threaten to ignite a war. If history is any guide, it will quickly become a regional conflict.

Unrivalled American influence

This is happening in a country where, unlike in Iran or Russia, the US has unrivaled influence. American officials designed Bosnia’s contemporary political system during the Dayton negotiations at an Ohio military base. The agreement, part of which also serves as Bosnia’s constitution, renders it a non-sovereign state with ample opportunity for American intervention.

The most powerful official in the country is not its elected head of government, but a foreign diplomat appointed by internationals known as the High Representative (HR). He oversees civilian implementation of the Dayton Agreement. The HR has immense powers to ensure treaty compliance, including vetoing legislation and firing Bosnian officials. US support is vital for the appointment of a HR, and the Deputy HR is always an American.

An EU-led military force, currently over 1,000 troops, supplements the HR’s treaty enforcement. Additionally, the Dayton Agreement, and a subsequent UN Security Council resolution, permit NATO deployments, including US troops, without consent from Bosnian officials. Although Europeans occupy key civilian and military roles in Bosnia, they only do so with American blessing. Perhaps no example better illustrates American centrality in Bosnia than the fact that key decisions, such as new election laws, are frequently negotiated in the U.S. Ambassador’s residence, rather than in Bosnian institutions.

Strategic irrelevance and tactical errors

Yet Bosnia is not a strategic priority for the United States government. The US Trade Representative’s website, which lists over 110 trading partners, does not include Bosnia. Neither the US National Defense Strategy, nor the National Security Strategy, mentions the country. In fact, the two documents only refer to the Western Balkans region only once. Washington’s assessment that Bosnia is not a priority has led to a concomitant lack of consistent US engagement and high-level policy attention when it comes to the region. This includes insufficient US pressure on problematic actors such as Dodik.

Tactically, sanctions against Dodik have failed in three primary ways.

No isolation

First, they have not isolated him politically or economically. Dodik and his political party continue to win elections. Internationally, he punches above the weight of a sub-national leader. He has allied himself with fellow European right-wing and pro-Russian politicians such as Hungary’s Viktor Orban to avoid potential EU sanctions, attended Turkish President Recip Tayyip Erdogan’s recent presidential inauguration, and is a frequent guest of Putin.

Still, American officials regularly meet with Dodik and behave as if he is a good-faith actor. Dodik has replied to such American attention by doubling down on pro-Russian and secessionist policies. Such meetings only served to highlight the irrelevance of existing sanctions – a point that both Dodik and the opposition make. The sanctions have also been financially inconsequential. Bosnian politicians mostly confine their assets and dealings to the EU and neighboring Balkan countries.

No multilateral complement

This highlights a second tactical shortcoming. There are no multilateral sanctions to complement American ones. So far, only the United Kingdom has joined the sanctions against Dodik. EU sanctions would impose serious economic and lifestyle costs on destabilizing individuals. But the Union refuses to activate a more than decade-old framework to sanction individuals that “undermine the sovereignty, territorial integrity, and constitutional order” of BiH.

Hungarian and Croatian officials have signaled that they would not provide the necessary unanimous support, despite abundant evidence of sanctionable offenses. Reports also indicate that the EU’s envoy to Bosnia advised against joining the US sanctions for fear of making Dodik a “martyr.” The response to Saudi Arabia’s murder of Jamal Khashoggi demonstrated that individual member states, such as Germany, can levy sanctions independent of the Union. No individual EU member, however, has been willing to join the US in sanctioning Dodik.

Inadequate targeting

In addition to not bringing allies along in support of sanctions, Washington has done an inadequate job of targeting Dodik’s network of political and economic accomplices and proxies. In 2022, the US Treasury, acting on a new executive order that includes corruption as a targetable offensive, sanctioned a Dodik-linked construction firm and a TV station. This well-intentioned attempt has yet to bear fruit.

The construction firm, Integral Inženjering, continues to profit from EU-funded projects, such as a newly-constructed bridge to Croatia. It participates in European Bank of Reconstruction and Development (EBRD) projects, despite the US being a founding member of the bank and its biggest capital contributor. Alternativna Televizija, formerly a USAID-supported outlet that Dodik’s proxies took over in 2017, has continued with the same pro-Dodik coverage as before the sanctions.

POLICY RECOMMENDATIONS

While the US failure to dedicate significant attention to Bosnia has placed the region’s security at risk, it is not too late to make tactical adjustments to sanctions policy. The limited goal should be stopping Dodik’s attacks on the peace agreement.

Get real

Policymakers first need to be honest about the present failure. State Department officials regularly claim, without concrete evidence, that sanctions are having an impact. American lawmakers, rather than serving as an accountability mechanism, are reinforcing the State Department’s narrative. Senator Shaheen, usually an astute foreign policy observer, stated that Dodik, “is upset about the U.S. sanctions, so clearly they are having an impact.”

But merely upsetting a targeted individual is an unserious metric. The US must hold itself to a higher standard. The American-led Dayton Agreement provides ample political and military leverage to maintain regional stability.

Stop the useless meetings

Second, U.S. officials should stop meeting with Dodik and other sanctioned individuals until they start reversing their destabilizing policies. Six years of meetings have not achieved anything other than making US officials appear feckless and incompetent. In a symbolic example of his approach to the US, Dodik humiliated the American ambassador to Bosnia in 2017 by refusing to shake her extended hand. Despite his clear contempt for Washington, every US Ambassador and visiting State Department official since then has continued to meet with him.

Dodik uses these meetings as a spectacle to demonstrate to local audiences his strength relative to the superpower’s emissaries. Frequently he will insult U.S. officials, or even walk out of meetings. None of these meetings have resulted in substantive policy changes on his part. If Washington wants to effect change, its officials need to stop serving as props in this humiliating charade. He is not a good faith actor. Dodik is an aspiring strongman who respects strength, not goodwill gestures.

Target the enablers

Third, the US needs to target Dodik’s economic and political enablers. Earlier rounds of sanctions against Dodik-affiliated entities demonstrated that a business doesn’t need to be registered in Dodik’s name to be considered under his control. While sanctioning Dodik-affiliated television station ATV was a good first step, Washington should go further and lead sanctions against the crown jewel in Dodik’s collection of businesses. That is ATV’s sole owner at the time of sanctioning, a tech services firm named Prointer.

Institutions controlled by Dodik’s political party have awarded Prointer tens of millions of dollars in no-bid IT contracts. The bulk of Prointer’s offering is American software services – 15 of the 22 companies it lists as “technology partners” are US-based. Dodik has confirmed that his son works for the firm. That gives credence to allegations that he was secretly managing the firm on behalf of his father. Prointer is one part of a vast business empire – stretching from real estate to fruit exports – that provides Dodik with unrivaled financial resources to maintain power and pursue his destabilizing agenda.

Avoid contradictions

The US should also sanction the political enablers of Dodik’s secessionist agenda. Treasury’s recent sanctioning of Dodik’s right-hand woman, Zeljka Cvijanovic, is an important step after six years of misguided and contradictory policies. Both Cvijanovic and Dodik celebrate convicted war criminals, engage in genocide denial, defy constitutional court rulings, and call for secession.

The US also appropriately sanctioned Dragan Stankovic for expropriating central government property, but it was Cvijanovic who signed into law the unconstitutional framework for him to do so. The UK sanctioned Cvijanovic in 2021 for violating the Dayton Agreement, but American officials continued to host her in Washington. This accommodating behavior, despite her secessionists policies, only served to embolden separatists by implying that the US was not willing to reinforce its rhetoric of upholding the Dayton Agreement.

Washington should not put itself in such a contradictory and counterproductive situation again. It must demonstrate the same decisiveness that it did in 2004 when it sanctioned every single member of the Serbian Democratic Party for obstructing war crimes prosecutions. Additionally, it banned from US entry every coalition partner of the SDS. These moves sent a clear message about US values, policies, and commitment to upholding the Dayton Agreement. They also contributed to SDS’ political collapse by effectively isolating a whole network of destabilizing individuals.

Secondary sanctions

Fourth, the US should impose so-called secondary sanctions on Dodik himself and his family, forcing non-US firms and individuals to choose between doing business with the U.S. or with Dodik. This type of sanctions leverages US dollar dominance in global trade and American market power to effectively compel non-US entities into implementing American policies. Such sanctions, for example, would apply to any bank dealing in US dollars – practically every legitimate bank on the planet – and conducting business with Dodik.

Secondary sanctions can be controversial for many reasons, including for imposing opportunity costs on non-U.S. businesses for the sake of American interests. While there is rising pushback against them – from China to Russia and plenty of countries in between – there are no American allies that engage in significant business relations with Dodik, meaning that secondary sanctions would be less of a burden than other examples. Additionally, secondary sanctions would partially compensate for the current absence of multilateral sanctions.

Multilateral sanctions

Fifth, irrespective of whether the U.S. implements secondary sanctions, it should ensure that sanctions against Dodik and his allies are multilateral, rather than easily evadable unilateral ones. The US should, at a minimum, coordinate its targeting with the UK to avoid an inconsistent approach, as was the case with Cvijanovic. While getting agreement from all 27 EU member states to sanction Dodik may be unlikely, Washington can still convince individual member states to levy their own.

Germany, for example, has already suspended development projects in the RS, but it should also employ a more targeted approach by punishing destabilizing individuals instead of the whole citizenry.

WHY THIS MATTERS

History demonstrates that seemingly isolated Balkan tensions can quickly escalate to regionally destabilizing events. Yet Europe lacks the willpower, coordination, and capacity to address continental security challenges without American support. To avert humanitarian catastrophe and distraction from strategic priorities, the US should refine its existing sanctions regime.

Dodik’s current trajectory makes peace unsustainable. Future actions to uphold the Dayton Agreement will inevitably require more funds and bandwidth at a time when there is already one war in Europe. The current US sanctions policy undermines its earlier investments in the region and squanders its influence. US taxpayers contributed over $15 billion from 1992 to 2002 on military operations to stabilize BiH and implement the Dayton Peace Agreement.

A National Defense University report assessed that Bosnia was the “exception” to otherwise “poorly coordinated and executed foreign interventions.” This US investment created unprecedented leverage to ensure stability in a volatile region. The current sanctions policy, however, is undermining this investment and making it likely that Dodik will collapse a US-sponsored peace agreement.