Bosnia Reborn

Elvir Causevic left sarajevo in 1990, just before the war engulfed Bosnia and smashed it to smithereens. Now 33 and educated in America, a member of Yale University's research staff, he recently moved back --and continues to be amazed at the town's transformation. The city he had seen so often on TV during the dark years was devastated, full of scarred and burned-out buildings, bereft of its once vibrant cosmopolitanism.

But no more. Sarajevo today is the very image of a thriving European capital, chockablock with chic restaurants and upscale art galleries. Cranes punctuate the skyline, erecting offices and putting a new face on, among many other things, Bosnia's postmodern Parliament, ruined during the war. Strolling the cobbled streets of the capital's ancient Old Town--a twisty maze of bars and tourist shops selling everything from Turkish coffee sets to T shirts reading i'm muslim, don't panic--Causevic is positively boosterish. "Now is the time for this country," he exults. His plan: to set up branches of his New York medical-instruments company in Sarajevo and Tuzla--a great investment, he thinks, because of Bosnia's strong engineering tradition and still inexpensive work force. He's already hired 12 employees and expects to grow to 100 within a couple years. "I see a real enthusiasm here," he concludes, reflecting national optimism.

It's hard to believe this is Bosnia--the place that introduced the world to the term "ethnic cleansing." A decade after its brutal war ended, the country is finally emerging from the wilderness. A recent World Bank report touts it as "a post-conflict success story." And it certainly looks that way. "Our economy used to be entirely dependent on international aid," Prime Minister Adnan Terzic tells NEWSWEEK. But these days, he enthuses (somewhat nerdily), the signs all point to "serious sustainability." Bosnia's GDP has tripled in the last decade. Exports, including steel and timber, are up by 50 percent. The government has successfully privatized banks. Foreign direct investment has tripled since 1999 to €750 million in 2004--and the trend is fast accelerating upward. Unlike neighboring Croatia and Serbia, also part of the former Yugoslavia, Bosnia has practically no external debt. At 2 percent, inflation is lower than Britain's. "I think boardrooms would be well advised to have a look at Bosnia," says Dirk Reinermann, the World Bank's country director.

It's been a long time since boardrooms bothered with Bosnia, a country roughly the size of Denmark with a population of 4 million. The fighting that raged from 1992 to 1995 killed 200,000 people, made refugees of 2 million more and destroyed almost 90 percent of the country's infrastructure. War damage totaled more than $60 billion--a magnitude of collapse not seen in Europe since World War II. Bosnia's three main ethnic groups (Roman Catholic Croats, Orthodox Serbs and Muslim Bosnians, more commonly known as Bosniaks) turned on each other savagely, despite decades of intermarriage and living peaceably together. Rape, torture, mass killings--Bosnia was a Balkan slaughterhouse, ending only with the U.S.- brokered 1995 Dayton peace accords. That agreement became the country's constitution and set up two quasi-autonomous "entities"--the Republika Srpska (usually referred to as the RS) and the Federation, a shaky alliance between Bosnia's Croats and Muslims. A weak national government is overseen by a U.N.-appointed High Representative.

As those awkward arrangements suggest, Bosnia's troubles are hardly over. In the central and southeastern parts of the country, Muslim schoolchildren are segregated from Catholic kids in 52 schools. (When administrators in one such district tried to integrate a school playground, they received so many threatening phone calls that they scrapped the plan.) In the RS, whose population is 90 percent Serb, there have been rumblings of holding a referendum on independence. (With United Nations negotiations underway in Vienna on Kosovo's independence, this isn't an entirely idle threat.) Even beer drinking can still become political. In north-central Vitez, whether you order a pint of Bosnian-brewed Sarajevska or a Croatian Karlovacko depends on which part of town you live in. With 20 percent of the country's population living below the poverty line, those in rural areas barely scrape out a living. Drug trafficking, organized crime and illegal logging are epidemic. Membership in NATO will remain a pipe dream until war criminals Radovan Karadic and Ratko Mladic, who may be hiding in the RS, are arrested.

Nonetheless, by the end of the year, Bosnia is expected to sign the Stabilization and Association Agreement, a big step toward EU eligibility. For most of the past decade, each of its factions had their own courts, customs and tax services; now the federal government has taken control. Three years ago, according to a Western diplomat, "Serbs would have laughed you out of the room if you told them they'd be serving in an integrated army." Today, they're doing just that. In June, Bosnia was awarded control of its airspace for the first time in more than a decade.

In Sarajevo, especially, you can see the country's ethnic groups reknitting old ties--not necessarily warmly, but with a heartening mutual acceptance. Many of the Serbs who fled the capital during the war are returning to visit. The ski slopes of Mt. Igman (remember the 1984 Olym-pics?) are becoming more culturally mixed, as are Sarajevo's packed cafés and concert halls. Earlier this summer, throngs came out to hear a popular Serbian turbo-folk singer, Jelena Karleusa. Orthodox, Catholic and Muslim religious leaders meet regularly and often go on walkabouts together in towns across Bosnia. "It is a much more pragmatic and much less ideologically nationalistic country than it was several years ago," says journalist Allan Little, coauthor of "The Death of Yugoslavia."

The picture is harsher outside the capital. Along the road from Sarajevo to Zenica (a new four-lane highway is slowly being built) the scars of war are still evident: carcasses of burned houses, villages that feel far emptier than they should. Yet the signs of progress are obvious here too. The vast majority of Bosnia's battered towns and villages have been rebuilt; according to government figures, 98 percent of properties illegally seized during the fighting have been returned to their rightful owners or their surviving kin. The ethnic mix of some places has changed. Many Serbs, Croats or Muslims have sold houses in areas where they might feel uncomfortable and bought another where they are in the ethnic majority. But others have returned to places they were driven from, if only because they are their homes.

Visit the Bosniak village of Ahmici, reduced to rubble by Croat forces in April 1993. The local mosque's white minaret, toppled during a massacre that claimed 118 lives, is back. A high-tech stereo blasts the call to prayer five times daily. A second mosque, up the hill from the outdoor basketball court, is being built. Its skeletal bricked interior is a Sunday-evening hangout for preteen girls, some wearing fashionable head scarves and flirting with boys. Along the curving, pine-forested roads of the RS, where signs are infrequent and marked only in Cyrillic, minarets and Catholic crosses can be glimpsed rising in the distance.

If any place testifies to how far Bosnia has come, it is the northern town of Brcko, hard on the Serbian and Croatian borders. This heavily contested bit of territory was the "bridge" linking the western reaches of the RS to the east and Serbia proper. To this day, Brcko is administered separately from the other Bosnian entities, with an American supervisor appointed by the U.N. The region experienced some of the most intense fighting of the war--and some of its fiercest ethnic hatred. Yet former Army barracks have been transformed into a grassy quad of brightly painted government buildings. Citizens have moved forward, together. Unlike much of the rest of the country, schools in Brcko are mixed. So are the police force and the District Assembly. "Most people here wanted to live again in a multiethnic society, so we all fought really hard to make Brcko work," says Ivan Krndelj, the Croat deputy speaker of the Assembly.

You readily see that at Zitopromet, a food-processing firm with an ethnically mixed staff who work together in two shifts baking 10,000 loaves of bread and pastries a day. In offices fragrant with the smell of croissants, the company's Bosniak director, Bahrija Agic, says he was surprised how quickly people came together. "In the beginning, two employees left, saying they had problems working for a Muslim manager," he told NEWSWEEK. "But there just aren't tensions like that anymore."

More and more, that describes the atmosphere across Bosnia. British Brig. Nigel Alwyn-Foster, deputy commander of the 6,200 troops of the European Union Force that took over from NATO in 2004, describes his theater of operations as "calm and stable." The garrison atmosphere of the immediate postwar years has disappeared. Bases have shut down and many EUFOR troops are living in local accommodations among the people. In leafy Bihac, to the west, Canadian M/Cpl. Tom Robinson is on his third tour of Bosnia. He's amazed by how much has changed. "In 1996 Bihac was a ghost town," he says, strolling past a new multiplex cinema showing the latest Hollywood flicks. "My time here has gone from being like a parent saying 'No, you can't do that' to being like an older sibling standing on the sidelines offering advice when asked." The city, which saw heavy fighting, has a trendy new mall with clothing shops like Stefanel. Its border crossing with Croatia is a modern complex equipped with the latest EU customs technology.

That's a metaphor. Bosnia is clearly prepping for EU membership. The country's newest high representative, German diplomat Christian Schwarz-Schilling, recently announced that he would also be the last. Next summer, he will relinquish his role as Bosnia's de facto head of state and become the mere "EU representative" to Bosnia--a job that's essentially monitoring Bosnia's progress toward joining Europe and that returns full responsibility for the country's affairs to the central Bosnian government. "This is a serious change of the political agenda," says Schwarz-Schilling.

There are other signs of political maturation. In April, the Bosnian Parliament, usually split ethnically, rejected reforms to the Constitution that would have strengthened the central government. The good news is that the measure lost by only two votes. Says NATO's senior officer in Bosnia, U.S. Brig. Gen. Louis Weber: the fact that parties sat down together to reach consensus is huge. "In every sphere you want to measure Bosnia, from the military to the social to the political, it is on a positive slope."

Perhaps most noteworthy is the way Bosnians--Muslim, Croat and Serb--are slowly coming to terms with the past. This spring, a Sarajevan movie named "Grbavica" won top honors at the Berlin Film Festival. Directed by Jasmila Zbanic, it portrays a Bosniak woman, raped by Serb soldiers, who is forced to tell her daughter how she was conceived. The movie has helped drive forward legislation for things like compensation and health care for civilian victims of war. Pirated copies have been selling like hot cakes in the RS capital, Banja Luka. In June, after a tip-off by locals in the Serbian village of Serovici about a nearby mass grave containing the remains of 35 men--probably Muslims killed during the infamous massacre at Srebrenica--the RS and Federation officials have been working together to solve the crime. That wouldn't have happened just a short time ago, says Tuzla prosecutor Emir Ibrahimovic, watching as pathologists carefully unearthed clothed skeletons from the sodden dirt. "These days, we're seeing lots of cooperation."

Biljana Josic, a fashionably dressed Serb translator who works for the European force, sits in a café in Banja Luka. "I love this country," she says. "Change takes time but we are getting there." Back in Sarajevo, Elvir Causevic stops outside Hacienda, a Tex-Mex bar throbbing with Europop music. "Look, we're transforming into a market economy, dealing with the legacy of a horrific war and learning how to be an independent country all at the same time." Hitting that trifecta, today Bosnia has become a different kind of model for Europe--and the world.