After Djapo and other Muslims and Croats fled the town in 1992, 25,000 Serb refugees from other conflict zones moved into the vacant homes.

When Djapo went back to Brcko to be resettled under heavy Nato security, the new tenants were not very welcoming.

"Our bus was stoned and I was thinking that maybe it wasn't worth it after all to come back because it would never be what it was," Djapo, a Muslim and now mayor of Brcko, said, recalling his return to the Sava river port town.

The issue of who had territorial rights to the town had not been resolved by the 1995 Dayton peace treaty which split Bosnia into a Serb Republic and the Muslim-Croat Federation of Bosnia-Herzegovina.

It seemed attempts to install a multi-ethnic government looked doomed and the town quickly fell into shambles.
 
Dayton peace treaty

As talks dragged on, some Serbs threatened to go to war again if they lost control of Brcko - located in a narrow corridor of land linking the east and west of the Serb Republic.

In 1999, a US-chaired arbitration panel declared Brcko a neutral district, beyond the rule of the Muslim-Croat Federation of Bosnia-Herzegovina and the Serb Republic.

Brcko is in a land corridor linking
the east and west of the republic

The arbitration deal worked.

Ten years after the end of the war, Brcko is a rare Bosnian success story, where former enemies live side by side in a city that was so fiercely contested it was dubbed a "black hole".

Today, Brcko is a vibrant city with 80,000 Muslims, Serbs and Croats and boasts the highest average wages in the country.

It has it own assembly, administration, police, judiciary and customs and tax authority.

Despite the town's brutal history, it took the international community just five years to create greater stability in Brcko than has been achieved in the rest of Bosnia in the 10 years since the Dayton treaty was signed.
 
Success formula

As well as splitting Bosnia into two entities with their own parliament, president and government, the Dayton accord created a central government, consisting of a cabinet, two-house parliament and a three-person, inter-ethnic presidency.

Brcko's three ethnic groups, including 20,000 mostly Muslim returnees and 12,000 settled Serbs, share power under an informal "two Muslims-two Serbs-one Croat" formula which dictates the composition of the government.

Children attend joint schools, but use their own language and scripts.
   

Students attend joint schools but
use their own language and script  

Damir Radenkovic, who co-owns a freight company and volunteers as a coordinator at a multi-ethnic youth association, known as Vermont, said most people are driven by the common good.

"Brcko is a good example because despite the wounds being still fresh on all sides, there are many people ready to break with it and move on," Radenkovic, 33, said.

Up to 200,000 people were killed in the 1992-1995 war and half of the pre-war population of 4.4 million were displaced.

Djapo said full reconciliation would not be possible until all those guilty of war-time killings of non-Serbs around Brcko were prosecuted. Only three people have been tried.

When Serb forces captured the town, they expelled the non-Serbs in a campaign of "ethnic cleansing".

Systematic killings

UN prosecutors said hundreds of Muslim and Croat men were systematically killed at the Serb-run Luka prison camp and other camps nearby.
 
For Susan Johnson, Brcko's US supervisor, the district's main advantage is the nature of the arbitration ruling which went beyond Dayton and its main purpose of stopping the war.

Up to 200,000 people were killed
in the 1992-1995 conflict

"It imposed ... multi-ethnic institutions, political and economic reforms and a number of things that have contributed to Brcko's relative success," Johnson said in the tightly guarded compound that houses her office.

Last year, moderate parties won the first postwar local polls.

Johnson believes this indicates that people believed "in a link between a multi-ethnic concept and economic prosperity".

Brcko does owe much of its success to money; foreign aid but also fiscal independence, with customs and tax revenues providing good wages for 3000 public employees, a generous social system and reconstruction programme.

Those revenues have begun to slow since Brcko harmonised its taxes with the rest of Bosnia in 2003 and last year, the central government started taking a slice of the tax revenue.

Business friendly

The nationwide introduction of Value Added Tax in 2006 may also hurt the town's so-called grey economy.

But district officials say their business-friendly policies and development plans should continue to woo investors.

Alessandro Lucchetta, an Italian, heads a 110 million euro ($129.5 million) venture to develop the "Arizona" market, where more than 5000 people work.

"Brcko is a good example because despite the wounds being still fresh on all sides, there are many people ready to break with it and move on"

Damir Radenkovic,
Resident, 33

"If Arizona were somewhere else [in Bosnia] it would probably not be successful... Here you are protected as an investor and the administration is good," Lucchetta said.

District leaders say they want to protect Brcko from the central state's occasional attempts to clamp down on its autonomy - such as plans to incorporate the police into a national force.

"If not, this would become the international community's biggest failure in Bosnia," said the district assembly's Serb speaker Milan Tomic.
 
"The people would lose faith that it would be possible to make something similar elsewhere in Bosnia."