Diplomats are keeping a close eye on the elections this Saturday (11 November) in the two regions which make up the country, the Serbian Republic of Srpska and the Croat-Muslim federation.They say the results could affect the mood at the Union-Balkans summit in Zagreb later this month, where leaders from the region hope to celebrate democratic advances made in the wake of Vojislav Kostunica’s stunning defeat of Serbian strongman Slobodan Milosevic last month in neighbouring Yugoslavia.Experts insist improved relations with the West are crucial for Bosnia and other Balkan countries, especially if they expect to receive more financial aid from the EU – and possibly even work towards membership of the bloc. “That is the main carrot for all the reforms here,” said one official working on the ground in Sarajevo. “A big nationalist showing would set that process back.” The voting is expected to produce gains for moderates in Croat and Muslim regions, but the nationalist Serbian Democratic Party (SDS) – founded by indicted war criminal Radovan Karadzic and fostered by Milosevic – could be returned to power in Srpska.Human rights campaigners have tried to prevent the SDS from taking part in the election, but acknowledge that it is too late to stop the party from making gains. “The time-frame is so short that it may be impossible to ban the party,” said Sascha Pichler of the International Crisis Group in Brussels. She also acknowledged that efforts to contain Serbian nationalism often have the opposite of the desired effect, inflaming rather than dampening isolationist sentiment.Staff at the Office of the High Representative in Bosnia-Herzegovina have nevertheless been working to boost turnout and dilute support for the nationalists. Experts point out that moderates have been making gradual gains, starting with municipal elections in April, and say even SDS candidates are trying to soften their isolationist rhetoric. As a result, they maintain, success for the party would not necessarily bode ill for the region.“It does not actually matter what happens in the elections as long as the world community continues to push for the Balkan states to live up to the terms of the Dayton accords,” said Nick Whyte of the Centre for European Policy Studies, referring to the 1995 peace agreement.Kostunica, still basking in the positive reception he has been given by the West, has been playing both sides. His recent trip to Bosnia for the funeral of a nationalist poet was a public-relations coup for the SDS. But the new Yugoslav president also promised to improve ties with the Croat-Muslim federation – something which would have been unthinkable a year ago.