With tensions rising in the western Balkans, the international community's envoy in Bosnia announced last week that he will be stepping down.

By the end of this month, the US and other Western governments must decide whether to replace the High Representative, Christian Schwarz-Schilling, when he leaves office June 30 and, if so, what sort of mandate to grant his successor. Their decision will have enormous implications for the effort to build Bosnia into a viable, unified state capable of joining the European Union and the North Atlantic Treaty Organization.

Mr. Schwartz-Schilling, who once argued that the Office of the High Representative (OHR) should be closed down altogether on June 30 to allow Bosnians to take fuller responsibility for their country, recently reversed this position. In high-level meetings with leaders in Berlin, Washington, and London this week, he advocated leaving the office open.

Sources say the German diplomat's change of heart is the result of the confluence of several events. Fiery campaign rhetoric leading up to October's elections heightened tensions between Bosnia's three ethnic groups – Serbs, Croats, and Bosniaks – as did the triumph of radical nationalists in neighboring Serbia's elections Jan. 21. Add to that the impending decision by the United Nations on whether Kosovo should be granted independence from Serbia.

"All of these things have a psychological impact on Bosnia and make for an extremely complicated situation," says Schwarz-Schilling's spokesperson, Chris Bennett. Shutting down the OHR, he says, has become "a question of how much risk you are willing to undertake."

Since 1997, the High Representative has had the power to impose legislation and fire public officials, tools used regularly by previous holders of the office. Schwarz-Schilling, who took office in early 2006, has championed a hands-off approach, arguing that imposed solutions are unconstructive, merely giving the illusion of progress.

"If there isn't local support, then these imposed laws simply don't get implemented," Mr. Bennett says. "It's about empowering the local authorities to take responsibility for the future of their country."

This soft approach has been satisfactory to Bosnian Serbs, who fought the war in order to create their own ethnically pure state, and generally resist any move that would strengthen national institutions at the expense of those of Republika Srpska, as their entity is called.

It has been extremely unpopular among non-Serbs, most of whom live in the country's other entity, the Bosniak-Croat Federation. The International Crisis Group is expected to be releasing a report in the coming days that is critical of Schwarz-Schilling's performance.

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