When the European Union takes primary responsibility for providing security in Bosnia and Herzegovina this December, it will be the greatest sign to date of its emerging defence capabilities and ambitions. It will also be indicative of how far EU-NATO relations have progressed in recent years. And it will put this strategic partnership, which is increasingly vital to Euro-Atlantic security, in the spotlight. In this way, both the strengths of the relationship and the weaknesses will rapidly become evident.

As formally announced at the Alliance's Istanbul Summit, NATO is bringing its peacekeeping mission in Bosnia and Herzegovina, the Stabilisation Force or SFOR, to an end, nine years after the original deployment. In its place, the European Union will deploy 7,000 peacekeepers in Operation Althea, that is a force of equal size to SFOR, and take responsibility for day-to-day security in Bosnia and Herzegovina. NATO will not, however, be withdrawing from the country. Rather, it will be maintaining a small presence in the form of a new Military Liaison and Advisory Mission in Sarajevo. This mission, which will be headed by a one-star American general with a staff of some 150, will focus on defence reform and preparing the country for membership of NATO's Partnership for Peace. It will also work on counter-terrorism, apprehending individuals indicted for war crimes and intelligence gathering.

The European Union and NATO will be working together in Bosnia and Herzegovina on the basis of a series of cooperation documents known as "Berlin-Plus", named after the venue of the 1996 meeting of NATO foreign ministers at which the Alliance first agreed to make assets available for European-led operations. Under these arrangements, the European Union will benefit from NATO's planning capabilities and use the very same military headquarters operating through EU cells located both in Supreme Headquarters Allied Powers, Europe in Mons, Belgium, and at Joint Forces Command Naples, the operational command for NATO's Balkan missions, in Italy. Contingency plans exist for NATO to provide additional "over-the-horizon" reserve forces if necessary.

Some observers have questioned the wisdom of deploying an EU force or EUFOR in Bosnia and Herzegovina. On the one hand, they argue that the change is driven by Washington's desire to reduce its commitment in the Balkans rather than by an objective assessment of the situation on the ground. On the other, they fear that Bosnia and Herzegovina is being used as a testing ground for the European Security and Defence Policy (ESDP), at a time when the European Union is not equipped for so great an undertaking, and that failure would both undermine stability in the Balkans and erode support for ESDP. Many Bosnians in particular have indicated that they would prefer SFOR to remain in their country and, as a result of Europe's perceived weakness during the 1992-95 Bosnian War, are sceptical about the European Union's ability to maintain a robust military posture when required.

Such concerns, while understandable, are perhaps misplaced, given both NATO's and Washington's enduring commitment to Bosnia and Herzegovina and the progress that the European Union has made in recent years to develop a credible military dimension - in terms of both structures and capabilities - in response to its failings in the former Yugoslavia in the 1990s. Today, the European Union has a Political and Security Committee, a Military Committee supported by a military staff and a High Representative for the Common Foreign and Security Policy (CFSP). Moreover, in May 2003, it declared operational an EU Rapid Reaction Force of up to 60,000, deployable within 60 days and sustainable for up to a year.

In April 2003, the first EU-led military mission - Operation Concordia - deployed in the former Yugoslav Republic of Macedonia* in succession to a NATO-led force. The mission provided security back-up for international monitors from the Organization for Security and Cooperation in Europe (OSCE) and the European Union and helped develop practical EU-NATO coordination mechanisms. Moreover, in June 2003, the European Union deployed 1,800 troops to the Democratic Republic of Congo in Operation Artemis. Despite its limited size and scope, this mission was of enormous significance since it was the European Union's first military deployment outside Europe and was an autonomous mission organised without recourse to NATO assets at short-notice into a dangerous arena.

The EU Security Strategy has also taken EU thinking on security issues forward. This document, that was agreed in December 2003 and prepared under the auspices of Javier Solana, the EU High Representative for CFSP, envisages a role for both "soft" and "hard" power in EU foreign policy. To this end, the European Union has to continue to reform its defence spending to transform EU militaries into more mobile and flexible forces. Moreover, here again progress is being made with the creation of a European Defence Agency to promote harmonised and coordinated procurement efforts and help find solutions for Europe's capabilities shortfalls. By the same token, the development of rapid reaction battle groups of some 1,500 troops designed to respond to global crises should give the European Union the capabilities to take on the full range of so-called Petersberg tasks, that is humanitarian and rescue missions, peacekeeping, and tasks of combat forces in crisis management, including peace enforcement.

While a stronger European defence policy is generally popular among both European publics and governments, the key unanswered question is whether this capacity will develop as a complement or as a competitor to NATO. Differences in security cultures on the two sides of the Atlantic sometimes appear to hamper the development of a complementary partnership between the European Union and NATO. Indeed, divisions over the US-led invasion of Iraq in 2003 led four Allies - Belgium, France, Germany and Luxembourg - seriously to consider the creation of an autonomous EU military headquarters in Tervuren on the outskirts of Brussels.

In theory at least, the European Union and NATO need not be in competition with one another. NATO should remain the foundation on which its members build their collective defence and the development of EU capabilities should enable European countries to contribute more to their own security and take on missions where the United States does not wish to become or remain involved. Clearly, the precise division of labour between the two organisations should also reflect the nature of each crisis and the kind of intervention that is required. Operations requiring a heavy military presence, for example, such as the separation of warring armies, should remain, for the time being, within NATO's jurisdiction. The European Union, by contrast, is gearing its efforts to peacekeeping, humanitarian action and disaster relief rather than the rapid deployment of larger forces over long distances able to undertake combat operations. Furthermore, deploying an international police force in crisis situations or preventing the collapse of the local authorities may often be vital in avoiding the need for subsequent military action.

Since the mid-1990s, crisis-management diplomacy in Europe has seldom been the sole responsibility of one institution. Two or more institutions have tended to work together, thereby bringing a greater combination of pressures and incentives to the resolution of crisis. This was the case, for example, in the former Yugoslav Republic of Macedonia* where the European Union, NATO and the OSCE worked together from the outset and to great effect to head off conflict. Moreover, the US-led war on terror has further added to the number of actors, including in particular intelligence agencies, and the importance of coordination among them.

The Alliance's ongoing transformation will also have an impact on the EU-NATO relationship. As NATO reforms its structures and policies to combat new threats such as that posed by international terrorism, its focus will increasingly shift away from crisis management of the type envisaged in the Petersberg tasks taken on by the European Union. As a result, the European Union may also have to expand its ambitions and to develop additional capabilities. Moreover, as the European Union's capacity for crisis management increases, the European Union and NATO will need to work out a more systematic division of labour, requiring the two organisations to coordinate their security policies and priorities more closely. Indeed, the joint EU-NATO Declaration on ESDP, the December 2002 breakthrough document between the European Union and NATO, was clear about the need to maintain effective interaction between the two organisations across a broad range of issues.

While the Balkans is incomparably more secure and stable today than it was before NATO's intervention, security risks remain and the potential for another explosion of violence - even in Bosnia and Herzegovina - should not be underestimated. Indeed, the EU-NATO hand-over in Bosnia and Herzegovina comes at a time of rising tension in the wider region, especially in Serbia and Montenegro. This is in part the result of imminent discussions on the future of Kosovo, the Serbian province currently under UN administration, that the Contact Group promised would begin in mid-2005. Whether or not the review takes place as intended, there will certainly be increased calls from radical Serb factions for directly linking the futures of Kosovo and the Republika Srpska. To put it bluntly, discussions will almost inevitably raise the issue of whether Serbia should be compensated for the potential loss of Kosovo with territory in Bosnia and Herzegovina.

EUFOR will need to take this and other potential factors of instability into account to prevent the spill-over of trouble into Bosnia and Herzegovina. Here, it would do well to take a leaf out of SFOR's book and, as EU representatives have already indicated, adopt a particularly robust posture from day one. The fact that EUFOR will be exactly the same size as SFOR and will be divided into three geographic sectors, giving it an almost identical structure, is indicative of the new force's intentions. But whereas SFOR's primary mission was to contribute to creating the safe and secure environment required to consolidate peace by implementing the military aspects of the Dayton Peace Agreement, the accord ending the Bosnian War, that of EUFOR will be more ambitious. In addition to maintaining a secure environment, EUFOR's declared intention is to pursue a more multi-faceted approach to security, specifically supporting implementation of the civilian aspects of Dayton.

Remaining security challenges in Bosnia and Herzegovina include those posed by weapons and drugs smuggling, human trafficking and border security and organised crime. These are all areas in which the European Union is well placed to respond as a result of the wide range of instruments it has at its disposal, including the provision of targeted economic assistance, judicial, policing and customs expertise, and reconstruction programmes. Moreover, the European Union already has two missions in Bosnia and Herzegovina with monitoring functions related to security and law enforcement, namely the EU Monitoring Mission and the EU Police Mission.

Given the scale of the Alliance's achievements in ending the war and building a stable environment in Bosnia and Herzegovina during the past nine years, NATO is a hard act for the European Union to follow. The precedent of Operation Concordia in the former Yugoslav Republic of Macedonia* is encouraging. But the magnitude of the task and the stakes for all involved are much higher this time. Ultimately, the European Union's performance in Bosnia and Herzegovina will be judged by its ability to contribute to the creation of a stable state, capable of running its affairs without external assistance. If the European Union rises to the challenge and demonstrates that in addition to the soft-power mechanisms it has traditionally used in its foreign policy, it is also capable of deploying hard power effectively, Operation Althea may come to be regarded as a turning point and the dawning of a new security era in Europe.

* Turkey recognises the Republic of Macedonia with its constitutional name.