Following its declaration of independence in early 1992, Bosnia and Herzegovina was plunged into a three-year long war. This led to major displacements of the population and extensive physical and economic destruction. On November 21st 1995 a peace agreement was reached in Dayton (USA) that put an end to the war. The final agreement was signed in Paris on December 14th 1995. The Dayton Peace Agreement retained Bosnia and Herzegovina’s international boundaries and created two entities within the state of Bosnia and Herzegovina: the Bosniak/Croat Federation of Bosnia and Herzegovina and the Bosnian-Serb led Republika Srpska. The implementation of the Dayton/Paris Peace Agreement has been monitored by a High Representative under UN auspices.

Bosnia and Herzegovina is a parliamentary democracy and the constitution in force was defined by the Dayton Peace Agreement. Bosnia and Herzegovina has a bicameral parliament comprised of the House of Representatives and the House of Peoples. Two-thirds of the members of the House of Representatives are elected from the Federation of BiH and one-third from the Republika Srpska.

In June 2008 the EU and Bosnia and Herzegovina signed the Stabilisation and Association Agreement (SAA) which is currently being ratified. An Interim Agreement on trade and trade-related issues entered into force in July 2008. 

Bosnia and Herzegovina benefits from EU financial assistance and during 2007-2012 it will receive 440.1 million euros to support the consolidation of the rule of law, human rights, social inclusion and respect for the protection of minorities. Support will be also given to the reform of the media sector, public administration reform and to improving the overall functioning of the judiciary. Since 1991, EU assistance to Bosnia and Herzegovina amounted to more than 2.5 billion euros. The EU is also contributing to Bosnia and Herzegovina's further consolidation through military presence (EUFOR – Operation ALTHEA), a police mission and a EU Special Representative.