* Some 75-100 mln euros per year at stake
* Rival leaders unable to agree how to spend EU funds
* Impasse indicative of Bosnia's stalled EU accession
By Daria Sito-Sucic
SARAJEVO, Aug 16 (Reuters) - Bosnia risks losing out on 75-100 million euros per year in badly needed funds from the European Union due to the failure of rival Serb, Croat and Muslim politicians to agree on how to manage the money, EU and Bosnian officials say.
Without a breakthrough by September, Bosnia could see hundreds of millions of euros in so-called IPA funds over the next cycle of 2014-2020 redirected to neighbouring countries also hoping to join the EU.
The prospect reflects a crisis of governance in the Balkan country of 3.8 million people, which is still dogged by deep ethnic rivalry 18 years since the end of a 1992-95 war.
"The IPA means Instrument for Pre-Accession," said Renzo Daviddi, deputy head of the EU delegation in Bosnia. "Is this country moving towards accession or not? Frankly, I don't think it's moving much towards accession," he told Reuters.
"We are still stuck with the kind of problems that are with us now for several years," he said, warning that the funds could be cut off without progress on the political front next month.
The EU provides funds to all the former Yugoslav republics looking to join the bloc, trying to foster better governance and encourage economic development as they draw closer to accession.
But with conflicting visions of their joint state, leaders of Bosnia's former warring communities have been unable to agree on the creation of an efficient mechanism to manage IPA funds.
The impasse has already led the European Commission, the EU's executive arm, to suspend projects designed to boost agriculture and tourism and help small enterprises.
Bosnia's Directorate for European Integration, which has so far been handling IPA funds, said the country's two autonomous regions - the Serb Republic and the Federation of mainly Bosnian Muslims and Croats - were divided over how to spend the money.
EU ACCESSION BLOCKED
The EU, which allocated around 660 million euros to Bosnia from 2007 to 2013, wants to see a more streamlined mechanism for distributing the funds and a single national strategy on how they should be spent.
But the Serb Republic, which is fiercely protective of its autonomy and rejects any deeper integration, says each region should handle the funds independently.
"The existing coordination mechanism does not function because of strong political influence," said Zara Halilovic, the directorate's assistant director.
The impasse is indicative of the ethnic politicking that has stifled Bosnia's recovery and development since the war, in which around 100,000 people died.
A peace deal in 1995 ended the fighting, but created a highly decentralised and unwieldy system of government that frequently grinds to a halt.
While neighbouring Croatia joined the EU on July 1, Bosnia has yet to even qualify to apply for membership. It trails fellow ex-Yugoslav republics Serbia, Montenegro and Macedonia.
Bosnia's further progress is blocked by the failure of politicians to agree on how to amend the constitution to address restrictions on ethnic minorities running for office.
Bosnia is also stuck in a row with the European Commission over its refusal to adjust a trade agreement with the European Union following Croatia's accession, in order to extend to other EU members the trade quotas Bosnia previously had with Croatia.
Bosnia argues its own agriculture producers will be hurt by a flood of customs-free goods from the EU.
"Bosnia seems to be particularly rigid and inflexible on this issue at the point in time when they are also demanding a number of other things," said Daviddi. "At the end of the day, there is more that Bosnia is demanding from the European Union than the EU is demanding from Bosnia." (Editing by Matt Robinson and Alison Williams)