By Ian Black

The EU takeover of peacekeeping in Bosnia is more significant for Europe's military ambitions than Bosnians themselves

Not many people are likely to notice it, but a military ceremony in Bosnia this week will be a landmark moment for Europe as it struggles to be taken seriously as a player on the world stage. Tomorrow's event in Sarajevo will signal the handover of peacekeeping from Nato to the European Union, which will be undertaking its most ambitious and complex peacekeeping mission yet. Bosnians may not feel it makes much of a difference, except for seeing foreign soldiers with different cap badges or blue and gold shoulder patches on their uniforms. But it is a very big deal for the EU and its aspirations. Eufor, as the new outfit will be known, replaces S-For, the Nato-led force which was 60,000-strong at its peak and has policed the country since the Dayton peace accords ended the war in 1995. The EU force of 7,000 will be commanded by the British general, John Reith, and it is expected to be there for at least three years.

The irony is that it took the Bosnian conflict - with a quarter of a million victims, millions of refugees, the shameful siege of Sarajevo and the Srebrenica massacre under the eyes of helpless Dutch peacekeepers - to highlight just how hopeless Europe was when it came to dealing with its Balkan backyard. British and French troops intervened under UN command, but they were able to do little more than feed the victims while fighting and ethnic cleansing raged on. It was only when the US under Bill Clinton overcame its reluctance and got seriously engaged that the war was brought to an end. The far more determined response to the Kosovo crisis in 1999 showed that Europeans had learned some lessons. But much more remains to be done.

In the last two years the EU has undertaken a handful of modest military missions. Operation Artemis in the eastern Congo as well as a smaller scale preventive deployment in Macedonia, the last of the former Yugoslav republics, have required time-consuming negotiations to arrange and finance. These are both part of the European Security and Defence Policy (ESDP) - designed to encourage the union to do more to develop its capabilities as a military power while seeking to avoid costly duplication and add some modest muscle to its economic and diplomatic weight. In the background is the grim realisation that the EU's 25 member states, with 450 million people, spend about 60% of what the US does on defence but can only muster about 10% of America's firepower and a fraction of its combat forces.

The key to the Bosnia deployment is an agreement with Nato which will allow EU forces to use the alliance's planning and logistics under an arrangement known as "Berlin-plus". That took years to nail down because of objections by France, which is always semi-detached from the US-dominated alliance and is often suspected of seeking to undermine it, as well as by Turkey, which wanted leverage for its own EU membership bid. Berlin-plus should increase Europe's ability to act where Nato does not wish to be involved. The idea is that this should not weaken the alliance, which has been the institutional embodiment of transatlantic ties for over half a century - though how long it will remain so must be open to question.

Nato's departure from Bosnia after nine years is linked to the reduction of US forces in Europe, overstretched as they are by commitments in Iraq and Afghanistan since 9/11. Nato, left out of the war in Iraq, is also undergoing a transformation, following an American agenda, to mount the sort of "out of area" operations it never even considered when worrying about the Soviet Union during the cold war. But since most of the existing 10,000-strong Nato force in Bosnia is already European, the change is more about politics - and insignia - than anything else. The EU is hoping desperately that Washington, where the Pentagon has long been suspicious of French and German motives, will finally start to take it seriously as a military power.

Significantly, and partly at the request of the Bosnians themselves, Nato is to leave behind a small intelligence and special forces team dedicated to tracking the high-profile war criminals who have so far eluded it: Radovan Karadzic and Ratko Mladic, respectively the political and military leaders of the Bosnian Serbs, are the most wanted men in the country but remain at large. With Slobodan Milosevic, the former Serb president, defending himself against genocide charges at the Hague war crimes tribunal, and Serbia and Croatia under heavy pressure to hand over other indictees, this is a highly sensitive issue.

The EU is trying hard to encourage internal reform and refugee returns in Bosnia by highlighting the country's prospects for future membership, though it has repeatedly accused the Bosnian Serb authorities of obstructing the hunt for war criminals. It is also working to ensure that organised crime and corruption - seen as a far bigger risk than the prospect of renewed fighting between Serbs, Croats and Muslims - do not spill over to the wider region, where Croatia is getting close to opening EU accession talks.

The long-awaited establishment of Eufor also seals Europe's political "ownership" of the international aid effort to Bosnia - already established in the person of Britain's Paddy Ashdown, who represents both the UN and the EU in Sarajevo. "This is the only real industrial-scale attempt to implement European security and defence policy on the ground," Lord Ashdown said this week. "If we cannot do this, many will see that policy as a piece of rhetoric."