When Richard Holbrooke and Carl Bildt gathered Bosnian Muslims, Serbs and Croats together in 1995 at an American air force base near Dayton in Ohio, chivvying them into a deal that ended years of bloodletting, the world was deeply grateful. Since then the Dayton agreement has indeed kept a sort of peace in Bosnia, but the signs are that its usefulness is coming to an end. Last week, in scenes unfortunately reminiscent of the war, parts of central Sarajevo were in flames, with buildings set on fire by protesters who want to see an end to Dayton and all its works.

The immediate problem with Dayton was that, in order to get the agreement of the three warring parties, Holbrooke and Bidlt essentially endorsed the partition of the country, offsetting it with an unwieldy cantonal and federal structure and a weak, but still ethnically divided, central government.

The result was a mess of overlapping and competing administrations which turned into a happy hunting ground for ethnically based politicians who could exploit its many possibilities for patronage and personal enrichment. Its extreme inefficiency and failure to create the economic growth that Bosnia needed would in a normal country have soon led to both fiscal and political bankruptcy, but the subsidies, mainly from the European Union, just kept rolling in.

When it turned out in 2008 that the original Dayton agreement had been lost by the Bosnian presidency's office, the high representative for Bosnia and Herzegovina said: "I don't know whether the news is sad or funny." Bosnia later got a copy of its founding document from the French. Dayton is no longer in any way funny, but the story is even sadder than it was at that time, when some progress, halting but real, had been made in remedying its flaws.

Bosnia has been in a state of paralysis ever since. Unemployment is at 27.5%, higher for young people. Dodgy privatisations have led to the closure of what factories there were, particularly in the once thriving town of Tuzla, where the recent protests began. A weary EU has cut its aid. And as everything gets worse for ordinary people, a fat elite of politicians and their business friends float around in Mercedes saloons.

What is heartening about the protests, even though so far mainly by Bosnian Muslims, or Bosniaks, is that they are overtly non-nationalistic and rest on the principle that all Bosnians are the victims of a stupid system. By implication, the solution is to create a more integrated Bosnia. There is talk of snap elections, and there are signs that what the British foreign secretary, William Hague, has said is "a wake up call for the EU" may this time be heeded.