After survivors and bereaved families put up a memorial to the mass slaughter in 1992 of Muslims in Višegrad, the response of the Serb authorities in the eastern Bosnian town was as unsubtle as it was symbolic. They ordered the word "genocide" chiselled off the stone monument.

A group of Višegrad widows soon restored the word in lipstick, only for it to be obscured by municipal white paint a few days later. This is a battle the town hall is not prepared to lose. When it sent a surveyor and workman into the town's Muslim cemetery with an angle grinder to erase the offending term on 23 January, they were accompanied by 150 policemen in riot gear. The message was clear.

The graveyard spat is a skirmish in a much bigger battle being fought in Bosnia – the continuation by bureaucratic means of the murderous four-year war of two decades ago. It is a struggle over collective memory and the power to write history.

"Those who committed the war crimes against us are still winning. They are killing our truth," said Bakira Hasečić, a Višegrad survivor who was raped multiple times by Serb paramilitaries at her home and in the local police station in 1992. Her sister was raped and killed. Her 18-year-old daughter was raped and had her head smashed by a rifle butt, but survived.

Hasečić now runs the Association of Women Victims of War. She and other Višegrad rape victims tried to protect the monument last month but failed because the town authorities turned up an hour earlier than announced, and in force.

"The huge numbers of police in their uniforms and caps brought back the memories of 1992. You relive those moments. My legs were shaking. When we arrived, we had no idea they had already done that to the monument. People started crying when they found out. I couldn't bring myself to look at it."

However, the same morning and less than 200 yards away, Hasečić and other Bosniak survivors were successful in stopping another act of demolition. The Serb authorities want to knock down a house on Pionirska Street, where 59 Muslim women, children and pensioners were locked into a single room and incinerated on 14 June 1992. Relatives of the dead, with Hasečić's help, are trying to restore the house as a memorial.

The town council has countered by expropriating the building, claiming the road needs to be widened. Yet the house is set well back from the existing road and the immediate Serb neighbours – who have mostly been supportive of the Bosniaks' restoration attempts, offering to help with water and electricity connections – say no other houses on the street have been targeted in the same way.

But no one in the neighbourhood believes the issue is really about town planning. Serb nationalists are striving to suppress reminders of atrocities committed in the name of separatism, mostly against the country's Muslims (known as Bosniaks) and to construct an alternative history in which Serbs were the principal victims. Many Bosniaks and outside observers fear that this refusal to come to terms with the past means there are few guarantees that such acts will not be repeated.

Bosniaks and Croats have also been slow to allow memorials to civilian victims from other ethnicities, but it is in the Republika Srpska, the Serb-run half of Bosnia, where the scale of the killing was by far the greatest, and where the culture of denial is now the deepest.

Višegrad is a grim example. An eastern Bosnian town set dramatically along a break in the white limestone ravines of the River Drina, it is home to Bosnia's best-known cultural artefact, the 16th century Mehmed Paša Sokolović bridge, a graceful span of 11 masonry arches made legendary by the Yugoslav Nobel laureate Ivo Andrić.

In his 1945 novel, the Bridge on the Drina, it is silent witness to atrocities across generations. In 1992, it was spattered with blood once more. Serb paramilitaries calling themselves "The Avengers" and the "White Eagles" went on a killing spree through the town and surrounding villages, executing Muslims. Men, women and over a hundred children were slaughtered, many on the bridge itself, and their bodies dumped in the Drina.

The practice of barricading people into houses and setting them alight with grenades was reproduced several times. In another incident in nearby Bikavac, there were 60 victims, against mostly women and children.

A couple of miles outside Višegrad, young women and girls as young as 14 were held captive and repeatedly raped in the Vilina Vlas spa hotel. It was where the paramilitaries led by a pair of sadistic local cousins, Milan and Sredoje Lukić, made their wartime base. Muslim men were routinely tortured next door to where the women were raped and killed.

The estimates of the total number of victims in the Višegrad municipality range from 1,600 to 3,000. The rest of the area's Muslims fled; most made their way south to Goražde, which became a Bosniak enclave and survived a three-year Serbian siege. Before the war, the Višegrad municipality had a population over 21,000, two thirds Muslim. Now the population is 12,000, 1,500 of them Bosniaks.

A Bosnian Muslim woman prays over a casket containing her relative's remains during a mass burial ceremony in Višegrad in 2012. Photograph: Elvis Barukcic/AFP/Getty Images

Today's survivors are post-war returnees to the Višegrad outskirts, often living in villages or houses where their loved ones were executed. Twenty years after the bloodletting they remain a marginalised community, routinely denied the meagre social benefits doled out by Višegrad's authorities.

After an interregnum in which slightly more moderate parties held sway, the Serb Democratic Party (or SDS for Srpska Demokratska Stranka) regained control of the municipality in October 2012. The extreme nationalist party of Radovan Karadzic, which hacked out the Republika Srpska and oversaw the "ethnic cleansing" of Muslims and Croats, is back in charge in Višegrad and 24 other Serb towns with its own version of what happened between 1992 and 1995, and its own way of doing things. Hence the municipal use of angle-grinders and bulldozers.

"With the old mayor we could co-operate much better. We had different opinions but it was discussed in a more civilised way," said Bilal Memišević, the head of Višegrad's Islamic community council. Both his parents were murdered in 1992, when he was studying abroad. "Since the SDS came to power, they started ignoring us. They don't mention employment, or the economy. It's all about the war and the manipulation of 1992. They have been able to target a vulnerable population and they have been successful. They have built an alternative reality."

That alternative reality is visible everywhere in town. In the main square, there is large statue of a knight bearing a cross and a sword, dedicated to "the defenders of the Republika Srpska, with the gratitude of the people of Višegrad". Nearby a large swath of land had been expropriated for a literary theme-park, Andrićgrad, masterminded by Emir Kusturica, Serbia's most famous film director, twice awarded the Palme d'Or at Cannes.

The complex, a pastiche on the town's history, due to be completed in June this year, is being built on the site of a former sports centre that was used as a detention camp by Serb paramilitaries.

In mid-March each year, hundreds of Serbs come from around the region to parade through the town to commemorate Draža Mihajlović, the leader of the ultra-nationalist Chetnik movement during the second world war, who carried out a series of atrocities against Muslims in the Drina valley. They come as Chetniks, with long wild beards, fur hats, and black skull-and-crossbone flags. Many of the killers in 1992 dressed exactly the same way. It is a terrifying annual spectacle for Višegrad's remaining Bosniaks, all the more so in 2010 when Mitar Vasiljevic, a Lukić henchman sentenced 15 years by the Hague war crimes tribunal for his part in the 1992 killings, made a triumphant return after early release. He paraded in full Chetnik garb and was given a hero's welcome, complete with patriotic music and a motorcade through the town.

Milan Lukić himself was transferred from the Hague this month to serve his life term in Estonia. His cousin Sredoje is serving 27 years in Norway.

The most powerful man in town now is Miroslav Kojić, a soldier and secret policeman for Republika Srpska during the war and now Višegrad's SDS representative in the Republika Srpska parliament.

He provides a legal defence of the municipality's actions, arguing that there have been no convictions at the Hague tribunal specifically for genocide that would justify the disputed memorial. (Višegrad was taken from the list of municipalities in Karadzic's genocide indictment to slim the charge sheet and speed up his trial, but the tribunal has declared the town was subjected to "one of the most comprehensive and ruthless campaigns of ethnic cleansing in the Bosnian conflict"). As for Pionirska Street, Kojić says the issue is a long-running non-political town planning matter.

Of his own wartime role, Kojić – an energetic man with a piercing stare – is heated, launching into a strangely inverted version of Višegrad's wartime history, in which Bakira Hasečić supposedly tortured Serb policemen and soldiers, and Višegrad's Serbs withstood a brutal Bosniak siege in 1992 and 1993.

The narrative of Serb victimhood is pieced together from sporadic Bosniak acts of resistance during the war. After the former Yugoslav National Army bombarded Muslim areas of Višegrad at the outbreak of conflict in the first week of April 1992, a group of armed Muslims took some Serb policemen hostage and threatened to blow up a nearby hydroelectric dam if shelling continued. The dam was retaken by the army which then withdrew on May 19, handing the town over to Serb nationalists and paramilitaries that carried out the atrocities against Bosniak civilians.

In summer 1992, survivors of the concentration camps helped form a Bosniak First Višegrad Brigade which fought a guerrilla campaign for a year in the wooded hills on the west bank of the Drina, but never came close to surrounding or threatening the city before being driven back into the Bosniak enclave of Goražde in 1993. After surviving multiple rapes, Hasečić, did join the Bosnian army, but there is no evidence of her mistreating Serbs.

Today the Bosniak resistance effort is the justification for public memorials in central Višegrad for Serb soldiers and even Russian volunteer fighters on the Serb side, and the absence of equivalent monuments to Bosniak civilians. It is a pattern repeated around the Republika Srpska. Further up the Drina is the town of Foca which became a byword for mass rape during the war. Bosnian Serbs imprisoned Muslim women and girls and raped them on such a scale the town made legal history. As a result of what happened in Foca, such systematic rape was finally classed as a crime against humanity.

There is no sign of such a grim history in Foca now, just another granite and marble monument to the Serb fallen. There is also no plaque at the most notorious concentration camp at Omarska, now within an iron ore mine run by a Luxembourg-based multinational steel corporation, ArcelorMittal, which says it is a matter for the Serb-run local authority in Prijedor to decide. In the neighbouring camp, at Trnopolje, where torture and rape were rife and where hundreds of Bosniaks and Croats were killed, a concrete memorial to fallen Serb soldiers has been placed at the entrance inscribed with an ode to "freedom".

In Višegrad, the remaining Bosniaks have become accustomed to the official state of denial. Omar Bosankić and Elvedin Musanović, two Muslim men in their mid-30s out strolling one recent afternoon on Višegrad's bridge, insist that relations with their Serb neighbours are fine as long as the war is not mentioned.

"No one wants to admit anything. They never want to talk about it," Bosankić said. As a 14-year-old boy, he helped fish bodies of murdered Muslims out of the Drina at night in his home village of Barimo, five miles downstream. "I still have images that come back all the time. There a woman with her hands tied behind her back and a man with a screwdriver still stuck in his neck."

Musanović says that Bosniaks on the bridge were slaughtered with whatever the Lukićs' "Avengers" or "White Eagles" could find, often blades of broken glass. A water tanker would come in the evening to wash away the gore from the ancient stones of the bridge where they now take their daily walk. In the absence of any jobs, there is not much else to do.

The two men are unimpressed by the municipality's legal objections to the Bosniak memorial.

"What else happened here but genocide?" Bosankić asked. Twenty-six people were murdered in his village in August 1992, the youngest, Emir Bajrić, was only 12 years old. He points out that the fact that no one has so far been convicted for the crime does not mean it did not happen. "Everybody who lives here knows what happened."