Srebrenica, where 8,000 Muslim men and boys were killed by Serb nationalist forces seeking to carve an ethnically homogeneous state out of Bosnia, has elected its first Serbian mayor since the 1995 massacre.

For relatives of the victims, the election of Mladen Grujicic, a Serbian nationalist who denies that the massacre was genocide despite international court rulings to the contrary, marks an ominous turn in Bosnian politics.

The US-brokered Dayton accords that ended the war set up an intricate federal structure with a weak central government designed to preserve Bosnia as a multi-ethnic state. But decentralisation has essentially entrenched the status quo achieved by Serbian and Croatian forces, critics say.

Srebrenica, a Muslim-majority town before the war, fell within the territory of Bosnia’s Serb Republic under the peace deal; its 7,500 population is now 55% Serb and 45% Bosniak (Muslim). Bosnia’s other autonomous entity is the Bosniak-Croat Federation.

A Bosnian woman walks among gravestones at the Potocari memorial centre near Srebrenica, in Bosnia and Herzegovina. Photograph: Amel Emric/AP

Grujicic claims Srebrenica’s Serbs face discrimination, and denies that the international criminal tribunal for the former Yugoslavia in The Hague has ever proved the massacre was genocide. “When they prove it to be the truth, I’ll be the first to accept it,” he said.

His defeated rival, Camil Durakovic, a Bosniak, pledged to appeal against the result of what he called a “rigged” election.

Zulfo Salihovic, a local politician who was one of the last Bosniaks to escape Srebrenica before the massacre, said he was worried for the future of the town’s Bosniaks.

“We fear that Bosniaks and other citizens who think differently from the leaders of Serb nationalist parties will be humiliated, bullied and discriminated against,” he said.

When Bosniaks – many of them elderly women wanting to be close to relatives’ tombs – began returning to Srebrenica after 2000, the international community, then closely involved in Bosnia’s peace process, promised them protection. Now many fear they may be forced to leave their homes again.

The massacre, Europe’s worst atrocity since the second world war, prompted western airstrikes on Serbian forces that ended the fighting in 1995.

In an attempt to conceal the crime, some Serbian forces dug up the bodies of Srebrenica’s victims and moved them to other grave sites across Bosnia. More than 1,000 remain missing, with more being found and returned to Srebrenica for burial every year.

The ICTY has jailed a number of Bosnian Serbs over the massacre. It convicted the wartime Bosnian Serb leader Radovan Karadžić of genocide earlier this year and sentenced him to 40 years in prison.

The Bosnian Serb general Ratko Mladić remains on trial for his role in the war, which killed 100,000 people.