This comes as the peace accord brokered 25 years ago has fallen apart.
"There is no room in Europe for a divided Bosnia-Herzegovina. After chairing a meeting with the bloc's foreign minsters, Josep Borrell stated that those who work in this direction were strongly wrong.
Last month, the United States announced new sanctions on Milorad Dodik the Bosnian Serb leader. Dodik has been advocating for years that the Serb-run Bosnian part of Bosnia should be separated from the rest of Bosnia and unite with Serbia.
He was accused by the U.S. of "corrupt activities" which threaten to destabilize the region as well as undermine the U.S.-brokered Dayton Peace Accord. Dodik claims he and the Bosnian Serbs have been unfairly targeted and wrongly charged with corruption.
Borrell said to reporters in Brussels that "we are prepared to use all of the instruments available if (it) requires us," Borrell said that these measures could include reducing "financial aid, and restrictive measures", but that this would only be used in the last resort.
The 1995 peace agreement ended the conflict in Bosnia that had left millions homeless and killed more than 100,000 people. Republika Srpska was established by Bosnia's Serbs. Another governing entity in Bosnia is controlled by Bosniaks. This ethnic group is primarily Muslim and Croats. Both are connected by state-wide institutions that are shared. All actions at the national level must be approved by all three ethnicities.
Dodik is also wanted by most EU countries, but Hungary, Croatia, and Slovenia are strongly opposed.
Dodik rejected any EU threat to pressure. He stated Monday that he and his ruling Party "will not accept" EU sanctions. Additionally, Dodik said that the Bosnian Serb entity would block any "development projects" at the federal level in Bosnia if the EU sanctions are accepted.
Dodik sad, "If they want the whole of Bosnia and Herzegovina to stop, we are at your service."
Alexander Schallenberg, Austria's Foreign Minister, had earlier stated that the announcements made by Dodik and Republika Srpska were extremely dangerous and played with the integrity state. This is why we are refusing to go.
Dodik warned that Bosnia and its Balkans should not be "a playground for actors from outside Europe." Russia, notably, has pledged support to Dodik and his associates.
The EU also demands that the electoral reform be passed before polls in Bosnia are held later this year.
Simon Coveney, the Irish Foreign Minister, stated that the EU is looking for a "full reform package that was agreed to and implemented before the elections in order that elections can be held that result in a government that can work."
Coveney stated that he wanted peace and stability for Bosnia and Herzegovina and that a reform package would help him achieve that goal.