In terms of regional state interests it was entirely appropriate that the starting point for a new Balkan War, which just happened to become the First World War, should be Sarajevo. But there is another sense too, for Sarajevo became the epicentre of a wider ideological struggle with profound implications for the shape of Europe. That entailed a clash between the forces of radical nationalism and conservative imperialism. The debate over which Sarajevo monument is more appropriate to mark the murders of June 28, 1914 — a pietà for the victims or a plaque for the assassin — is ultimately one about systems and values, and it has implications for the way in which the Great War is viewed as a whole.

Princip and his controllers certainly wanted to liberate Bosnia and Herzegovina from the Habsburg Empire. But did the peoples of Bosnia and Herzegovina wish to be liberated? And even if Serbs living there wanted it, could and did it benefit non-Serbs? Did it, in particular, benefit Sarajevo? Here the answer is both clear and revealing — no, it did not.

Sarajevo is the work of two empires, the Ottoman and the Austrian. Their cultural imprint is everywhere. The Ottomans chose the site and erected the city. Their vakufs — religious or charitable endowments — funded the institutions of education and welfare. The Ottoman city was divided into mahalas — residential neighbourhoods, each built around a mosque or other place of worship, for three or four mahalas were non-Muslim. One was Jewish, originally populated by Sephardim expelled from Spain and Portugal at the end of the 15th century, joined in the 18th century by Ashkenazim. But in early times, one of the largest was the Catholic mahala — it is still the Catholic (Croat) quarter, Bistrik. This was based on people from Ragusa (Dubrovnik). The Ragusans, tributaries of the sultan but maintaining on the Adriatic an exclusively Catholic mini-state, had no scruples about helping to build Sarajevo's imposing mosques. It is a microcosm of a contradictory yet harmonious system. Without overlooking the unspeakable cruelties visited on those who sought to throw off Ottoman domination, one can otherwise admire the order, sophistication, diversity and tolerance that the Porte, at the height of its powers, sustained in this, its regional capital.

The population of Sarajevo appreciated it too, at least when confronted with the alternative. Hence the fierce armed resistance offered to Austrian troops, who arrived in 1878 under the terms of the Treaty of Berlin, which granted Austria the right to occupy and govern, but not to own, Bosnia and Herzegovina. The new rulers had, in fact, no intention of wiping clean the cultural slate. To the contrary, not just Orthodox Serbs but Catholic Croats, whose hopes had been raised, loudly complained that they were pushed aside in favour of the traditional Muslim elite. What the Austrians did bring to Sarajevo, and to Bosnia generally, was progress and prosperity.

From 1878, and with greater urgency after formal annexation in 1908, the Austrians dragged Sarajevo and Bosnia a long way into the modern world. They built roads, and not just for military purposes. They built narrow-gauge railways across the province and Sarajevo flourished as a centre of railway building. Trams began to circulate. The Austrians cautiously promoted the role of religious leaders to dampen the role of secular nationalisms, but they also later encouraged cultural organisations from which parties emerged. A Bosnian parliament was established, albeit with restricted franchise and seats effectively allocated on confessional grounds.

The authorities strongly emphasised education. In fact, they were too successful, because it was among students that radical opposition developed. Multi-confessional schools were founded. An elementary school solely for Muslim girls was opened, but it met resistance. Industrialisation and commerce were encouraged. Brick, tobacco and textile factories, sawmills, a reservoir and (in 1910) electricity generation transformed work and life in the city. Naturally, breweries appeared in the wake of Austrian officials and soldiers. The oldest of these, the Sarajevo Brewery, still in its old premises in Bistrik, produces the best dark beer in the region.