(Corrects paragraph 18 to show Ivica Osim was coach, not player, for the 1990 World Cup team)
* Bosnia qualified for first ever World Cup finals
* Soccer side scrapped structure based on ethnic quotas
* Team officials say this was secret of its success
* Politicians pressured to reform along same lines
SARAJEVO, Oct 22 (Reuters) - Bosnia's international footballers have offered their political leaders a valuable lesson: see what you can achieve when you set aside your ethnic divisions.
Last week the national soccer side won a place at the World Cup finals for the first time, two years after Bosnia was briefly suspended from international competition for letting ethnic politics pervade the sport.
Under a reformed soccer federation, Bosnia automatically qualified for Brazil next year on the same night as some much bigger names in the European game - Spain, England and Russia.
Bosnians let off fireworks and honked car horns long into the night in Sarajevo when their team qualified, embracing a moment of joy after the horrors of a war that pitted Muslims, Croats and Serbs against each other in the early 1990s.
The victory mattered all the more because the team is a beacon of progress and unity in a country still divided between ethnic groups, mired in corruption and quarrels, and floundering on the edge of the European mainstream it wants to join.
"My message today to Bosnian politicians is: follow the example of your footballers and live up to expectations of your citizens," said European Union enlargement chief Stefan Fule the day after Bosnia qualified for the World Cup finals.
Nearly two decades after the civil war in which around 100,000 people were killed, the former Yugoslav republic's problem is not so much that the ethnic groups don't get along.
A system created by the 1995 treaty that ended the war, giving each of the three ethnic groups a share of power and rotating important posts between them, has kept the peace.
Bosnia's main problem is that this system breeds sleaze, the protecting of vested interests and paralysed decision-making. But while the politicians are still stuck in their old ways, the soccer team has shaken off the system and achieved the qualification, sealed by last Tuesday's victory over Lithuania.
Two years ago, Bosnia's NFSBiH soccer federation mirrored the way the state is organised. Its presidency was run by a Serb, a Croat and a Muslim who took turns in the job every 16 months, in much the same way that the state presidency works.
The system, say people involved in the sport, was dysfunctional. Officials were chosen on ethnic and political grounds rather than on competence.
Crucial decisions were fumbled. One example was the missed opportunity to recruit Zlatan Ibrahimovic, one of Europe's top stars who now plays for French side Paris Saint-Germain.
Near the start of his career, his Bosnian-born father said he wanted Zlatan to play for the national side. No one from the federation pursued the possibility, former officials and local media say, and now the striker captains Sweden, the country of his birth.
The Bosnian federation was on the verge of bankruptcy. Three former officials, one of them an ex-commander of the Muslim-dominated Bosnian army during the war, were jailed last year for tax evasion and embezzlement.
Many foreign-based players and devoted soccer fans boycotted the national team, angry at political interference which they said was spoiling otherwise harmonious relations among players and coaches.
The world and European governing bodies, FIFA and UEFA demanded the federation should have a single chief. "We were in an abyss only two years ago," said NFSBiH President Elvedin Begic, who was appointed to the job in December last year.
The turning point came in 2011. With no sign of any progress, FIFA and UEFA briefly suspended Bosnia from competitions in April of that year. Stung by this, ethnic leaders agreed to reform the federation's set-up.
A FIFA-appointed interim committee made up of soccer professionals of all ethnicities took over from the suspended federation. It was headed by Ivica Osim, who as coach led the former Yugoslavia to the World Cup quarter-finals in 1990. A Sarajevo-born Bosnian Croat, he is married to a Muslim.
Osim signalled how things had changed last year, when matches between Bosnian clubs were marred by violence between fans from Sarajevo and the Serb-dominated city of Banja Luka.
In an act of candour unprecedented in Bosnian soccer, he said sectarian politics was behind the violence, and this had no place in sport. He banned visiting fans from the stadiums.
Last December, the federation's assembly elected its first single president for a four-year term and appointed a 15-member executive committee, comprising officials from Bosnia's two autonomous regions, the Federation of Muslim Bosniaks and Croats and the Serb Republic.
"We now have a national team which is not based on the grounds of who is who, but who is the best," Osim, who advises the new soccer federation, said last week. "If only politicians were as cohesive as this team."
BALL IN POLITICIANS' COURT
Ethnic suspicions linger. Most of Bosnia's ethnic Serbs have traditionally supported the Serbian national team and many Bosnian Croats cheer for Croatia - although this may be changing thanks to Bosnia's success.
In the Serb Republic, the Serb-dominated autonomous part of Bosnia, public television did not broadcast the match against Lithuania and reported the result only hours later, as a short news item.
"Football cannot reconcile the citizens of Bosnia-Herzegovina, football cannot make them more tolerant because football was not an issue. Politicians are those who must do it," said Srdjan Puhalo, a psychologist from Banja Luka, main city in the Serb Republic.
Brussels has made reforming Bosnia's ethnically-based political system a condition of starting talks on EU accession. So far, the politicians are reluctant to change a set-up that serves their interests.
Yet at a grass-roots level, the example set by the multi-ethnic soccer team is helping heal some of Bosnia's divisions.
Sasa Zivkovic, a graphic worker from Banja Luka, watched the Bosnia-Lithuania match at home with friends by tuning into a Bosnian commercial station that carried it.
Zivkovic said many other people in the city cheered on the Bosnian team, though they don't admit it because of "strong antagonism" towards anything connected to the Bosnian state.
"But people like winners, and Bosnia's football team is a winning team, so I think that many things will change," he said. (Additional reporting to Gordana Katana in Banja Luka; Editing by Christian Lowe and David Stamp)