Inflammatory rhetoric is leading to a spread in hate incidents in Bosnia-Herzegovina, rights and security watchdog the Organization for Security and Cooperation in Europe (OSCE) said on Wednesday, as unresolved rivalries among its three ethnic groups stoke fears of a new conflict.

A spate of security incidents occurred across Bosnia-Herzegovina's Serb Republic in the recent days, with Serb nationalists encouraged by their leader's rhetoric provoking their Muslim neighbors.

Shots were fired near mosques during prayers and nationalist songs glorifying convicted war criminals were sung during street celebrations around the Orthodox Christian Christmas and Sunday's banned holiday of the autonomous Serb Republic.

"The growing use of inflammatory, divisive rhetoric by some officials in Bosnia-Herzegovina, including in recent days in Republika Srpska, is contributing to the proliferation of such incidents," the OSCE mission in Bosnia-Herzegovina said in a statement. "The mission cautions against any and all acts that carry the potential to incite conflict and lead to the destabilization of peace and security in Bosnia," it added.

Serb nationalist leader Milorad Dodik, who has been pushing for the secession of the Serb Republic from Bosnia-Herzegovina and its integration with Serbia, has been using ethnic slurs against Muslim Bosniaks, degrading them to a religious group without ethnic identity and ascribing them the "colonial mentality."

Following its devastating war in the 1990s in which 100,000 died, most of them Bosniaks, Bosnia-Herzegovina was split into two autonomous regions – the Serb Republic and the Federation dominated by Croats and Muslim Bosniaks, linked by a weak central government.

Now, Bosnia-Herzegovina is experiencing its gravest political crisis since the end of that war, reviving concerns of a new conflict after Bosnian Serbs last summer blocked the work of the central government and began a process aimed at unraveling state institutions.

On Sunday, the Bosnian Serbs marked their region's national holiday, commemorating the date in 1992 when Bosnian Serbs declared independence, triggering the war, with a parade of armed police forces in defiance of a court ban and United States sanctions on Dodik.

The United States has urged Bosnia-Herzegovina's authorities to investigate reports that war criminals were glorified and non-Serbs targeted during the celebrations.

The European Union has also warned the Bosnian Serb leadership it was risking sanctions and a loss of aid should it continue to incite tensions.