Bosnia and Herzegovina is a liberal democracy. It has several levels of political structuring, according to the Dayton Agreement. The most important of these levels is the division of the country into two entities: the Federation of Bosnia and Herzegovina and Republika Srpska. The Federation of Bosnia and Herzegovina covers 51% of Bosnia and Herzegovina's total area, while Republika Srpska covers 49%. The entities, based largely on the territories held by the two warring sides at the time, were formally established by the Dayton Agreement in 1995 because of the tremendous changes in Bosnia and Herzegovina's ethnic structure. Since 1996, the power of the entities relative to the State government has decreased significantly. Nonetheless, entities still have numerous powers to themselves.