I'm reading this book now. It doesn't ever say explicitly that the country is in Eastern Europe, but I've gotten that impression as well -- particularly from the extra consonants in the characters' names
. But also there's a scene in which Borlu and Corwi talk about places they've been outside of Besz; Corwi has been to a couple of Eastern European cities, but Borlu has traveled more widely -- Berlin before the wall came down, Paris (I think he said), etc. The sense I got from that scene was that Corwi had traveled closer to home.
I haven't gotten to the part yet where it's explained (if it ever is!) why the two cities split, and how it was accomplished. Looking forward to that. I'm not a huge fan of police procedurals, but the fantastic elements are keeping it interesting for me.