SERBIA'S U-TURN 26 March 2004 Europe Report N°154 Belgrade/Brussels TABLE OF CONTENTS EXECUTIVE SUMMARY AND RECOMMENDATIONS................................................. i I. INTRODUCTION .......................................................................................................... 1 II. KOSOVO FRUSTRATIONS ........................................................................................ 2 III. ELECTION FALLOUT................................................................................................. 4 A. THE EMPIRE STRIKES BACK..................................................................................................4 B. THE SRS AND SPS: WARTIME NATIONALISTS ......................................................................5 C. RIGHT-WING POPULISTS: DSS, SPO AND NS .........................................................................6 IV. HOW DID IT HAPPEN? ............................................................................................... 7 A. NO ONE TO BLAME BUT THEMSELVES .................................................................................7 B. INTERNATIONAL MISCALCULATIONS ....................................................................................9 V. FORMING A GOVERNMENT .................................................................................. 11 VI. TRENDS ........................................................................................................................ 12 A. IMPLICATIONS OF KOSOVO..................................................................................................14 VII. CONCLUSION ............................................................................................................. 16 APPENDICES A. MAP OF SERBIA ..................................................................................................................17 B. GLOSSARY OF NAMES, ACRONYMS AND USEFUL TERMS ....................................................18 C. ABOUT THE INTERNATIONAL CRISIS GROUP .......................................................................19 D. ICG REPORTS AND BRIEFING PAPERS .................................................................................20 E. ICG BOARD MEMBERS .......................................................................................................26 ICG Europe Report N°154 26 March 2004 SERBIA'S U-TURN EXECUTIVE SUMMARY AND RECOMMENDATIONS In politics and policies, Serbia increasingly resembles last longer than anyone expects. The Kosovo unrest the Milosevic-era without Milosevic. Its reaction to has been a unifying factor, however temporary. But the catastrophic mid-March 2004 near collapse of the such stability as there may be will come through UN mission in Kosovo (UNMIK), the strong lowest common denominator politics, which in showing by ultra-nationalists in the 28 December Belgrade today is anti-Western populism. Although 2003 parliamentary elections and the subsequent Prime Minister Kostunica has stated that Serbia has two-months of squabbling before democratic parties no alternative to Europe, it does not appear that he could form a minority government that depends for considers cooperation with The Hague Tribunal a survival on the support of Milosevic's old party all priority. are signs that more trouble lies ahead. In 2004 Serbia can anticipate continued political instability, In spite of the government's pronouncements, increasingly strained relations with the West and Serbia's path towards a wider European future may further economic decline. The spasm of ethnic be rocky. Events in Kosovo have reduced the appeal cleansing of Serbs by Albanians in Kosovo has raised of European institutions to the country and damaged the prospect of Kosovo partition, strengthened the UN, EU, U.S. and NATO credibility. Parties that are nationalist right wing and increased anti-Western either opposed to or ambivalent about European sentiment. Instability and economic weakness could integration control 71 per cent of the parliament. The hasten moves by Montenegro towards independence, ultra-nationalist SRS has one third of the seats in while Kosovo tensions could spill over into the every committee. Anti-reform forces within the Presevo valley, Sandzak and even Vojvodina. "democratic" bloc appear intent on forestalling or rolling back many key Djindjic-era measures, while These prospects should prompt the international the SRS is pushing for a return to the past. The community to re-evaluate its policies towards economy and Kosovo place tremendous pressure on Serbia. The results should include: no longer the government, and the SRS is most likely to assuming that Serbia is a factor of regional stability; benefit in the upcoming presidential and municipal relying less on the "carrot" of European integration elections from any dissatisfaction. and insisting less on the Serbia-Montenegro union; and making more use of a stricter aid conditionality. To become a stable state, Serbia must undergo two If there is a bright side, it is that the ongoing -- and transitions. The first is from the Milosevic-era likely to worsen -- economic slide gives the criminalised state to a more normal society. The international community greater leverage over the second is the classic Eastern European transition from Serbian government if it is prepared to use it. a socialist command economy to a democratic market economy. Until there is significant progress in the Serbia's new government could prove short-lived. It first transition, the second will not happen. It is this has serious internal differences, and its minority failure to cleanse Serbia of the Milosevic legacy -- status reduces the chances that it can take the tough particularly in the security services -- that has led to decisions necessary to turn the economy around, the resurgence of the extreme right and cessation of especially if it does not get major outside help. reforms. International assistance should be redirected Nonetheless, its initial actions (and those of the to target the first transition. Unfortunately, the new parliament) hint that it could prove more stable and Serbia's U-Turn ICG Europe Report N°I54, 26 March 2004 Page ii government has indicated that it is more interested in of contact and contribute to coordination of a removing traces of Djindjic than Milosevic. common voice within the Western diplomatic and international donor communities. It is increasingly apparent that 5 October 2000, the day on which Milosevic stepped down, was less To the United States: revolutionary than it seemed at the time. Many of Serbia's democrats accepted the Milosevic-era myth 3. Continue and strengthen aid conditionality, that all the country's problems were caused by a including the requirement that Serbian decade of wars and international sanctions and the government cooperate with the ICTY; NATO bombing campaign of 1999. With these "causes" removed, many democrats showed little To NATO: enthusiasm for reforms and, in many instances, 4. Adhere to the policy of not admitting Serbia actively blocked them. As a result Serbia failed to and Montenegro to Partnership for Peace make a clean break with the Milosevic heritage. until it drops its lawsuit against NATO and With the December 2003 elections, the past has cooperates fully with the ICTY. partially returned to endanger the scant progress made to date, both domestically and in Serbia's To the Donor Community: relations with its neighbours. 5. Extend conditionality to include IMF, World Milosevic-era structures and personnel are still Bank and EBRD assistance. relatively intact in the judiciary, police, army and 6. Demand greater accountability from the other key institutions. Serbia's media and judiciary Serbian government on capital investment are less independent today than two years ago. The projects. myriad intelligence services still appear out of control and engage primarily in spying on domestic 7. Insist upon greater cooperation by Serbia political opponents. It is nearly as difficult to do with international community structures in business in Serbia in 2004 as it was under Milosevic, Kosovo and impose greater accountability for a fact confirmed by the scant foreign investment. its actions in supporting parallel structures in The only institutions that appear to function with any Kosovo. efficiency are the army and the National Bank. In the meantime, the lack of a final status resolution for To the Serbian Government: Kosovo will continue to overshadow domestic 8. Give higher priority to economic reform. politics and warp normal political dialogue. 9. Cooperate with the ICTY, including by ICG will shortly publish a separate report on the arresting and transferring to The Hague all March 2004 events in Kosovo and their implications indictees on its territory. for the future of Kosovo and international policies in 10. Reform the judiciary and media to make them the wider region. functional and independent. 11. Restrain nationalist passions, including by RECOMMENDATIONS urging the media to avoid inflammatory rhetoric. To the European Union: 12. Provide increased security for Serbia's human 1. Make economic aid, both from the EU and rights activists and for national minorities in from its member states, subject to a formal Vojvodina, Sandzak and Kosovo. annual review of Serbian government achievement of specific benchmarks, 13. Prevent radical right-wing forces from including cooperation with The Hague attempting ethnic cleansing in southern Serbia, Tribunal (ICTY).