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Serbia Faces International, Domestic Pressures to Improve Foreign Policy - 2004-10-18

Serbia's a weak and divided government is facing a host of domestic and foreign policy problems and a declining economy. One of the key challenges for Belgrade is developing a coherent policy for the secessionist Kosovo.

Serbia is under pressure. Internationally, Belgrade has angered the Americans and Europeans by refusing to hand over several former military commanders indicted for crimes during the Yugoslav civil wars of the 1990s. It is under pressure from Montenegro, which wants to end its loose federation with Serbia. And the government needs to develop a coherent policy on Kosovo, whose future status is likely to be determined during the next year.

Four years after a revolution that ended the dictatorship of Slobodan Milosevic, Serbian voters are turning cynical. They've gone to the polls eight times in the past two years but there is still no political consensus on the way forward. James Lyon, the Belgrade specialist for the independent, Brussels-based International Crisis Group, says Serbia is still traumatized by a decade of war, dictatorship and corruption. He believes Serbia is drifting back towards an anti-western style of nationalism.

"Currently 71 percent of the Serbian parliament is composed of deputies from parties who are either openly or ambiguously anti-western," said James Lyon. "And there is no question that the Radicals [the Radical party that was aligned with Milosevic's Socialists] are gaining in popularity. And it's possible, should early parliamentary elections be held before the Spring, that we could face a Radical prime minister. In that case there is very little the international community can do."

The Radicals made significant gains in recent local elections, capitalizing on a popular backlash against perceived unfair international treatment of Serbia. The current minority government of Prime Minister Vojislav Kostunica relies not on the Radicals but on Mr. Milosevic's Socialists for its parliamentary majority.

Mr. Lyon says the most immediate problem for the government is the economy.

"The country is now slipping into a deeper and deeper economic crisis," he said. "The standard of living appears not just to be stagnating but falling. There is a question of whether Serbia will enter a severe debt crisis in 2005. The government is almost bankrupt. Social services are in trouble. There is no budget to speak of.

"We don't see the government being able to pass a budget for 2005," continued Mr. Lyon. "The government could well fall over the budget issue."

The International Monetary Fund is holding back on needed lending until the government reduces its budget deficit to stem the risk of rising inflation.

Daniel Sunter, a Belgrade journalist and political analyst, believes the government's failure to attack systemic corruption has contributed to the loss of support for reform parties. Serbia, he says, is similar to Russia in that its economy is dominated by oligarchs, most of whom who rose to power during the communist era.

"[and] We have oligarchs who are coming from the time of the Milosevic regime," said Daniel Sunter. "And also oligarchs who were created after Milosevic. And unfortunately for this country and this nation, democratic governments-the first and the second democratic governments-were not ready to deal with this issue."

Some oligarchs are believed to be involved in organized crime. Reform Prime Minister Zoran Djindjic was assassinated in 2003, a crime linked to Serbia's criminal underworld and likely to rogue agents in the security services.

Despite Serbia's mounting problems, observers say the country has made some progress on the bumpy road away from dictatorship and war to democratic rule. The media is freer than it has been in decades. Personal liberties have increased. Reconciliation with the other former Yugoslav republics is underway. And there has been some foreign direct investment.

But analysts caution that, as the economy continues to decline, disenchanted Serbs may turn for solutions to the nationalists, returning the country to intolerance and isolation.