BALKANS: Serbia Goes to Polls over Kosovo Independence

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric Zimonjic

BELGRADE, Mar 11 2008 (IPS) - The coalition government of Serbia has become the first political victim of the independence declared by Kosovo, once the southern region of Serbia.

Elections called for May 11 will decide what course the nation will now take.

Conservative Prime Minister Vojislav Kostunica announced the collapse of his government Saturday. “It has been established that the government no longer has united and joint policies” over Kosovo and European Union (EU) integration, he said.

“The government, which does not have united policies, cannot function, that’s the end of the government,” he added. Serbian President Boris Tadic called new elections May 11, the date already set for local elections.

The fall of government did not surprise many Serbs. The Democratic Party of Serbia (DSS) of Kostunica and the Democratic Party (DS) of Tadic who were in coalition have been at odds for a while over Kosovo and EU integration.

For Kostunica, the Kosovo issue represents the focal political point. His part of government wants to cut all ties with any nation that recognises the independence of Kosovo, declared three weeks ago.

Kostunica says “the return of Kosovo into Serbia” should be the single aim of the nation. For Tadic, the loss of Kosovo is not unimportant, but he speaks of EU integration as “the solid ground for economic improvement.” Leading EU nations have recognised Kosovo.

“Without economic improvement there can be no strong Serbia that is able to defend its interests,” Tadic said in an interview on the popular B92 TV.

Since 2000, when the isolationist regime of Slobodan Milosevic fell from power, Serbia has entered into the market economy, with more than 10 billion dollars of foreign investment. More than 20,000 small and medium enterprises, including factories and production units formerly owned by the state, have been privatised.

After the collapse of domestic banks in the 1990s under the economic sanctions, the banking sector is now dominated by international banks that took over after 2000.

Serbia’s annual industrial growth stands at a stable six percent, with unemployment falling in 2007 by 20 percent in the northern province of Vojvodina and in capital Belgrade due to revival of the economy.

Inflation is less than 10 percent, while foreign currency reserves stand at 15.6 billion dollars, the highest in 20 years.

Average monthly salaries have reached 500 dollars for the first time since 1989, the last prosperous year before the wars of the 1990s that tore former Yugoslavia apart.

“This was all a result of the fact that politicians did not involve themselves in the economy as they used to,” economics professor Danica Popovic told IPS, referring to the influence of politics over the economy in the communist era that ended in 2000.

“Some extremely serious changes occurred in Serbia – people began thinking about their future by getting credits for business, new homes, cars…seriously thinking about and investing in their future. They can hardly think about the economy falling apart.”

One of the first consequences of Kostunica’s announcement was a 5 percent fall in the Belgrade Stock Exchange index on Monday. “This tells us that investors are nervous,” analyst Misa Brkic told IPS.

The EU has urged political leaders in Belgrade to shun isolationism and keep their country on course for EU membership. Arriving at an EU foreign ministers’ meeting, Javier Solana, the bloc’s foreign and security affairs chief, said he hoped Serbs “continue pushing for a relationship, deep and solid, with the EU.”

The Foreign Investors’ Council (FIC) that gathers 120 international companies in Serbia said in a statement that “for citizens of Serbia it is important to show what direction they want to take in the May elections. They should know that stability and predictability are the main pillars of advanced economic development.”

One of the most talked about issues now in Serbia, both among experts and the broader public, is the controversial deal that Kostunica’s government made recently for the sale of the national oil industry NIS to Russian Gazprom for a mere 600 million dollars. Critics say that the cheap sale of national silver came as gratitude to Russia for its political actions against the independence of Kosovo.

Outgoing Energy and Mining Minister Aleksandar Popovic told local media on Monday that he did not want to comment on speculation that the deal was off.

According to leading energy experts, such as Sijka Pistolova, “it is not valid any more, as it has to be ratified by the parliament. We have to wait for the new parliament to convene and approve it.”

Besides, the public prosecution office has been involved in an investigation whether the deal was closed through private lobbying of several individuals, including late Milosevic’s brother Borislav who lives in Moscow as a private businessman. Borislav was ambassador to Russia in the 1990s.

However, analyst Milan Nikolic is of the opinion that the emotional campaign linked to Kosovo and the possibilities of its “return” under Serbia’s authority will be very strong.

“Many people are hurt by what they saw as the ‘cradle of the Serbian medieval state (Kosovo) being taken away’. That will provide fertile ground for manipulation in the electoral campaign where those who are against the international re-integration of Serbia will play on the card that economic prospects are not important,” Nikolic wrote in Blic, the daily with largest circulation in Serbia.