One Year After Milosevic – Standing still or moving forward?

On the eve of the one-year anniversary of the
collapse of the Milosevic regime in Serbia, young people from the
legendary movement Otpor (resistance) expressed their continued
dissatisfaction with Belgrade through graffiti that read,
“Everything is the same, only He is gone.”

Serbian Prime Minister Zoran Ðindic challenged
this perspective, however, at a lecture delivered at the United
States Institute for Peace (USIP) in Washington, DC. The Serbian
delegation came to the US capital in order to lobby the United
States for support in writing off Serbia’s debt to the Paris Club
of creditors. In addition, Serbia is seeking increased financial
assistance from the US. Amidst their other duties, Prime Minister
Ðindic and his colleagues paid a visit to USIP to discuss Serbia
and the process of transition one year after the fall of the former
regime.

Ðindic discusses challenges

Following an introduction by Daniel Serwer,
Director for the Balkans at USIP, Prime Minister Ðindic took the
main stage in a very small and crowded conference room. Ðindic,
similar to other foreign leaders who have visited the US following
the 11 September attacks, opened by explaining the role of Serbia
in the fight against terrorism. Ðindic stated that Serbia is part
of the international coalition fighting global terrorism and that
Serbia has a role in keeping the Balkans stable and fighting
terrorism in that region.

The Prime Minister was primarily referring to
Serbia’s efforts in helping Macedonia overcome difficulties with
Albanian rebels and in keeping south Serbia and Kosovo stable.
Ðindic remains optimistic about the future of the Balkans because,
as he said, for the first time in history governments in the region
are democratically elected and reform-oriented. These changes will
allow the region to stabilize and slowly integrate with Europe.

As for Serbia, Ðindic addressed three major
structural problems facing the new regime;

• passing new laws and changing the Constitution,
• financial troubles for the new Government after inheriting an
  essentially bankrupt country, and
• problems within the ruling coalition DOS.

Recovering a hijacked legal system

One of the biggest challenges for the new
Government in Belgrade is to revise some of the old laws, as well
as the Constitution, created by Milosevic’s regime over the past
decade. Radical change is needed in order to make a clean break
from Milosevic’s methods of hijacking the legal system as well as
to set in place an appropriate legal framework that will allow
Serbia to move towards the European Union.

However, this is not an easy process for the
Serbian government. Just a few weeks ago, when the Government
pushed the “labor bill” through Parliament, Serbian labor unions
protested the new bill calling on workers to take to the streets
until the bill was withdrawn for further adjustment. The problem in
this case was that workers and labor unions in Serbia perceived the
proposed bill as a “cruel capitalist law” which would strip workers
of the rights they enjoyed during the Tito and “Slobo” eras. As a
result of the protests, the Serbian Government withdrew the bill
for further consideration.

Similarly, in March 2001 when DOS wanted to pass
a law in Parliament that would allow federal authorities to
cooperate with the Hague Tribunal, the Montenegrin “comrades,” who
for more than a decade supported Milosevic’s regime in Belgrade,
refused to vote in favor of the law. Thus, DOS was forced to
withdraw the bill from the floor.

In many cases DOS is unable to push through
certain legislation because other groups in Parliament oppose
changes in the legal system, or because outside interest groups are
able to create social unrest on the streets. In either case, this
situation is creating significant problems for the new Government a
nd is delaying much needed legal reform.

An unclear future? Montenegro and Kosovo

Prime Minister Ðindic also addressed the
problems of changing the Constitution of the country, which is
closely related to the unresolved status of Montenegro and Kosovo
as well as the status of the Federal Republic of Yugoslavia in
general. According to Ðindic, the Government in Belgrade is not
able to draft a new Constitution until it is known whether or not
Montenegro and Kosovo will stay part of Yugoslavia.

Once the future of Montenegro and Kosovo is
clear, then the Government will be able to pursue changes in the
Constitution. Since the status of Montenegro and Kosovo within the
Federal Republic of Yugoslavia is unlikely to be resolved in the
near future, such changes could be delayed indefinitely.

Debt, inflation and public support?

Additional problems faced by the Serbian
Government include huge financial difficulties. For the past ten
years, the Serbian people suffered through wars and an economic
blockade that caused the Serbian gross domestic product (GDP) per
capita to drop by 60 percent. When the new Government came to power
it inherited a devastated economy. According to the International
Monetary Fund (IMF), unemployment in Serbia is currently hovering
around 50 percent with inflation at 30 percent. The inflation rate
in 2001 is down from 112 percent in 2000 following two waves of
hyperinflation in the 1990s.

Additionally, Yugoslavia is one of the most
indebted nations in the world, with an external debt of USD 11.4
billion. This is over 140 percent of Yugoslavia’s GDP. With all of
these troubling numbers in mind, Prime Minister Ðindic and Finance
Minister Bozidar Ðelic laid out what they called “one of the
boldest economic reform programs in the region.” Their proposed
program offers reforms in many sectors of the economy including
fiscal reform, privatization and corporate governance, banking
reform, enterprise restructuring, external debt restructuring,
liberalization and macroeconomic stabilization.

Steps such as stabilizing the exchange rate have
already been taken. The liberalization of prices has also been
introduced. This move by the Government remains largely unpopular
with the Serbian public, however, as the people are accustomed to
strict government controls, which have previously regulated more
than 70 percent of all prices.

Obstacles to reform

According to Prime Minister Ðindic, there remain
several important obstacles in the way of reforms. First, the
workers and the labor unions in Serbia are very suspicious of and
concerned about the nature of reforms. They fear that the new laws
will decrease worker rights, leaving them at the mercy of their
employers. This in turn may mean the subsequent loss of jobs. While
worker concerns are understandable, they must face the cruel
reality that Communist state-owned enterprises are simply
inefficient.

There are too many workers and too little work.
Such was the case with the car manufacturer Zastava that makes
Yugos. While the company was forced to lay off 14 000 of 30 000
employees, it did offer social benefits and retraining to those it
let go. This type of action, while hugely unpopular, is necessary
and can be considered an important move towards improving the
efficiency of the economy.

Secondly, the Serbian government is fighting
organized crime and corruption. Organized crime has been on the
rise for the past ten years and in many cases the Mafia had been
collaborating directly with the Milosevic regime. Cigarette
smuggling and similar activities are well established in the
Balkans and serve as a challenge to the new Government. Ðindic and
Ðelic declared a comprehensive fight against corruption and
organized crime. The focus of this fight will be on judicial reform
as well as reform within the public administration, particularly
the Mi nistry of Internal Affairs (MUP) and Customs.

Many employees of the MUP and Customs have been
suspended or arrested with criminal charges brought against them.
However, the process of eliminating corruption and organized crime
in Serbia is not something that the Government will be able to do
overnight, nor will it be an easy goal to achieve. The Mafia in
Serbia has been growing for more than a decade and has accumulated
considerable wealth and power that is being used to diversify its
operations and making it even more difficult to fight.

Thirdly, both speakers emphasized that
international support is of critical importance to the success of
economic reform. Finance Minister Bozidar Ðelic spoke of Serbia’s
hope to pump additional US dollars into the Serbian economy and to
garner US support for a 70 percent debt reduction from the Paris
Club of creditors.

The Serbian Prime Minister encouraged US
authorities to continue supporting Serbia by providing financial
aid, unfreezing assets with OFAC and normalizing trade relations
with a move toward most-favored-nation status for Serbia. In
addition, Serbian authorities would like to collaborate with the
FBI and other agencies to build institutions able to fight
smuggling and organized crime.

Questions and answers

Aside from their economic-focused agenda, the
two Serbian leaders addressed other key issues facing their
leadership at the moment. On the issue of Ðindic’s relationship
with President Vojislav Kostunica, Ðindic clearly expressed his
frustration that Mr Kostunica’s party continued to criticize him
and DOS.

According to Ðindic they are not in opposition,
but rather Kostunica and his party are considered an integral part
of the DOS coalition. The speeches by Prime Minister Ðindic and
Finance Minister Bozidar Ðelic were followed by a no holds-barred
question and answer session with the assembled guests.

Questions ranged from the future of Kosovo, to
the relationship between Belgrade and Baghdad, to Mr Ðindic’s
relationship with Ratko Mladic and Radovan Karadic, to a write-in
question by B92 chief Veran Matic about why the state of
independent media in Serbia is “worse” now than during the
Milosevic era. Ðindic and Ðelic confidently fielded these and other
challenging questions (with the notable exception of Ðindic’s
relationship to the Hague indictees) while reiterating the major
points of their earlier speeches.

While these hotly debated and contentious issues
continue to challenge Serbia and its politicians, one might
conclude after listening to this discussion that at least on the
surface of things Ðindic and DOS as a whole are making positive
strides towards the democratic and economic stabilization of Serbia
and are awakening to their new found role as a force of
stabilization in the region. What is clear is that, for the first
time in quite a while, Serbia has entered a genuine period of
“transition.”

While there will be considerable growing pains
in the effort to transform Serbia into a fully democratic European
nation-state, Serbia appears to acknowledge, understand and be
willing to undertake the difficult steps that face them in their
efforts to create a better standard of living for all of its
peoples.

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