Crucial May 6 for Serbia as presidential, parliamentary polls to be held

By bne IntelliNews April 4, 2012

Nicholas Watson in Belgrade -

May 6, 2012 is shaping up to be a critical juncture in Serbia's history as President Boris Tadic has decided to resign and thus enable early presidential elections to be held on May 6, the same day as the country's parliamentary elections.

bne sources say that Tadic is due to announce Wednesday, April 4 his resignation ahead of his presidential mandate expiring later this year and hold the election on the same day his ruling Democratic Party will attempt to secure another term in parliamentary elections, partly as a way to save costs for a country that, by all accounts, is in deep economic crisis and close to bankruptcy.

And it's the economy, not the issue over Serbia's erstwhile province Kosovo that so preoccupies the West, that is the pressing issue for most Serbs. "People are going hungry, we are now a desperately poor country," sighs one former politician and academic.

Economic growth in the final quarter of last year was a paltry 0.4% and is expected to be around that for the whole year, if not outright recession. The local currency, the dinar, is at its weakest levels since the fall of the late dictator Slobodan Milosevic in 2000, while unemployment stands at 24%. The country's finances are in even worse shape: budget targets for 2012 of 4.25% of GDP that were agreed with the International Monetary Fund as part of a bailout loan look set to be breached. And there's little in the way of investment expected from a European economy labouring under the sovereign debt crisis, while other global investors are scared off by the botched privatisations of the last 10 years that has meant 70% of them have been reversed and just 35% of more than 3,000 companies privatised since 2001 are still producing anything today, implying many companies were bought by the politically connected because of the property owned, not because of their market potential. "Industry used to make up 30% of Serbia's economy, now that figure is just 13% - we don't produce anything," says one official of the main opposition Serbian Progressive Party.

Big men, big problems

Given such a dismal economic backdrop, it might be assumed that Tadic, who has been president since 2004 and whose Democratic Party has been running the show since 2008 as head of a pro-European coalition, will struggle in the presidential election. Yet Tadic is a still-popular and much silkier politician than his expected main challenger Tomislav Nikolic, head of the Progressive Party, which split from the ultra-nationalist Serbian Radical Party in 2008 after Nikolic fell out with Radical leader Vojislav Seselj, whose health is fading in The Hague as he awaits trial for alleged war crimes committed during the 1990s.

Those two will no doubt be joined by other candidates such as Milan Panic, representing former deputy PM Mladjan Dinkic's URS party, and president of the Liberal Democratic Party Cedomir Jovanovic. Should no one win a majority in the first round of voting on May 6, a run-off between the two most successful candidates will be held two weeks after.

The parliamentary elections could well be a reverse of the presidential one, with Nikolic's Progressive Party winning out over Tadic's Democratic Party. According to an opinion poll conducted by Belgrade-based Faktor Plus in mid-March, the Progressive Party would get 33.2% of votes cast, while Tadic's Democratic Party would win 29.1%.

The unpopularity of the Democratic Party is well illustrated by its campaign posters for the parliamentary elections not featuring its name anywhere, just that of the more popular Tadic. "The people that have done well personally in the last 10 years are generally seen as those from the Democratic Party; any public jobs left go to people linked to the Democratic Party; and anyone arrested for corruption these days are those people not affiliated with any of the ruling parties," says the former politician.

Even if the Progressive Party wins, it's unlikely to secure enough seats to rule on its own, meaning weeks of coalition wrangling will probably ensue. Sources say a tie-up with the (rather confusingly named) Democratic Party of Serbia (DSS) of former PM Vojislav Kostunica, which could win between 5 and 10% of the vote. The DSS can be thought of as akin to the eurosceptic, radical free market wing of the UK Conservative Party - though without the pro-Russian bent.

The DSS is pinning a lot of its hopes on an economic plan devised by Belgrade mayoral candidate Nenad Popovic, a Russian-educated (but fluent English-speaking) former athlete with a penchant for still wearing tracksuits. This economic platform, which the DSS alone amongst parties has laid out in exacting detail, emphasises negotiating a €10bn loan from the Serbs favourite Slavic brothers, the Russians, and then using this money to rebuild industrial sectors such as construction, chemicals, textiles, which it argues will "seed" small business. For a country that's heading toward bankruptcy, €10bn would undoubtedly be a useful sum. But critics point out the danger of giving such a large sum of money to politicians who until now have singularly failed to transparently and efficiently distribute similar amounts in the past. DSS officials counter to bne that establishing a development banks would solve this problem.

Further, the DSS policy of "political neutrality" - ie. not joining the EU to which Serbia was awarded candidate status in March, but also not selling out to the Russians - would appear to fly in the face of the Progressive Party's new EU-oriented credentials that it has spent the past few years convincing Brussels and Washington of. Bringing in Seselj's Radicals to bump up the numbers in a three-way coalition would send Brussels into conniptions.

However, this EU label that the western press likes to employ as an easily identifiable way to typecast Serbia's various parties and candidates (read: pro-EU guy good, pro-Russia guy bad) is disregarded by most Serbs these days. The idea that Serbia will be able to join a crisis-ridden, enlargement-fatigued bloc anytime before 2020 is dismissed by even many in Tadic's party, whose sole policy often appears just that, as a fantasy.

Probably the worst outcome, but by no means the least likely, for the country is that Tadic's Democratic Party ekes out a win, but has to bring in other smaller parties to make up the numbers, thereby weakening the ruling coalition further and making it even more riven with vested interests. "Suppose Tadic squeezes out a win - what happens in six months? The country is heading towards bankruptcy and they will be doing nothing about it," says the former politician. "There's seething discontent and if the Democratic Party stay in power somehow, this country could explode."

For the EU, therefore, perhaps a win for the Progressive Party, even with its dodgy friends, might be the best change for all involved.

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