“Comprehensive reform” will be the watchword for the Serbian government if it is re-elected, as expected, in snap elections to be held at the end of April, government sources have told bne IntelliNews.
bne IntelliNews has been provided with a shopping list of reforms the ruling conservative Serbian Progressive Party (SNS) aims to implement after the election. But critics point out many, if not most of these have supposedly been on the cards since 2012 or before, and the election – Serbia’s third in four years and held nearly two years before the government’s term is due to end – is rather a gambit by Prime Minister Aleksandar Vucic to consolidate his grip on power and lengthen his spell in sole charge of the EU candidate state for the benefit of his inner circle.
Vucic’s supporters see the election as a crucial part of a titanic battle to overhaul the country – though they insist the main aim is to prepare Serbia for EU membership as soon as possible. “[The election has been called] because there is a big question where Serbia wants to go in the next few years,” said one government source. “Serbia needs four years of stability so nothing can turn it back. The PM needs a full mandate with the strong backing of society so Serbia can become ready to join the European family as a strong partner.”
Serbia opened its first “chapters” of negotiation with Brussels in December 2015, a landmark in the country’s rehabilitation from international pariah following the Wars of Yugoslav Succession from 1991 to 1999, which severely damaged its reputation (and those of Serb statelets across the region). However, the country is unlikely to be ready for membership by the time the next government’s mandate expires in 2020. “We have just opened the first chapters of the EU negotiation process,” said the government source. “This is just the beginning of a long road. There will be many hard questions for us to answer on that road – how our society is built, what kind of institutions will we have, and the supremacy of the rule of law.”
Serbia is one of Europe’s poorest countries, and has suffered three recessions since 2009. The economy grew just 0.5% in 2015, according to the European Bank for Reconstruction and Development, though it expects a brisker 1.8% this year.
A member of Vucic’s economic team, who also could not be named, provided bne IntelliNews with a substantial list of reforms that the government is targeting after the election. Optimists hope Vucic will use his new mandate – set to be substantial – to push through reforms in the knowledge that he has a four-year window to do so, having made slower than hoped-for progress over the past two years.
The economic source said the government would stick to ”strict budget limitations” set by its fiscal consolidation programme under Serbia’s year-old €1.2bn stand-by agreement with the IMF. Last year, Serbia overshot its International Monetary Fund (IMF) budget deficit reduction target of 4.1% of GDP, bringing it down to 3.7%, half the level of 2014, when the country had Europe’s largest fiscal shortfall.
Fiscal reforms in the pipeline include a new law on local government financing, improving efficiency of allocation and incentivising the greater income-generation at local level; comprehensive reform of the public wage system; and following an IMF-supported programme for enhancing tax administration.
The economic source laid out a “privatization process or finding strategic partners for state-owned enterprises, as well as for concession projects”. Projects cited include the Zelezara Smederevo steel mill, renationalised from US Steel for $1 in 2012, and considered by some a white elephant without a large-scale overhaul. Perhaps more promising are Belgrade’s Nikola Tesla Airport (which has seen some of the fastest passenger growth in Europe thanks to the expansion of Air Serbia), construction and management of transportation infrastructure on the so-called “Corridor XI” linking Belgrade to the Montenegrin port of Bar, and the Petrohemija petrochemicals plant in Pancevo. The economic source also said that the government would continue to restructure large state-owned enterprises, including electricity company EPS, gas monopoly Srbijagas and Serbian Railways, many of which weigh heavily on the budget.
However, the government has toned down its previously enthusiastic language on sell-offs of state companies somewhat, perhaps as the complexities and political challenges of restructuring and potentially selling 500-plus public companies have become obvious.
Some progress has been made on passing new economic laws and piecemeal sell-off of some state assets, while the business community widely expects the sale of Komercijalna Banka, the second-biggest bank by assets, to take place in the next two years. But in December the government cancelled the sale of state telecommunications firm Telekom Srbija, widely regarded as the most attractive asset on its books. And swingeing cuts to the top-heavy (and politicised) public administration have also yet to take place, despite plans reportedly being in place.
The has left some sceptical about another term for Vucic’s team. “On a public front, elections are called to reset the ‘promise-o-meter’ and mask the inability to deliver on major issues – reform of the public administration to name one,” says Tibor Jona, a Serbian commentator. “So far the government has been in a constant campaign promising new projects, new jobs, and so on – sometimes forgetting that they are in position of government. Since 2012, a lot of increasingly fantastic things were promised but few delivered. These elections will give SNS a chance to say – we got rid of those who were putting us back and now look what wonderful things we can deliver. But we should expect changes, yes, and the changes will indicate if Vucic intends to work towards improving the country or just improving the social and economic position of his inner circle.”
Vucic the leopard
Vucic was once an ultranationalist, and a hardline information minister under Slobodan Milosevic. He shifted to the theoretical centre-right in 2008 when Tomislav Nikolic, now president, formed the SNS from a pro-EU faction of the ultranationalist Serbian Radical Party (SRS). Some feel that Vucic has not truly changed his spots – with media freedom in particular being an area of concern. A much-trumpeted anti-corruption campaign has resulted in many arrests, but few big-name scalps, and has been criticised for its selective choice of targets.
But Vucic’s government has won plaudits in Brussels and Washington for its willingness to participate in an EU-brokered rapprochement with Kosovo, which Belgrade still regards as a breakaway province. A 2013 deal signed by Belgrade and Pristina (when now-Foreign Minister Ivica Dacic was premier, and Vucic his powerful deputy) paved the way for Serbia to get EU candidate status, and a stabilisation and association agreement for Kosovo.
The SNS came to power following elections in May 2012, ruling in coalition with the Socialist Party of Serbia, with Dacic as prime minister (despite having polled less than 15% in both parliamentary and presidential polls). Snap elections called in March 2014 brought Vucic to the premiership, with the SNS taking 48% of the vote and 158 of the 250 seats in parliament. The Socialists stayed in the government, with the remarkably resilient Dacic becoming foreign minister, and thus a central figure in EU negotiations. The SNS is almost certain to win another majority; it is currently polling at around 50%, while the opposition is weak and divided.
What happens to Dacic, who had publicly opposed calling new elections, remains to be seen. The Socialists' ideological leanings and influence in some state-owned companies is not seen as conducive to reform, but Dacic has been an influential figure in governments of different stripes over the past decade and a half, and has cordial international relations. His party and its electoral allies currently stand second in the polls, with 15.3%, according to a February 3 survey by Faktor Plus for Serbian newspaper Vecernje Novosti. That the second most popular electoral list only has a third of the support of the SNS is indicative of Vucic’s strength – and the opposition’s weakness.
This is likely to be one reason for the snap election that some see as a costly distraction – Vucic wanting to cash in his chips again while in a position of great relative strength. Holding the general election concurrently with local polls, and elections to the multi-ethnic and liberal-leaning autonomous region of Vojvodina (currently ruled by the opposition), the SNS hopes to optimise its gains country-wide.
“The opposition is broken – it’s in pieces and without one strong leader,” says Kresimir Macan, a political consultant who has worked across the region. “Vucic’s target is to finally take over Vojvodina and some of local communities SNS has not conquered yet. He uses world-class advisors and has practical control of media and money. He’s the certain winner of these elections.”
On current polling, the elections would see the re-entry to parliament of the Radicals, who may prove a useful paper tiger for the government, as well as two factions of the Democratic Party (DS), which ruled from 2008 to 2012, and the rightwing Eurosceptic (and confusingly-named) Democratic Party of Serbia. “Our obligation is to forge strong and competent opposition capable of preventing SNS and [the Socialists] from further destruction of Serbian economy, institutions, media freedoms and democracy,” Konstantin Samofalov, spokesman for the SDS, a DS offshoot led by former president Boris Tadic, told bne IntelliNews.
The DS is portrayed by the SNS as a discredited and utterly disreputable force, corrosive to the country’s body politic, in terms that are reminiscent of the current Polish and Hungarian governments’ condemnation of their liberal-ish predecessors.
Justified as many criticisms of the opposition are, this raises concerns about pluralism in Serbia, more fragile than in Poland at least. But the first source insists that there have been no purges in Serbian public life since 2012, and there will be no need for any after the coming election.
Despite expressing doubts about the EU, Vucic does not echo the Eurosceptic rhetoric of Hungary’s Orban and Poland’s Kaczynski. Indeed, he has been praised for “European values” for Serbia’s treatment of refugees, while EU member states to the north have been criticised. Whether Serbian society’s relaxed welcome to transiting refugees can be maintained if border closures “trap” them in a country with 25% unemployment remains to be seen.
The Vucic government has reasserted its commitment to a European path despite overtures from Moscow, a traditional ally, though it has refused to join EU sanctions on Russia, and in recent days Russia said that it is willing to supply its Balkan “ally” with weapons in what some fear is becoming a new arms race in the region. Serbian Deputy PM Zorana Mihajlovic rebuffed her Russian counterpart’s claim that the EU harmonisation process could see “another Cologne” in Serbia where “your women are afraid to go outside”, telling Dmitry Rozogin that, “I think he should take care of his own country and we will take care of ours”. Some also see the election as a chance for Vucic to purge the SNS of a pro-Russian faction close to President Tomislav Nikolic.
While the government source agreed that one of the ideas of the election was to reassert the pro-European side of the SNS and “the whole society”, some see the supposed Nikolic-Vucic split as a sideshow that allows the party to remain a broad church, and Serbia to maintain friendships in both the West and Moscow.
Unnecessary though the poll may seem, Vucic and his supporters are right – this is an important poll for Serbia. Amid the crises currently rocking the EU and the world, it will show how serious the government is about reinvigorating Serbia’s economy and society, and setting it on a path towards a fully functioning liberal democracy and meaningful, job-generating growth.