Dominic Swire in Belgrade -

The global financial community breathed a collective sigh of relief on Sunday, February 3, as Serbia's pro-European President Boris Tadic was granted a further five year mandate from voters who turned out in droves to ensure their country stayed on course for European membership.

The second round of Serbia's presidential elections held in a chilly Serbia was billed as the most important since former dictator Slobodan Milosevic resigned amid protests following the disputed elections of 2000. Many in the financial community were hoping for a Tadic victory, with rating agency Standard & Poor's issuing a statement earlier in January warning that a victory for ultranationalist opposition candidate Tomislav Nikolic could pose a risk for foreign investor sentiment.

The result of the election was one of the closest ever with nails being bitten well into the night. In the event, preliminary figures show Tadic of the Democratic Party gained 50.5% of the vote beating ultranationalist candidate Tomislav Nikolic's 47.9%, in the highest turnout for almost 10 years.

Following the result, Tadic waded through a sea of supporters and the blaring trumpets of a gypsy band into a car that took him to central Belgrade. Fists thumping the air, Tadic bellowed from a balcony to the masses of supporters on the street. "We want to go to Europe. We want to cooperate with the world. We want to say to the people of Kosovo that we'll never let them down. We need to work together to fulfill Serbia's potential," Tadic declared.

Since the end of the first round of voting when the two most popular candidates Tadic and Nikolic went through to a run-off, the Democrat party had been billing the election as a referendum on the EU.

Speaking after the first round, Vice President Bozidar Delic told bne: "In exactly two weeks, we will have a referendum on the direction of where Serbia wants to go, and of course we will be doing everything in our capacity to mobilize all those who are for a European, open progressive Serbia and also asking our EU friends to do their part of the job."

Brussels has certainly been making overtures, notably by announcing the start of talks on creating a visa-free regime between Serbia and the EU - an issue close to the heart of many Serbs - and inviting Serbia to sign the Stabilisation and Association Agreement, seen as the first step on the path towards EU membership. However, the latter offer hit a snag with pressure from Belgium and the Netherlands following Serbia's lack of progress in catching and handing over suspected war criminals from the Balkan wars of the 1990s. As a result, for the first time ever the EU offered a watered down agreement that Serbian Foreign Minister Vuk Jeremic nevertheless described as a "breakthrough" that left Belgrade "very, very pleased."

International investors are also going to be smiling, as a victory for Nikolic would not be good for business. Even though Nikolic insisted that his Radical Party was not against EU membership, this was not how the international community perceived the situation. "We believe that a potential victory of the Radical Party's candidate, Tomislav Nikolic, in the final round of elections poses a risk to Serbia's European integration, and to foreign investors' sentiment towards Serbia," S&P said, pointing out that foreign investment is crucial to Serbia's financial wellbeing, as it was estimated to make up 15% of GDP in 2007.

The election victory has provided a further shot into the arm for the Democrats, with Minister of Economy and Regional Development Mladan Dinkic claiming that Serbia can now accelerate it's bid for EU membership. "Now President Tadic has a five-year mandate. We can even catch up with Croatia by 2011. I think Serbia will become a member of the EU while he is president," Dinkic toldbne.

Send comments to The Editor