Serbia Still at the

Crossroads

Briefly . . .

• Serbia today represents an opportunity more than a problem: democratization coupled with economic recovery would allow resolution of remaining issues throughout

the Balkans.

• Since January 2001, a lot has been achieved, especially in economic reform, but political and institutional changes are just beginning and many of the major reform challenges Serbia faces remain unmet. 

• The competition between Yugoslav president Kostunica and Serbian prime minister

Djindjic reflects a deep division over the direction of reform, the concept of the state,

and Serbia’s past and future.

• In an established democracy, rivalry between a more principled, nationalist pole and

a more pragmatic, reformist pole might provide balance and check political extremism; but in a fledgling democracy with an autocratic legacy, it has hindered the democratic transition. 

• The Yugoslav Federation is largely nonfunctional but nevertheless inhibits reform; the

Serbian Republic is the de facto governing authority and engine for reform in Serbia,

but the political struggle within DOS is a serious distraction.

• Major obstacles to reform reside in the police, army, state security services, the Montenegrin participants in the federation government, and other former pillars of the

Milosevic regime’s power.

• Further progress in Serbia requires clarification of the status of the Yugoslav Federation, political calm in Kosovo, an effort to rid the Yugoslav and Serbian state organs

of those responsible for past abuses and war crimes, and cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY). 

• The transition to democracy in Serbia will take time. Occasional setbacks are

inevitable. Powersharing will inevitably give way to competition at the polls between

forces led by Kostunica and Djindjic. 

• The international community should refrain from taking political sides but should

continue to push for reform. Using economic and other incentives, the United States

and the European Union can contribute to the acceleration of social, political, and

economic transformation in Serbia.

www.usip.org

SPECIAL REPORT

1200 17th Street NW • Washington, DC 20036 • 202.457.1700 • fax 202.429.6063

March 15, 2002

ABOUT THE REPORT

This report examines Serbia’s rocky road to reform

from January 2001, when the 18-party Democratic

Opposition of Serbia (DOS) took power, until the

beginning of 2002, when it remained in power but

had lost active participation of Yugoslav president

Vojislav Kostunica’s party. The report was prepared

before the European Union–brokered agreement

between Serbia and Montenegro and before the

Yugoslav Army arrest of a Serbian deputy prime

minister. The report is based on a series of public

and private discussions at meetings of the

Institute’s Balkans Working Group over the previous

six months as well as on several visits to Serbia.

Contributors to the discussions included prominent

Yugoslav and Serbian officials as well as a dozen

U.S.-based analysts and commentators. None of

them is responsible for this report, which was prepared by Vladimir Matic under the direction of

Balkans Initiative director Daniel Serwer.

Vladimir Matic has been a visiting professor of

international relations at Clemson University since

1996. He has published papers and articles, has lectured widely, and has been a consultant to a variety

of government and non-governmental institutions.

Matic served as a Yugoslav diplomat and is a former

assistant federal minister for foreign affairs.

The views expressed in this report do not necessarily reflect those of the United States Institute of

Peace, which does not advocate specific policies.

UNITED STATES INSTITUTE OF PEACE

CONTENTS

Introduction 2

“DOS Minus One” 2

Conflicting Visions 4

Cooperation with ICTY

Virtually Frozen 5

Where Does Serbia End? 5

Economic Reform 6

Law and Order 7

The Army 8

Conclusions and Policy Options 9
Introduction

In October 2000, after Slobodan Milosevic was forced to acknowledge electoral defeat,

the feeling of relief and euphoria in Belgrade was so overwhelming that little attention

was paid to the legacy he left behind. In those early heady days, it seemed to many

inevitable that the pillars of support that had sustained the old regime—from the police

and intelligence services to the banks, courts, and the state-controlled media—would

crumble. 

Now, some 16 months later, it is apparent that only limited sectors have undergone

profound change. Economic reform, for which Serbia was well-prepared by the work of

the economists’ organization known as G-17, has been particularly rapid. Starting from

a difficult position, the new authorities at both the federation and Serbian Republic levels have aggressively pursued macroeconomic stabilization, economic liberalization, fiscal and banking reform, enterprise restructuring, and rescheduling of external debt.

While there have been some struggles within the DOS over economic reform, which may

be hindered in the future by political tensions, progress has so far been rapid. 

In many other key areas, Yugoslavia and Serbia today still find themselves at the crossroads. The judiciary, police, and military remain largely as they were under Milosevic.

Media are far freer, but tend to follow old habits and align with political parties and groups

of the DOS, which exploit the media in ways that resemble those of the Milosevic regime.

The lack of a system for distributing frequencies to electronic media has so far hampered

“independent” television and radio outlets from reaching wider audiences. Corruption is

still a major issue. Control of some major economic assets remains in the hands of those

who gained their position with the assistance of Milosevic. Within DOS there is a struggle for control over large state-owned companies, whose boards provide well-paid

sinecures and whose privatization promises further benefits. Despite the unearthing of

bodies of murdered Albanians from Kosovo at many sites in Serbia by a Serbian Interior

Ministry determined to confront the past, many Serbs continue to ignore what was done

in their name in Kosovo, Bosnia, and Croatia and regard themselves as the major—even

the only—victims of the Balkan wars of the 1990s. Resistance to transfer of indictees to

the Hague Tribunal remains strong. The prevailing political culture does not favor substantial reforms but rather conservative and nationalist positions and policy. 

“DOS Minus One”

Post-Milosevic Yugoslavia and Serbia are governed by coalitions born out of necessity

and not based on close ideological and political views. They often lack a common strategy for dealing even with everyday problems. They came to power in October 2000 in

the federation and in January 2001 in Serbia with the tacit collaboration of the security forces, which abandoned Milosevic during the October 5 demonstrations. 

On the federal level, Yugoslav president Vojislav Kostunica has formed two successive governments with DOS and the Montenegrin Socialist People’s Party (SNP), Milosevic’s former coalition partner and a die-hard opponent of transfer of indictees to The

Hague. This is the only partner possible since the pro-democracy forces in Montenegro

boycotted the September 2000 elections and are therefore not represented in the

Yugoslav parliament. 

DOS itself, which governs the Serbian Republic, was formed in the summer of 2000

by the 18 political parties belonging to the democratic opposition. They ranged from

nationalist to anti-nationalist, from conservative to liberal, from pragmatic to principled.

Their shared political conviction was the need to remove Milosevic. From the beginning,

DOS has been plagued by differences regarding major issues and conflicting visions of

the future of Serbia and its place in the world. For almost a year now there has been one

crisis after another. DOS managed to survive them all, though not unharmed. 

2

ABOUT THE INSTITUTE

The United States Institute of Peace is an 

independent, nonpartisan federal institution 

created by Congress to promote the prevention,

management, and peaceful resolution of international conflicts. Established in 1984, the Institute

meets its congressional mandate through an 

array of programs, including research grants, 

fellowships, professional training, education 

programs from high school through graduate

school, conferences and workshops, library

services, and publications. The Institute’s Board of

Directors is appointed by the President of the

United States and confirmed by the Senate.

BOARD OF DIRECTORS

Chester A. Crocker (Chairman), James R. Schlesinger

Professor of Strategic Studies, School of Foreign Service,

Georgetown University • Seymour Martin Lipset (Vice

Chairman), Hazel Professor of Public Policy, George

Mason University • Betty F. Bumpers, Founder and 

former President, Peace Links, Washington, D.C. 

• Holly J. Burkhalter, Advocacy Director, Physicians for

Human Rights, Washington, D.C. • Marc E. Leland, Esq.,

President, Marc E. Leland & Associates, Arlington, Va. 

• Mora L. McLean, Esq., President, Africa-America Institute, New York, N.Y. • María Otero, President, ACCION

International, Somerville, Mass. • Barbara W. Snelling,

State Senator and former Lieutenant Governor, Shelburne,

Vt. • Harriet Zimmerman, Vice President, American Israel

Public Affairs Committee, Washington, D.C.

MEMBERS EX OFFICIO

Lorne W. Craner, Assistant Secretary of State for Democracy, Human Rights, and Labor • Douglas J. Feith, Under

Secretary of Defense for Policy • Paul G. Gaffney II, Vice

Admiral, U.S. Navy; President, National Defense University • Richard H. Solomon, President, United States

Institute of Peace (nonvoting)
3

The first serious clash within DOS occurred in March 2001 over cooperation with the

ICTY and what to do with Milosevic. The leaders of DOS managed to reach an agreement

that resulted in the first extradition, that of a Bosnian Serb. DOS agreed in principle to

hand over to ICTY all indicted non-Yugoslav citizens (in practice Bosnian Serbs) and to

submit to the federal parliament a draft law on cooperation with the tribunal. DOS also

agreed to establish the Commission for Truth and Reconciliation. Kostunica later followed up on this proposal, appointing 17 members to the commission and tasking it “to

truthfully reconstruct events,” though anti-nationalist members of the commission

resigned in protest of its composition and mandate.

Then on March 31, the Serbian government ordered Milosevic arrested. This corresponded with a deadline imposed by the U.S. Congress, which threatened to withdraw

assistance if Belgrade failed to cooperate with the Hague Tribunal. A two day stake-out

at Milosevic’s home in the wealthy Dedinje neighborhood of Belgrade ensued before

Milosevic was taken. President Kostunica opposed the arrest of Milosevic and did little

to hide his disapproval. 

None of the parties in the DOS coalition were yet ready for elections, nor do they

seem to be even now. Although relations between Kostunica’s Democratic Party of Serbia (DSS) and the other 17 members of DOS have continued to deteriorate, their marriage of convenience remains vital to its members’ political viability. The smaller parties

can survive only as part of a coalition because there is a required minimum 5 percent of

the vote for representation in the Serbian parliament. While Kostunica personally enjoys

high popularity, his party, the DSS, lacks the organization to carry out a successful campaign. Djindjic’s Democratic Party (DS) is generally regarded as having the stronger electoral machine, but he has been less popular in the polls than Kostunica, with high

negative evaluations from a significant percentage of the population. 

Under pressure from other DOS leaders, Kostunica and Djindjic reached an understanding in early May to stop bickering and to keep the coalition together, but they were

unable to pass an effective law on cooperation with the tribunal, despite promises to

President George Bush, or to agree on what to do with Milosevic. The Yugoslav federal

government instead issued a decree establishing rules for cooperation with ICTY and for

extradition of those indicted, including Milosevic. On June 27, 2001 Kostunica declared

that the decree could not be implemented before being reviewed by the Federal Constitutional Court. The next day, the court—consisting of five judges appointed by Milosevic—ordered all actions based on the decree stopped. 

At an emergency meeting of DOS that same evening, a decision to implement the

decree without any delay was adopted unanimously by the representatives of the 17 DOS

parties present; Kostunica’s DSS did not send a representative. Influencing the decision

was U.S. and European pressure on the eve of an international donors conference for

Yugoslavia. Thus “DOS minus one” took responsibility for cooperation with the Hague

Tribunal, and the government of Serbia transferred Milosevic on June 28. 

This decision further deepened the rift between Djindjic and Kostunica almost to the

breaking point. Still the DOS coalition at least formally continued to exist, while DSS

pressed for a reshuffle in the Serbian government that would replace interior minister

Dusan Mihajlovic and minister of justice Vladan Batic. The two ministers had been champions of Milosevic’s transfer, and their ministries controlled the police and associated

security services.

In August the situation within DOS worsened. A former member of the Serbian State

Security services, Momir Gravilovic, was murdered just hours after meeting with Kostunica’s advisers. Press leaks suggested that Gavrilovic had been providing the president’s

staff with evidence of corruption and connections to organized crime by high-level officials in Djindjic’s Serbian government, maybe even, the allegations hinted, Djindjic himself. This turned out not to be the case, and Gavrilovic’s own criminal involvement

quickly became public. Djindjic and his Democratic Party came out of the Gavrilovic affair

strengthened, and the cohesion of DOS minus one was forged. 

Post-Milosevic Yugoslavia

and Serbia are governed by

coalitions born out of 

necessity and not based 

on close ideological and 

political views.

From the beginning, DOS has

been plagued by differences

regarding major issues and 

conflicting visions of the 

future of Serbia and its

place in the world.

Thus “DOS minus one” took

responsibility for cooperation

with the Hague Tribunal, and

the government of Serbia transferred Milosevic on June 28. 
4

DOS minus one was tested in December in voting on a draft labor reform law

opposed by DSS. This led to the resignation of the DSS speaker of the Serbian parliament. Formally DSS remains part of DOS though its representatives have pulled out of

the Serbian government and have formed their own “clubs of representatives” in the

Serbian and the federal parliaments, but have left open the possibility of their attending DOS meetings. 

Conflicting Visions

Increasingly separated from the rest of DOS, DSS controls the Yugoslav Federation and

portrays itself as the defender of national interests and the state (Yugoslav and Serbian)

against international (primarily American) pressure, while at the same time claiming to

share democratic values, in particular the rule of law, with Europe. At the same time,

Djindjic has consolidated the coalition of his DS with the smaller parties as well as DOS

minus one control over the Serbian government and parliament. DOS minus one portrays

itself as reform-minded, prepared to meet international obligations, and concerned primarily with moving Serbia forward towards Europe. As deputy prime minister Zarko Korac

has put it, DOS minus one advocates “substantial changes and speedier accession of

Serbia in the European Union. . . . All 17 parties in DOS are for decisive reform steps.”

In interviews with the magazine NIN in October 2001, Kostunica and Djindjic offered

their assessments of DOS’s first year in power and further elaborated on their positions

(NIN no. 2649, October 4, 2001). 

For Kostunica, October 5, 2000 represents the moment Serbia achieved freedom,

when real democratic institutions could begin to be established. He emphasizes “the

issue of the state,” defining it as the establishment of a legal state and preservation of

the Yugoslav Federation. Explaining the slow pace of reforms, Kostunica says that they

cannot be implemented in a vacuum, but only through the legal institutions of the

state. Attempts to introduce fundamental changes must not be allowed to put the state

in jeopardy. The state institutions consist of real people who cannot be replaced

overnight. Continuity is necessary especially in the military and the police, Kostunica

argues. He expresses his disagreement with those who consider “that we have already

become part of a wider world, that borders have disappeared, that we have to adjust to

those rules in force in the world disregarding our state framework.” Kostunica criticizes

reformers who disregard Serbia’s unique history and inherited problems.

By contrast, Djindjic portrays October 5, 2000 as a historic moment when national

consensus was reached that the way out of Serbia’s crisis is to join democratic Europe.

The legacy of total isolation of the country and the mind-set of the nation will have to

be changed. Milosevic was a “product of the Serbian society,” according to Djindjic, and

“our responsibility is larger for making it possible for him to do what he did, than his

for doing it. That means that if we want substantial changes, we have to change ourselves.” The prime minister thought more could have been done after October 5 were it

not for differences within DOS about removal of the Yugoslav army chief of staff, Nebojsa Pavkovic, and former state security chief, Rade Markovic. Djindjic is critical of his

own performance in dealing with the abuse and criminal behavior of the former regime

and with reform of the judicial system. Djindjic defines his party as a “symbol of efficiency, speed, and finding solutions for new problems without too much theory.” He says

he is tired of preaching about morality, culture, and the Slav world and that he believes

in western ethics based on responsibility. He warns about the dangers of populism in

Serbia.

In an established democracy such different positions could have provided a good balance and kept political extremism of any kind in check; but in a fledgling one being

built by a society with a strong autocratic legacy, they have created a political quagmire that slows reform and preserves major elements of the Milosevic regime.

DOS minus one portrays 

itself as reform-minded,

prepared to meet international

obligations, and concerned primarily with moving Serbia

forward towards Europe.

Continuity is necessary 

especially in the military and

the police, Kostunica argues.

According to Djindjic, “if we

want substantial changes, we

have to change ourselves.” 
5

Cooperation with ICTY Virtually Frozen

Cooperation with the Hague Tribunal has been the major sticking point. Serbian politics

are still conducted in an atmosphere that reflects the legacy of radical nationalism and

isolation, a large element of which is distrust of anything foreign. The ICTY is viewed as

a basically anti-Serbian institution. International community pressure in spring 2001

pushed public opinion towards favoring the extradition of Milosevic, but this shift was

based on expectations that extradition would be richly rewarded with financial assistance. While the majority of Serbs polled last June believed that Milosevic should be

tried for abuse of power and corruption, only 2 percent thought that he was responsible

for war crimes.

During that same month two topics were featured on almost all prime-time TV news

broadcasts and on all the front pages: what to do with Milosevic, and the discovery of

mass graves containing bodies transported from Kosovo to sites around Serbia. Little

connection was made between the two issues, as if the excavated bodies had nothing

to do with Milosevic’s policies and crimes committed under his rule. 

After the conflict that erupted within DOS following Milosevic’s extradition to The

Hague at the end of June, DOS agreed to a moratorium on extraditions for three months.

This was tacitly extended for the rest of the past year. Cooperation with the tribunal is

an issue in Serbia primarily because of the U.S. Congress, which is again threatening to

cut off assistance. This has led to hints from Djindjic that further transfers may be imminent. Domestically in Serbia, 29 trials for crimes against humanity are underway in military courts, and one in a civilian court. But more than two and a half years after

Yugoslav Army (VJ) forces withdrew from Kosovo, not a single trial has been concluded

or sentence handed down, nor is the public kept informed about the issue. Left to their

own devices, Kostunica would defend the Yugoslav Army, and Mihajlovic would defend

the police and security forces. The compromises struck in October 2000 between DOS

leaders and security forces to ensure a peaceful transfer of power may haunt the new

authorities for a long time. 

Those in DOS who oppose ICTY argue that it will relieve Serbia of the burden of

addressing responsibility for past crimes and hamper establishment of the rule of law.

They suggest that ownership of the process is as important as the judicial procedure.

Those who support ICTY, who remain a minority in Serbia and in DOS, hope that the Milosevic trial will expose his policy and strategies, result in more readiness to explore the

events of the past 12 years, and force Serbia to face the responsibility for those who

were acting “in the name of the Serbian nation.” 

Where Does Serbia End?

DOS inherited from Milosevic a non-functional federation, a fictional Yugoslavia, which

had in fact ceased to exist a year or two before Milosevic fell. Kostunica himself had

described the federation as a facade. Montenegro has established virtual independence,

maintains its own monetary system and customs, operates a largely separate economy,

and sends representatives abroad. The only functional federation institution is the VJ,

which remains stationed in Montenegro, but Podgorica does not contribute to the federal budget so even the army is financed mainly by Serbia. 

While DOS has maintained unity in federation talks with Montenegrin leaders, shifting the leadership burden to Kostunica and his advisers, behind the scenes the DOS parties have little in common beyond opposition to Montenegrin independence. Some feel

it would be better to resolve the issue quickly, even if independence were the outcome,

so that Serbia can move ahead with reforms, including the rewriting of the Milosevicera constitution. Voters in Serbia increasingly see the stalemate as preventing faster

consolidation of their own republic’s reforms. Only 55 percent of Serbs support the 

While the majority of Serbs

polled last June believed that

Milosevic should be tried for

abuse of power and corruption,

only 2 percent thought that he

was responsible for war crimes.

DOS inherited from Milosevic a

non-functional federation, a fictional Yugoslavia, which had in

fact ceased to exist a year or

two before Milosevic fell. Kostunica himself had described the

federation as a facade.
6

continuity of the federation, down from 67 percent in March 2001. At the same time,

support for independence in Montenegro has been declining, under strong pressure

from both the European Union and the United States. EU foreign policy chief Javier

Solana has been anxiously pressing for “a democratic Montenegro within a democratic

Yugoslavia,” if only as a temporary measure, with a final decision postponed for several years. 

DOS has not attempted to formulate a common position and strategy for negotiating Kosovo’s final status, though all the parties would agree that Kosovo should remain

part of Yugoslavia. If the issue of Kosovo final status is raised under current circumstances, the DOS party leaders would be compelled to compete with patriotism, as they

did when reacting to the Albanian extremist attacks in southern Serbia last spring. The

prevalent mind-set of the general public has in the past and would again reward the

nationalists, which would thus limit room for negotiations. While some would argue that

the unresolved issue of Kosovo stands in the way of accelerating Serbia’s approach to

Europe, a premature push to reach a final settlement could set back democratization in

Belgrade. 

Developments in Kosovo following the November 2001 elections there may lead to

some improvements. Participation of the Kosovo Serbs in the United Nations–sponsored

political process was an important first step. Over time it may change the perspectives

for a solution of Kosovo’s status, provided the Kosovo Serbs begin to feel secure and

some displaced people begin to return home. Serb participation in Kosovo governance

will also gradually diminish the influence of the radical elements on both sides and may

help make the issue less politically charged within Serbian domestic politics as well. 

With respect to Bosnia-Herzegovina, Belgrade has taken crucial steps: recognition of

Bosnia as a sovereign state and establishment of full diplomatic relations as well as

expanded economic cooperation. Yugoslavia has announced that it will ratify the Dayton agreements and that it will open a consulate in Banja Luka. Bosnia has remained

an issue because of continuing personnel and financial arrangements between the

Yugoslav Army and security services and Banja Luka’s military and state security services,

despite repeated announcements that these ties have been broken. Belgrade has also

tried to suggest that if Kosovo or Montenegro were to become independent, then Republika Srpska (RS) would necessarily also be entitled to move in that direction. This

implied threat sits badly with an international community that has invested heavily in

preventing partition of Bosnia and that continues to protect Republika Srpska with NATO

troops even though the RS has not fulfilled its obligation to allow refugees and displaced people to return home. 

Most of the problems relating to the status of Vojvodina and its autonomy within Serbia seem to be on the way to resolution. At the end of January the Serbian parliament

started debating a law drafted by the government of Vojvodina and approved by the Serbian government. It was adopted at the beginning of February, though DSS representatives did not support it. It is a comprehensive law dealing with 26 areas of government

and it transfers some 300 “responsibilities” back to Vojvodina. 

Economic Reform: Pain but No Gain

When it was formed in February 2001, the Serbian government was overwhelmed with

the disastrous state of the economy that the former regime had managed to conceal

from the public. Foreign donations of $400 million during the last three months of 2000

and a further $900 million in 2001 for energy supplies, pensions, and social programs

provided enough for bare survival but did not change the fundamental situation. 

Considerable progress has been made in creating a legal framework for a functional

market economy, earning the praise of the International Monetary Fund and the World

Bank, but the process took twice as long as anticipated. Most important was adoption

Serb participation in Kosovo 

governance will also gradually

diminish the influence of the

radical elements on both sides

and may help make the issue

less politically charged within

Serbian domestic politics as well.

Bosnia has remained an issue

because of continuing personnel

and financial arrangements

between the Yugoslav Army and

security services and Banja

Luka’s military and state 

security services, despite

repeated announcements that

these ties have been broken.
of laws on privatization, creation of a new tax system, and enactment of the controversial Law on Labor, which allowed for the process of restructuring and privatization

to begin. 

The government also restructured Serbia’s banking system. Eighteen smaller banks

and four major state banks with 8,500 employees were closed. Combined they had an

accumulated private debt of $1.6 billion amassed during the Milosevic era through

shady deals and manipulation. A government guaranty was issued for deposits in these

banks. This bold initial step significantly reduced the debts of several large state-owned

companies and saved them from bankruptcy so they may be restructured and/or privatized. This is intended to create conditions that will attract foreign investment by next

summer. 

Social conditions in the meanwhile remain precarious. Industrial production in 2001

was lower than in 2000 and 4 percent lower than the 1996–98 average. Last summer,

the Serbian government confronted unhappy workers in Kragujevac, Serbia’s industrial

heartland, after the largest factory there was effectively closed. At the time, the Kragujevac region was operating at only 4 percent of its former industrial capacity. Unemployment is estimated to be at 40–50 percent. Additionally, half of those currently

employed do not actually work and will be let to go once privatization gets underway.

Purchasing power has been reduced by half. Some 700,000 refugees and displaced people still remain in Serbia. 

It is generally assumed that economic dislocation, poverty, and social unrest will hurt

those who have advocated economic reform, in particular Djindjic. While this may be

true, it is notable that some of the strongest and most forthright advocates of economic reform are also among the most popular public figures in Serbia: Yugoslav deputy

prime minister Labus and central bank governor Dinkic in particular. They, along with

other more intellectual figures like Civic Alliance leader and Yugoslav foreign minister

Svilanovic, may emerge as a third force in Serbian politics, in addition to the more conservative group around Kostunica and the more reformist group around Djindjic. It

remains to be seen, however, whether they can convert personal popularity into votes in

a Serbia still suffering enormous economic hardship. 

Law and Order: A Long Way to Go

In addition to basic economic laws, the most important legislation passed so far has dealt

with reform of the court system, with the goal of transformation of the entire judicial system and establishment of an independent judiciary. In November, Serbian minister of justice Batic replaced 187 judges. Remaining on the agenda of parliament are penal code

amendments, court fees, and laws on criminal procedure, police, anti-corruption, and

tobacco. The impact on judicial performance has been limited so far, however, due to the

enormity of the task and squabbles within DOS. The judicial system remains unreliable,

prone to political pressures and manipulation, and far from being citizen-oriented. 

Political patronage, cronyism, and corruption have been a way of life in Serbia, and

under Milosevic a symbiotic relationship was established between the government and

organized crime. Social values were further corrupted by decades of communist rule.

President Kostunica—who is generally regarded as personally uncorrupted—has often

drawn attention to the problem of corruption, but the federation government he heads

has done little to attack it. The new authorities at the Serbian Republic level at first

seemed unable or unwilling to address this enormous problem head-on. But the prime

minister and his finance minister, among others, have now raised the priority of fighting corruption and promised to root out organized crime. 

Last summer a Serbian law was adopted introducing a one-time tax on extra profit

gained and property acquired by use of special privileges from 1989 until the summer

2001. It targeted war-profiteers, organized crime, and the former regime’s cronies and

7

The judicial system remains

unreliable, prone to political

pressures and manipulation, and

far from being citizen-oriented.

Some of the strongest and 

most forthright advocates of

economic reform are also

among the most popular

public figures in Serbia.
front companies. This controversial law, while generating income for the budget and

addressing the fiscal aspect of the problem, at the same time absolved the enriched collaborators of the former regime of criminal charges and legalized their acquired positions. Critics called the plan a buy-out, but the government accepted this as a short-cut

towards economic reconstruction and political reconciliation. 

The Serbian government claims that it has achieved some results by adopting regulations to stamp out crime and corruption in customs. The Interior Ministry has made 30

arrests for corruption, and Serbia has joined the Stability Pact’s Anti-corruption Initiative. The problems of corruption and criminality remain one of the most serious challenges in the ongoing process of political, social, and economic reform. 

After October 5, 2000, the police and state security apparatus were left intact for a

full five months, in part out of a combination of fear and gratitude for their restraint

during the events leading to Milosevic’s fall. But the chief reason the police and intelligence apparatus were left alone was the lack of agreement in DOS on how to deal with

this most powerful former pillar of the Milosevic regime. After the Serbian government

was finally installed in February 2001, some top police officials were replaced, allowing

for the “professional core” of the institutions to be preserved along with the mentality

forged under the previous regime. One of the most damaging consequences of the initial

hesitation to conduct sweeping personnel changes is that ample time was provided to

destroy evidence of crimes committed in the past, including dozens of unsolved political assassinations and links with organized crime.

More than a year after the change, the security structure remains essentially unreformed and may potentially even present a threat to the government. The demonstrations and disruption of traffic in mid-November by the Serbian Interior Ministry’s “Red

Berets,” known for their special operations in the Croatia, Bosnia, and Kosovo conflicts,

illustrates this risk. Members of this special operations unit showed that their loyalty is

not to the democratic government and the people they supposedly serve. They consider

themselves the ultimate arbiters of what is right and how they should behave. The immediate cause of the mutiny was the arrest of two Bosnian Serbs wanted by the ICTY. The

Red Berets were unhappy to have unwittingly participated in this operation and requested the resignation of the minister of interior, Dusan Mihajlovic. They wanted no further

arrests to be made and their members not to be used in such operations. Djindjic rejected Mihajlovic’s offer to resign. But he also held a long talk with the Red Berets in their

barracks in an allegedly conciliatory tone. Later he fired the director of state security and

his deputy and appointed his own chief of the cabinet to the position of the deputy interior minister. It remains unclear whether the Red Berets are under their control.

In November the independent newspaper Reporter published a list of 345 police who

were allegedly suspects or potential witnesses in The Hague. Mihajlovic vowed that while

he is minister, no member of the police force would be transferred to The Hague. Djindjic reiterated this position, saying that “we owe at least a minimum of gratitude to these

people who risked their lives wearing blue uniforms” (in Kosovo). This statement was

received with confidence by members of the force, since their former commander in

Kosovo, police general Sreten Lukic, was appointed by Djindjic as director of public security in the Serbian Police.

The Army: Chief of Staff Puts on the Brakes

After October 2000 there was a groundswell of support for reform of the VJ, including

cashiering Milosevic’s proteges. Fourteen VJ generals retired, and several VJ commanders

serving in Montenegro were replaced at the request of Montenegrin president Milo

Djukanovic. Another 35 generals retired in the next few months. 

Reform then ground to a halt under VJ chief of staff General Nebojsa Pavkovic, former commander of the Third Army, which was active in Kosovo during the NATO/Yugoslav

More than a year after the

change, the security structure

remains essentially unreformed

and may potentially even

present a threat to the 

government.

8
war. As soon as it became clear that Pavkovic would be kept in place, the impetus for

reform evaporated. He has since managed to monopolize decisions on retirement, promotions, and appointments. At the end of December 2001, some 21 generals were

retired. Among them were five assistants and advisers to the minister of defense, who

learned about the retirements from the media. One of the generals forced to resign had

been promoted by the federal government only a few days before his forced resignation.

Throughout 2001, very little was done to restructure the army. President Kostunica

defended the snail’s pace of military reform in a speech on October 9, 2001, saying “conditions for a substantial reform of VJ have not been created.”

Pavkovic’s fate has now become a political issue, with Kostunica championing his

retention, and Djindjic and other elements of DOS demanding that he be replaced.

Although he has publicly emphasized the “constitutional” role of the army as a state

and non-partisan institution, Pavkovic has become openly involved in politics. He

actively campaigned for Milosevic in the September 2000 elections. Last spring he

engaged in a power struggle with deputy prime minister of Serbia Nebojsa Covic, firing

a general who had cooperated with Covic and contributed to better working relations

with NATO troops in southern Serbia. Pavkovic also got into a public dispute with interior minister Mihajlovic over revelations about army and police units in Kosovo in

1998–99. Repeated requests to President Kostunica by the Serbian government to

replace Pavkovic have been ignored, which greatly enhanced his power. By February

2002 a campaign by the youth wing of the liberal Civic Alliance party had gathered more

than 35,000 signatures on a petition calling for Pavkovic’s removal. NATO has made it

clear that Serbian membership in Partnership for Peace (PfP) cannot happen while

Pavkovic is still chief of staff.

President Kostunica has refused to accept Pavkovic’s resignation and wants to see

the relationship between Serbia and Montenegro sorted out before a decision on PfP

membership, which has been recommended in a study prepared by the Ministry of

Defense. A law on civilian control over the VJ, including military spending, is being

drafted, but Pavkovic warned in a December speech that it is “inappropriate that any

other institution in this state or any political party . . . interfere with personnel policy

[in the VJ].” 

Conclusions and Policy Options

Serbian citizens chose the path to reform in October 2000, but many are still hesitant

and not quite ready to pay the price for building a new democratic society and an efficient economy, the prerequisites for joining Europe. Blocking that path are many obstacles, including the unreformed army, police, state security services, and some other

pillars of the former regime’s power structure. The core of the apparatus built by Milosevic remains mostly intact. The limited personnel changes that have taken place in the

police and intelligence services have merely scratched the surface, and in the VJ not even

that minimal degree of change has happened yet. 

The new authorities seem to have developed a certain dependency on these structures. Kostunica looks to the army and Djindjic looks to the police and state security services for support against the other. This is a major source of political friction in the

government and tension in society that perpetuates instability and feeds scandals. There

is a gnawing sense that little has changed. 

Democratic transition in Serbia is an historic process. There are no instant solutions,

and occasional setbacks are inevitable. Transformation of Serbian society depends on the

outcome of the competition within DOS, not just between personalities but also over

conflicting concepts of the nation and its role in the region, Europe, and the world.

Intertwined in that struggle are relations with Montenegro, Bosnia-Herzegovina, and

Kosovo, as well as major issues in Serbia like regional autonomy, state-church relations,

As soon as it became clear 

that Pavkovic would be kept 

in place, the impetus for 

reform evaporated.

9

Transformation of Serbian 

society depends on the outcome

of the competition within DOS,

not just between personalities

but also over conflicting

concepts of the nation and its

role in the region, Europe, and

the world. 
the position of ethnic minorities, and the role of the army. During this long process, powersharing may be the only viable solution and attempts to shift the balance abruptly could

lead to a new crisis.

Though it seems that no member of DOS wants elections any time soon, the pre-election campaign has been going on for months, and every major issue that arises is dealt

with in that context. In the past few months Kostunica has lost a great deal of his popularity, but he remains in sync with the nation as an embodiment of traditional values.

Djindjic holds most of the levers of power, and he uses them to push for reform. It

remains to be seen if the voters will reward or punish him for that. The state of the economy may be the most decisive factor in determining his fate, and with it the direction

Serbia will take in the next several years. The problems are of such a character and magnitude that only continued assistance and massive foreign private investments could

lead to recovery. This provides the international community with an opportunity to

remain involved and to continue supporting true, far-reaching reform. 

Though U.S. interest in the Balkans has declined, the region’s stability remains a

cause for concern. Instability would damage NATO and delay withdrawal of U.S. troops

from the Balkans. It could also lead to failed states that would be havens for organized

crime and terrorism. Continuing progress on political and economic reform in Serbia is

crucial to the region as a whole. 

• The international community should not take sides regarding political personalities in

Serbia and Montenegro but rather should focus on encouraging concrete reforms,

using economic levers and aid as means to accelerate this process and ensure establishment of the rule of law, including cooperation with ICTY. 

• Preservation of the Yugoslav Federation, which the European Union and United States

have made a priority, should not be allowed to set back the cause of political and

economic reform in either Serbia or Montenegro or to strengthen anti-reform forces.

Montenegro ultimately should be allowed to make its own choice on its relationship

with Serbia.

• The EU should encourage a thorough-going reform of the public administration in Serbia, including the judiciary, police, and state security service. This should include

removal of those in leadership positions during the Milosevic era, retirement of those

whose skills are insufficient to meet the needs of a modern state, and a sharp reduction in numbers of officials. Serbia also needs a legal process (lustration) that will

remove those who were responsible for abuses during the Milosevic regime.

• The United States should focus its economic assistance on conflict prevention and

ethnic reconciliation in sensitive areas like southern Serbia and northern Montenegro. 

• Lack of meaningful reform of the VJ is a strong argument against expanding militaryto-military cooperation, but programs focused on civilian control of military forces

should continue. It is also important that the VJ see clearly the benefits of Partnership for Peace even if it will have to undergo further reform before reaping them.

• Enhancing Serbia’s capacity to contribute to the international effort against international terrorism and transnational crime should be pursued through training and

technical assistance along with direct contacts between the FBI and other government agencies with their Serbian counterparts. However, care must be taken not to

strengthen the hand of those who abused power during the Milosevic era. 

• Kosovo’s status cannot be put off forever; it will eventually be decided on the basis

of negotiations between Belgrade and Pristina. Safety and security for Serbs in Kosovo will hasten the day that such negotiations can be successful. In the meanwhile,

the UN authorities in Kosovo need to build viable institutions there and initiate economic cooperation between Belgrade and Pristina. 

10

Serbia also needs a legal

process (lustration) that will

remove those who were 

responsible for abuses during

the Milosevic regime.

Only continued assistance

and massive foreign private

investments could lead to

recovery. This provides the

international community with

an opportunity to remain

involved and to continue

supporting true, far-reaching

reform.
Of Related Interest

Many other publications from the United States Institute of Peace address issues that

relate directly to the Balkans and European security. 

Recent Institute reports include:

Albanians in the Balkans (Special Report, November 2001)

Whither the Bulldozer? Nonviolent Revolution and the Transition to Democracy in Serbia

(Special Report, August 2001)

American Civilian Police in Peace Operations (Special Report, July 2001)

Serbia and Montenegro: Reintegration, Divorce, or Something Else? by Stojan Cerovic

(Special Report, April 2001)

The Future of Macedonia: A Balkan Survivor Now Needs Reform (Special Report, March

2001)

Europe in the 21st Century: A Strategy for Achieving Stable Peace (Special Report,

November 2000)

Bosnia’s Next Five Years: Dayton and Beyond (Special Report, November 2000)

To obtain an Institute report (available free of charge), write United States Institute of

Peace, 1200 17th Street NW, Suite 200, Washington, DC 20036-3011; call (202) 429-

3832; fax (202) 429-6063; or e-mail: usip_requests@usip.org.

Recent books from USIP Press include:

Turbulent Peace: The Challenges of Managing International Conflict, edited by Chester A.

Crocker, Fen Osler Hampson, and Pamela Aall (2001)

NATO Transformed: The Alliance’s New Roles in International Security, by David S. Yost

(1999)

Herding Cats: Multiparty Mediation in a Complex World, edited by Chester A. Crocker, Fen

Osler Hampson, and Pamela Aall (1999)

For book sales and order information, call 800-868-8064 (U.S. toll-free only) or 703-661-

1590, or fax 703-661-1501.

United States 

Institute of Peace

1200 17th Street NW

Washington, DC 20036

For more information, see our website

(www.usip.org), which has an online

edition of this report containing links

to related websites, as well as additional information on the topic.

SPECIAL REPORT 84