Executive Summary

Serbia's political culture suffers from a legacy of poverty, ignorance and illiteracy, war, and nationalist and communist authoritarianism. It is also held hostage to the conflict between Serbs and Albanians in Kosovo making the process of democratisation, which is key to lasting peace and stability in the Balkans, especially difficult. Though the UN-imposed economic embargo of Serbia and Montenegro has been lifted since the end of the Bosnian war, an outer wall of sanctions remains in place to pressure rump Yugoslavia's two remaining republics into living up to the commitments they made in the Dayton Peace Agreement and working towards a resolution in Kosovo. The outer wall cuts Serbia and Montenegro and the 11 million people living there off from normal capital flows by barring them from the International Monetary Fund and World Bank, among other international institutions. Western analysts estimate unemployment at about 40 percent; the Yugoslav economy is about half its 1989 level; the country's trade deficit is increasing by about $2 billion a year; and its $12 billion foreign debt stands at about 80 percent of gross domestic product. In the 27 months since Dayton the Serbian political environment has evolved in four ways. First, violence has increased dramatically in Kosovo, where the majority Albanian population no longer recognises the Serbian government's authority and is demanding independence. Second, there has been a cooling of nationalist passions among Serbs. Third, the authority of Slobodan Milosevic, Yugoslavia's president and paramount leader, among Serbs has waned; the country's so-called "democratic" opposition has disintegrated; and, as a result of these two trends, an extremist nationalist party, Vojislav Seselj's Radicals, has strengthened its power base despite the decline in nationalist passions within the overall population. Finally, gangland-style assassinations in Belgrade have revealed serious rifts within Serbia's ruling elite and that cut close to Milosevic himself. Resolution of Kosovo is a prerequisite for democratic change in Serbia. Kosovo must therefore be the international community's priority in dealing with Serbia. Despite the upsurge of violence in the troubled province, conditions may now be favourable for progress in this most intractable of disputes. Ironically, given the consistently negative role he has hitherto played there, the weakened Milosevic may offer the key to a solution, but only if pressured by the international community. Though his influence is on the wane, Milosevic remains the only credible interlocutor in Serbia. He alone has the authority to negotiate an agreement on Kosovo. He alone has the control over the local media to rally Serbs behind such an agreement. He alone has the political power to force through the constitutional amendments that will be necessary to change Kosovo's status. And he alone has the police network to deal with a possible extremist national reaction. That said, Milosevic will not pursue a solution in Kosovo unless the international community forces him to do so. Milosevic's track record suggests that he will abandon previously held positions if put under sufficient pressure and that agreements he concludes can be made to stick if such pressure is maintained. The key to pressuring him to abandon a position and go along with a policy initiative is to create conditions from which he will infer that he will lose power in the short term if he does not co-operate. Milosevic exercises his authority and safeguards his power by means of a number of levers. These include the country's financial controls, the police, the media and his Socialist Party organisation. Making Milosevic believe that he is moving dangerously close to being overthrown might be accomplished by targeting the levers he uses to control Serbia and undertaking measures aimed at weakening them. The managers and, especially, the shareholders of investment banks and other companies that enter into financial transactions, and especially privatisation agreements, with large Serbian enterprises connected to the Milosevic regime should be advised by NATO governments of the risks inherent in such activity. These companies should be put on notice that by propping up Serbia's Mafia-style government and economy they are dragging out the timetable for the NATO mission in Bosnia, helping to squander an opportunity for resolving the Kosovo dispute, and prolonging instability in the Balkans that is costing the alliance time and resources. NATO governments should also find the means, overt and covert, to pressure Serbia's oil and gas suppliers to demand cash for their exports to Serbia and not to accept barter payments. The United Kingdom, Italy and other countries with commercial sections attached to their embassies in Belgrade should be urged to close them. Diplomatically, Milosevic should be advised that his hold on power in Serbia will not be secure if he continues to obstruct a settlement to the Kosovo dispute. At the same time, high-ranking foreign officials should reduce their visits to Belgrade to a minimum. And the Yugoslav Army's high command should be given concrete promises of the financial, material and technical support they stand to reap if the government they serve takes steps to resolve the Kosovo dispute peacefully and once and for all. In the longer-term, the construction of civil society is key to the healthy evolution of Serbian political life. The international community must be prepared to provide significant financial aid to help the Serbian people build democratic institutions. Funds earmarked for building civil society in Serbia should be considered a component part of an exit strategy for the military mission in Bosnia and factored against the astronomical cost of prolonging that mission.

General Situation

More than two years after the General Framework Agreement for Peace (Dayton) 1 ended the war in Bosnia and Herzegovina (Bosnia), the 11 million people living in Serbia and Montenegro are still suffering the consequences of the lust for power that drove Slobodan Milosevic to unleash a tidal wave of aggressive Serb nationalism, launch Serb uprisings in Croatia and the ethnic-cleansing of Bosnia, and engineer the repressive regime that has goaded the ethnic Albanian majority in Kosovo toward armed revolt. The United Nations suspended economic sanctions against Serbia and Montenegro a few weeks after Dayton was signed, 2 and many countries returned their ambassadors to Belgrade after a three-year absence. But the international community, led by the United States, has kept in place financial and political restrictions, known as the "outer wall" of sanctions, in order to pressure Serbia and Montenegro to comply fully with the provisions of Dayton and take significant steps toward resolving the Kosovo dispute. The "outer wall" cuts Serbia and Montenegro off from normal capital flows by barring it from the International Monetary Fund and the World Bank; it also bars the two Yugoslav republics from membership in the United Nations, the Organisation for Security and Co-operation in Europe, and other international forums. 3 In January 1998, as a punitive measure for Milosevic's failure to carry out promised electoral reforms, the European Union suspended trade preferences for Serbia and Montenegro, thereby reducing their ability to carry on profitable trade with EU-member countries. 4 After years of mismanagement and institutionalised corruption, the United Nations sanctions and the "outer-wall" restrictions delivered a dazing punch to much of Yugoslavia's economy. Western analysts estimate unemployment at about 40 percent; the country's gross domestic product, which measures the size of the economy, is about half its 1989 level. Yugoslavia's trade deficit is increasing by about $2 billion a year, and its $12-billion foreign debt already stands at about 80 percent of gross domestic product. 5 Apathy is rife. Crime is on the rise. And, not surprisingly, young people in Belgrade quip that anyone with two legs has already emigrated. In their dealings with foreign representatives today, Milosevic and his supporters act as if nothing extraordinary has happened during the past ten years in Serbia. They maintain that Milosevic is the only person standing between Serbia and chaos. They insist that the international community, especially the United States, tear down the "outer wall" of sanctions and that the European Union reinstate its trade preferences. They demand a re-negotiation of the country's external debt. And in return, they promise that unfulfilled commitments made in Dayton will be honoured. They promise that all the elements of a democratic state and a market economy will be set in place. And they promise that the Kosovo dispute will be resolved. For the time being, no one who matters is ready to satisfy any of the Serbian regime's demands because no one who matters trusts Milosevic's word. An examination of the major developments in Yugoslavia since Dayton indicates a pressing need for resolution of the Kosovo dispute as a prerequisite for serious democratic and economic reforms.

Kosovo violence increases

After six years on a back burner, the Kosovo dispute re-emerged as a domestic and an international issue after Dayton was signed. Kosovo has witnessed steadily escalating violence as elements of the region's repressed Albanian majority have struck back at Serbs, Serb police officers, and Albanians loyal to the Serbian state. Many analysts attribute the backlash to widespread disappointment among Albanians that Kosovo did not feature in Dayton, and to frustration among an extremist Albanian minority with Ibrahim Rugova, the most prominent Albanian leader, whose pacifism has failed to yield results. The former Yugoslavia's poorest and least developed region, Kosovo has been the scene of a territorial conflict between the Albanians and Serbs for centuries. Serbs justify their hold on Kosovo with international treaties and a historical claim stemming from the fact that the area was part of the medieval Serbian kingdom and once had a Serb majority; Kosovo is also the site of centuries-old Serbian Orthodox monasteries that Serbs everywhere regard as national treasures. Albanian scholars dispute the Serbs' historical claim to Kosovo by arguing that the Albanians are descendants of the ancient Illyrians, Kosovo's earliest inhabitants. Albanian demands for political control of the region are based upon the fact that Albanians account for more than ninety percent of Kosovo's population. 6 Animosities between Kosovo's Serbs and Albanians were exacerbated in 1989, when Milosevic stripped the region and its Albanian leaders of the autonomy they had enjoyed under Communist Yugoslavia's 1974 constitution. Since then, Serb bureaucrats, backed up by a heavy police presence, have ruled Kosovo. The Albanians have responded by establishing a parallel state of their own and setting up a government, a police force, schools, health clinics, and a university. Albanian leaders are publicly demanding complete independence from Serbia and Yugoslavia, but there are clear signs that the Albanians of Kosovo, like the Serbs of Serbia, are divided both in terms of their aspirations and the means that should be applied to attain them. The international community has been virtually unanimous in insisting that Kosovo not be recognised as anything but a part of the Federal Republic of Yugoslavia because independence for Kosovo would open a Pandora's box of dangerous border issues and immediately undermine neighbouring Macedonia, which has a restive Albanian minority of its own. An unstable Macedonia could produce a wider conflict involving Albania, Greece, Bulgaria, and Serbia. Anti-Albanian sentiments among Macedonia's Slavs are strong, and Macedonian leaders have long been discussing the possibility of widespread hostilities in Kosovo, including an idea to channel any arriving Albanian refugees from Kosovo through Macedonia and into Albania. In 1996, a militia known as the Kosovo Liberation Army (UCK) began claiming responsibility for attacks against Serbian policemen and police stations as well as Albanians known, or believed, to be close to the Serbian authorities. These attacks escalated in 1997. During a shoot-out in November, the UCK forced a column of police armoured vehicles to withdraw from Drenica, a highland area in northern Kosovo. 7 The UCK set up checkpoints along roads through Drenica, and for a time the Serbian police did not venture into the area. The UCK's activities have so far been limited to Drenica. But there has been violence instigated by the Albanians and the police in other areas of Kosovo, and statements attributed to the UCK have warned that it plans to wage war on three fronts: Kosovo, Macedonia, and a third, unnamed, area that many Serb analysts assume to be Belgrade. In early February 1998, Belgrade newspapers reported that the Serbian police are planning to break the resistance of the UCK in Drenica in late February or early March. The Serbian police have in recent days sent reinforcements into the area, established checkpoints, and improved security at their police stations. The Yugoslav army has clearly indicated through statements to the press that it does not consider the UCK a threat to Yugoslavia's territorial integrity; it categorically denies that the UCK has any arms heavier than infantry weapons. Rugova, the president of the parallel Albanian "state", has publicly condemned all use of violence in Kosovo. The Albanians have been urged by the United States and other Western governments to halt their attacks and remain patient in the face of Serb police repression. 8 Beyond the fact that there has not been an explosion of violence in Kosovo, the only thing Rugova has been able to show for his non-violent policies has been a U.S.-backed, nine-point agreement with Milosevic for the reopening of Kosovo's schools. Signed in 1996, the agreement was mediated by the Vatican and was supposed to be the first in a series of such agreements on practical governmental problems that would lead to the Albanians' receiving a measure of autonomy. The education agreement, however, was not implemented, and at the beginning of the 1997 school year, Albanian students held peaceful demonstrations demanding that they be allowed to return to their classrooms. The Serbian police responded by breaking up the demonstrations so violently that even the patriarch of the Serbian Orthodox Church publicly complained. 9

Nationalist passions in Serbia cool

Since Dayton, Serbia has witnessed a dramatic cooling of the nationalist passions that erupted so powerfully at the end of the last decade. This cooling has been partly due to war weariness and economic hardship, but it is probably more a result of the disappearance from state television of the fear-instilling news broadcasts Milosevic's loyalists used to stoke up the nationalist fervour in the first place. As a consequence of the non-chauvinistic propaganda line, the military loss in 1995 of two Serb-held regions in Croatia, Western Slavonia and Krajina, has been accepted with hardly a murmur by most of Serbia's people. Likewise, the vast majority of Serbia's Serbs welcomed Dayton with relief, and they no longer consider Bosnia and the fate of its Serbs a central political issue. January's handover of Eastern Slavonia, the last Serb-held area in Croatia, produced little more than an embarrassing hush in Belgrade. Most significantly, many Serbs today show little stomach for the problems of Kosovo. Milosevic's media give only scant attention to complaints by the minority Serbs of Kosovo. Despite the recent violence against Serb police officers and the assassination of a local Serb political leader in Kosovo by an Albanian militia, there are no public protest demonstrations and no calls for volunteers to march off to Kosovo and fight to defend the region's Serb minority or Serbia's honour. The breadth of public debate on the Kosovo dispute has widened enormously, especially in Belgrade, with open discussions of proposals for granting Kosovo autonomy, regional self-rule, and equal status with Serbia and Montenegro within the Federal Republic of Yugoslavia -- all ideas that would have been shouted down with cries of treason a decade ago. It must be stressed, however, that even with the cooling of the nationalist ardour in Serbian society overall, nationalism remains a driving passion for a hard-core minority. The size of this minority, judging from voting patterns for extremist nationalist parties, seems to increase and decrease within a band extending from about fifteen to about thirty percent of the voting population. This force is clearly something that will have to be reckoned with, if there is to be any forward movement involving Kosovo. For the time being, Milosevic is the only political factor in Serbia in possession of the authority to reckon with it.

Milosevic and the "democratic" opposition weaken

After the international community accepted Milosevic as a "peacemaker" at the Dayton talks, the Serbian leader immediately began exploiting his new-found international prestige to shore up his political position at home. He took over Studio B, the only independent television station in Serbia. He tried to close down Borba, an independent Belgrade newspaper critical of his regime. He attacked elements of the opposition as "anti-peace". He purged the ranks of his party, the Socialist Party of Serbia, and secured its left flank on the political spectrum by strengthening the coalition of communist, socialist, and social democratic parties controlled by his wife, Mirjana Markovic. He used strong-arm tactics to co-opt small-business owners and squeeze them for donations. He rewarded his supporters by handing out monopolies for the importation of consumer goods like televisions and cigarettes. With Milosevic and the Socialist Party in firm control of the peace slogan and in possession of a track record, albeit spotty, for paying wages and pensions, the opposition was left with little it could promise voters except vague rhetoric about democratic reform and assurances that everything would be fine once Milosevic had been defeated. 10 In November 1996, the regime felt confident enough of its position to hold federal and local elections. When the votes were tallied, the Socialist Party and its allies had won majorities in both houses of Yugoslavia's federal parliament but had lost power in a number of key municipal councils. When Milosevic illegally quashed the local election results, tens of thousands of protesters staged peaceful demonstrations in towns all over the country and disrupted traffic in Belgrade. After two months of whistle-blowing, slogan-shouting, and stiff international pressure, Milosevic gave in and the opposition took control of the local governments they had won at the ballot box. 11 It proved to be a Pyrrhic victory. In the months following the demonstrations, the mainstream "democratic" opposition -- an unstable coalition made up of three small parties: the right-wing Serbian Renewal Movement, the middle-of-the-road Democratic Party, and the tiny Citizens' Alliance of Serbia -- collapsed. The Democratic Party and Citizens' Alliance put themselves on the political sidelines by boycotting republican parliamentary elections in the fall of 1997, despite complaints by Western diplomats who publicly called the move "stupid". 12 Even with the boycott, Milosevic's Socialists and their allies managed to collect only 110 of the 250 seats in Serbia's republican parliament. The extremist nationalist Serbian Radical Party, which has at times acted as a satellite of the Socialist Party, won 82 seats. And the Serbian Renewal Movement won 45 seats and entered into talks with Milosevic on the formation of a coalition government. As a result of the bickering between opposition leaders, the election boycott, and other factors, the mainstream opposition in Serbia is now practically rudderless, ideologically hollow, and financially bankrupt. Moreover, in the districts where they control the government, many local opposition leaders have behaved in a very similar fashion to Milosevic and his protégés. They have, for example, pressured the business community for donations and taken a monopoly control over local media.

The Serbian Radical Party strengthens

The Radical Party is clearly the most dangerous political party in Serbia. It is the only party in the republic with a strong cohesive ideology: aggressive nationalism. Support for the party appears to have risen since Dayton, despite the cooling of nationalist passions among the overall Serbian population. This is the result of three factors: the party has retained the support of die-hard nationalist extremists; it has toned down its rhetoric to attract a broader slice of the voting population; and it has gained a good slice of the "anti-Communist" vote because of the consistency of its "anti-Communist" rhetoric and the incessant in-fighting among the other opposition leaders. The Radical Party's leader, Vojislav Seselj, was once a communist ideologue who metamorphosed into a rabid nationalist after serving time in prison before Communist Yugoslavia's disintegration. Milosevic has tolerated Seselj, and has in different periods used his media clout to promote Seselj, in order to present himself to voters as a moderate and to diplomats as the lesser of two evils. Milosevic used the Radical Party as a cat's paw to do much of the dirty work of ethnic cleansing during the wars in Croatia and Bosnia; specifically, Milosevic's police gave the Radical Party the wherewithal to organise irregular militias, including Seselj's own Chetnik militia, whose members carried out some of the worst war crimes in Croatia and Bosnia. The Radical Party's supporters have also been responsible for attacks on members of minority groups in Serbia. Milosevic has also used the Radical Party to pummel the mainstream opposition rhetorically, and Seselj's thugs have beaten up opposition leaders and attacked opposition demonstrators. The party's platform offers simple, alluring solutions to the most complicated problems: fight on to create a Greater Serbia; expel 300,000 "illegal" Albanian immigrants from Kosovo; introduce unspecified "egalitarian" emergency economic measures to straighten out the country's economy; restore law and order to the streets; fight corruption. These slogans have attracted votes from the least-educated, lowest-paid, and most-desperate segments of the Serb population in Bosnia, Serbia and Montenegro. Seselj is also said to enjoy wide support in the army and the police. 13 As Milosevic and the mainstream opposition in Serbia have weakened, Seselj and the Radical Party have come to pose a greater danger to stability in Serbia, Montenegro, and Bosnia. Seselj is clearly positioning himself to take advantage of the chaos that might prevail if Milosevic's regime collapses. He also clearly has a strong enough network of nationalist militants and sufficient popular support potentially to play a key role in a period of political and social upheaval. His party won almost thirty percent of the seats in Serbia's parliament in 1997 and is the second strongest party after the Socialists. Seselj himself was popular enough last autumn to attract over 1.3 million voters in presidential elections.

Milo Djukanovic rises in Montenegro

During the opposition demonstrations in Belgrade over the winter of 1996-97, Milo Djukanovic, the prime minister of Montenegro, broke ranks with Milosevic and publicly criticised him for Yugoslavia's isolation and economic woes. In the months that followed, Djukanovic became Milosevic's most salient rival. Djukanovic managed to survive eight months of browbeating by Milosevic's supporters, and in a fraud-ridden election in the autumn of 1997 he ousted Milosevic's ally in Montenegro, Momir Bulatovic, to become the republic's president. In January, a day before Djukanovic's inauguration, Bulatovic incited riots in Montenegro's capital; but they failed to keep Djukanovic from assuming the presidency. Since then, Bulatovic supporters have been blamed for a series of car bombings and other violent attacks against Djukanovic's supporters. Djukanovic's rise clearly reveals that there is dissent within the Milosevic regime and that Milosevic's authority is restricted to Serbia itself, for the time being. The international community may be able to work with Djukanovic to chip further away at Milosevic's power base. However, the extent of Djukanovic's commitment to democracy remains to be seen. If Djukanovic intends to work towards creating democratic institutions and the free market in Montenegro, it seems clear, because of the lingering influence of Milosevic loyalists, that the first steps will have to be undertaken by undemocratic means. This could result in a backslide into the authoritarian political culture that spawned Djukanovic, or his ouster by those who still reside in that culture. If he succeeds in providing the Montenegrins with the opportunity to prosper and establish democratic institutions, however, it could prove the most significant step yet toward hastening Milosevic's departure.

Gangland violence hits close to Milosevic

Over the past six years, Belgrade has witnessed a rash of gangland-style murders. In the past year, a senior Serbian police official, Radovan Stojcic Badza, and one of the most influential figures in the Milosevic regime, Zoran Todorovic Kundak, were gunned down, apparently by lone hit-men. Neither of these killings has been solved. The official press hardly mentions the victims. So little is known about the killings that it is an exercise in speculation to try and fathom the motives behind them. But the killings clearly indicate instability within the regime itself, more than likely as a result of competition over control of import monopolies. It seems likely that the violence portends more bloodshed that could produce a radical, unexpected change in the country's leadership.

Major Problem Areas

The key developments in Serbia and Montenegro since Dayton clearly point to two crucial problem areas: the Kosovo dispute and the need for the creation of democratic institutions that can become the pillars of long-term stability. Resolution of the Kosovo dispute is a prerequisite for any democratic change in Serbia, and Kosovo must be the international community's first priority in dealing with Serbia and Slobodan Milosevic. Without a change in the deteriorating situation in Kosovo, it is likely that the region will witness escalating violence that will cement the "outer wall" that keeps Serbia isolated and economically weakened. Without a solution to Kosovo, Milosevic's power will continue to wane and Serb-against-Serb domestic strife and a new wave of aggressive nationalism will become more likely. This would increase the danger of broader regional instability that would slow the Bosnian peace process and reduce the security of the international troops in Bosnia.

The Kosovo dispute

14 The paradoxical window of opportunity in Kosovo Despite the tensions in Kosovo and the portents of war, the present situation in the region presents an unusual window of opportunity for a resolution of the dispute. Never before has the Kosovo dispute attracted so much international diplomatic attention, and international attention is the first prerequisite for getting the Serbs and Albanian leaders to a negotiating table. Perhaps never before has the fear of violence so gripped Kosovo's people and made a resolution of the conflict so desired. The nationalist passions in Serbia have cooled even on the Kosovo issue, for now at least, and even once-rabid Serb nationalists now admit privately that Kosovo will be under Albanian rule in a decade or two. Serbia's isolation and economic turmoil augur well because they amount to constant pressure on the regime to strike a deal. The chief of staff of the army, General Momcilo Perisic, has sent clear signals that he favours restoring Kosovo's autonomy so long as it leads to stability, normalisation of relations with the outside world, and Yugoslavia's finding a place for itself under NATO's umbrella. The fact that Milosevic himself is still unrivalled as Serbia's paramount leader is also an asset because he still has enough authority to cut some kind of deal with the Albanians in the way he was forced to deal in Bosnia and accept the Serbs' change of fortunes in Croatia. Finally, the international community has the means to pressure Milosevic into making this deal and pressure the Albanian leaders to settle for it. This window of opportunity will close when Milosevic becomes too weak to strike a deal, force through the constitutional changes that will be necessary for it to be implemented, and mount the media campaign that will be necessary to convince the public to accept it. Albanian and Serb visions of Kosovo's future The Albanians Most Albanian leaders today insist they will accept nothing less than Kosovo's independence from Serbia; some of these leaders refuse even now to admit that Kosovo is still a part of Yugoslavia. Other Albanians say a "republican" status for Kosovo, a status equal to Serbia and Montenegro within the Federal Republic of Yugoslavia, would be acceptable. Still others say privately that restoration of the autonomy Kosovo lost in 1989 would be acceptable. Albanian leaders have agreed to talks with the Serbian government but only on the condition that the talks are held in the presence of an international mediator. The Serbs Belgrade insists that Kosovo is a part of Serbia and will remain so for now and ever more. Some nationalist Serb leaders, including Yugoslavia's former president, Dobrica Cosic, have for years recommended partitioning Kosovo; but that solution is unacceptable to many because it would ineluctably lead to forced transfers of population like the Serb ethnic-cleansing campaign in Bosnia. Other Serb leaders propose the "regionalization of Serbia," which presumes a division of Serbia and Kosovo into districts with local self-rule. Other Serbs advocate the idea of making Kosovo a republic equal to Serbia and Montenegro. Seselj's Radical Party favours the forced expulsion of Albanians and threatens unrest if Kosovo is handed over to the Albanians in any form. The Milosevic regime once refused to engage in any dialogue with Kosovo's Albanian leaders. Now, Belgrade is offering to meet the Albanian leadership anywhere at any time to discuss Kosovo's status so long as no international mediator participates. The Serbian regime is calling on the international community to declare the Kosovo Liberation Army (UCK) a terrorist organisation. The parameters of a solution The final solution of the Kosovo dispute is, of course, up to the Serbs and the Albanians to work out on their own. But international assistance will be crucial to achieving a peaceful solution. International pressure will be necessary to force Serb leaders to sit at a conference table and grant the Albanians some degree of self-rule. France and Germany have put forth a proposal for a "special status for Kosovo". Greece, Serbia's main ally, has offered to mediate in talks between the Serbian government and the Albanian leaders. The United States has pressed for the Vatican-mediated education agreement as a starting point. Whatever is eventually decided upon, it is clear that ongoing international monitoring and pressure will be required to guarantee that any agreements and promises the Serbs make are fulfilled. It is possible that the deployment of United Nations peace-keepers and observers will be necessary to safeguard the Serb minority in Kosovo as well as the Serbian Orthodox churches and monasteries in the region. Without a war that ends in an Albanian victory, it is difficult to imagine any solution for Kosovo that places the region outside the borders of the Federal Republic of Yugoslavia. And given the apparent resolve of the international community not to recognise Kosovo as anything except a component part of Yugoslavia, it is difficult to imagine that such a war would result in a shift in international frontiers. Therefore, stiff pressure must also be exerted on the Albanian leaders to step back from demands for complete independence of Kosovo from the Federal Republic of Yugoslavia. The Albanians in general, and their leaders in particular, must be given clear, repeated, and public warnings that the UCK will be labelled a terrorist organisation if it continues its attacks. Albanian leaders in the region must also be put on notice that if the UCK or any other extremist elements within their own community continue to wage low-level war, Washington will not honour the warning it delivered to Milosevic in December 1992 threatening United States military intervention in response to Serbian attack on the Albanian population. Furthermore, pressure will have to be mounted on Albanians abroad who provide financial support to any extremist groups in Kosovo that use violent methods.

Serbian political reform

Only after significant progress is achieved on the Kosovo dispute or, rather, once political life in Serbia is no longer a hostage to the Kosovo issue, will there be a chance for the necessary political reform in Serbia. Real peace -- the peace necessary for Bosnia, Serbia, Montenegro, Kosovo, Macedonia, and Albania to make their transition from a world of false security of Communism into a world fraught with the normal insecurities inherent in free-market capitalism and popular democracy -- will remain in jeopardy until Serb leaders have channelled their nation's passions and ambitions toward more constructive ends. This is hardly conceivable without the construction of civil society in Serbia, an end to the republic's economic turmoil, and the inclusion of Serbs in a framework of lasting co-operation with their neighbours on all sides. The political culture in Serbia suffers from a legacy of poverty, ignorance and illiteracy, war, and nationalist and communist authoritarianism. Political parties traditionally form around a strong leader instead of broad material interests or principles. There is little breathing room for a loyal opposition. Compromise is unknown. Risk-taking and supporting a quixotic reformer or a good-looking dark horse are unknown. "Serbs always back winners and never losers," one axiom holds, "and they back them only after they have won their victory." This obsolete political culture has been reinforced by the international economic sanctions that have been, and still are, necessary to force Milosevic to change his policies. The sanctions have had a devastating effect on the political opposition in Serbia. They have helped stunt growth of an entrepreneurial middle class whose members would tend to favour free market capitalism, rule of law, and rational assessment of material interests. Without middle class entrepreneurs there is little financial support for opposition political parties that profess these values. Today's opposition parties lack credibility among the voters because the parties lack money even for telephones and other rudimentary organisational tools. Some opposition leaders have had to resort to collecting their party funds illegally; for example, some opposition political leaders took control of local governments after election victories in 1996 reportedly began immediately demanding $3,000 kick-backs from retailers who wanted to set up kiosks in their constituencies. Just as the Communist leaders of the old East bloc countries had to be forced to make concessions to their democratic opposition, so Milosevic and his regime will have to be pressured to open the door to democratic forces in Serbia. As a first step, the regime must be pressured to respect the decisions of the European Union's Gonzales commission, which came to Belgrade at Milosevic's request at the height of the opposition demonstrations in December 1996. The commission called on the Serbian government to provide equitable access to the country's mass media, allow for private media to function, negotiate an accord with the opposition for a new electoral law, and allow the judiciary to function freely and independently. It is also clear that the secret police must be eliminated as a political weapon. In addition to pressure on Milosevic, significant funding will be necessary to help Serbs build civil society. Laying the groundwork for democratic institutions in Serbia is the same as an investment in long-term stability in the Balkans, and funds earmarked for building civil society in Serbia should be considered a component part of an exit strategy for the military mission in Bosnia and factored against the astronomical cost of prolonging that mission. Moreover, the international community has an obligation to provide such assistance because the existing economic sanctions, as necessary as they may be for maintaining pressure on the Milosevic regime for progress on Kosovo and Bosnia, have stunted the natural development of a viable opposition.

Milosevic's utility

However weakened he may be, Slobodan Milosevic remains the "godfather," the only credible interlocutor, in Serbia. Only he has the authority to negotiate an agreement on Kosovo. Only he has the control over the local media to rally the Serbian people behind such an agreement. Only he has the political power to force through the constitutional amendments that will be necessary to change Kosovo's status. Only he has the police network to deal with a possible extremist national reaction. Furthermore, enough is known of his past behaviour to project how he will respond to pressure, and this knowledge can be used to coax him to make an agreement. Milosevic's behaviour suggests that he will abandon previously held positions if he is under sufficient pressure and that agreements he concludes can be made to stick if such pressure is maintained. Political power is the alpha and the omega for Milosevic. Thus, the key to pressuring him to abandon a position and go along with a policy initiative is to create conditions from which he will infer that he will lose power in the short term if he does not go along. The bloody ruins of the peace efforts in Bosnia from August 1992 to August 1995 should be evidence enough to disabuse anyone of the illusion that Milosevic will change his positions in response to appeals "to negotiate" or warnings that the Serbian people will suffer economic hardship, isolation, or the horrors of war. He has never changed his positions in exchange for incentives. Unless incentives have a direct and significant impact on Milosevic's political power, they are not likely to have any impact.

Character and background

As a political character, Milosevic is anything but a stereotypical Serbian underdog ready to sacrifice himself in defiance of an overwhelming enemy. He has behaved more like Scheherazade, the heroine of The Arabian Nights who conjured up a new story each night for a thousand and one nights in order to charm a demented Shah and save herself from execution. Like Scheherazade, Milosevic has survived by anticipating dangerous situations and preparing for them. He is a quintessential opportunist. His habitat is the realm of the short term. He brooks no ideological constraints or personal loyalties to narrow his manoeuvring room. He displays not the slightest respect for the principles of truth or compromise. He reacts to offers of compromise as if they were admissions of weakness that can be exploited. His negotiating strategy is to cling stubbornly to a maximal position and support it by repeating spurious arguments ad nauseam. He has taken advantage of the divisiveness of the international community by playing the envoys of one nation off against those of another, by lying about promises made by negotiators, and by constantly seeking new interlocutors and catering to the vanity of diplomats and negotiators who have assumed that they better than anyone else will be able to guide him onto the correct path. He cannot be taken at his word. He does not respond to shouting or empty threats. Even a nutshell biography yields the elements of a compelling explanation for Milosevic's lust for power and lack of scruples. His childhood and early adulthood were clearly punctuated by trauma. He was born and raised amid the uncertainties of World War II Serbia. His parents appear to have been well-educated idealists who inhabited opposite extremes of the ideological spectrum: his mother was an ardent communist; his father was a religious man who had trained to become a Serbian Orthodox priest. The marriage ruptured soon after World War II; each of his parents committed suicide in separate incidents about a decade apart. Milosevic found his one lifelong companion in high school: his wife and political adviser, Mirjana Markovic, a child of Serbia's communist elite; an ambitious, unreconstructed Communist; a person who once boasted to a friend that her Slobodan would someday enjoy a power and a glory to rival that of Yugoslavia's post-war communist dictator, Marshal Tito.

Past shifts

Milosevic has radically altered his professed beliefs and loyalties and abandoned his strategies on several occasions. Once again, the common denominator lying beneath each of these shifts has been a hunger for power or an acute fear of losing it.

• In 1987, Milosevic betrayed his political patron and friend, Ivan Stambolic, in order to become Serbia's paramount leader. At the same time, he betrayed the internationalist values he had long espoused as a Communist party member by embracing aggressive nationalism.

• In 1990, after being thwarted in his attempt to seize power in all of Yugoslavia by bullying the communist leaders of the country's other republics, Milosevic turned his back on the idea of Yugoslavia as a state and decided to channel the nationalist euphoria in Serbia toward the creation of a Greater Serbian state.

• In 1991, Milosevic took a decision to go to war to solidify his power by channelling Serb nationalist euphoria toward the battlefronts. This decision followed street demonstrations by anti-Communist and nationalist Serbs in Belgrade which threatened to unseat him.

• In 1993, Milosevic turned his back on the idea of a Greater Serbia and settled for the creation of a rump Yugoslavia comprised of only Serbia and Montenegro. This shift came after the Serb military venture in Bosnia spluttered and United Nations economic sanctions threatened to undermine his power in Serbia. Within weeks of making this shift, Milosevic cast aside his nationalist cloak and abandoned the Serbs of Bosnia and Croatia. He assumed the guise of a reliable negotiating partner and announced that he would accept a proposed peace plan. Almost overnight, the worst of the nationalist propaganda disappeared from Belgrade television. In a turn-about Orwellian proportions, news announcers in Belgrade were soon castigating the Bosnian Serb leaders as traitors to the Serbian national cause.

• In 1995, Milosevic signed Dayton. This act came only after the Bosnian Serb army, weakened by NATO air-strikes, was retreating before advancing Bosniac and Croat forces and it appeared that hundreds of thousands of Serbs, including thousands of men of fighting age with guns and a deep hatred of Milosevic, were preparing to flee from Bosnia into Serbia. Thus, Milosevic used the peace agreement to save himself, and he used his media to sell it to the Serbian people and avoid a nationalist backlash.

Preserving Milosevic

Slobodan Milosevic can no longer attract massive public demonstrations of support. Institutions and groups of people who once backed Milosevic now despise him. The clergy of the Serbian Orthodox Church, once key supporters, now disdain him as a Communist who has betrayed the Serbian nationalist cause and has set Serb against Serb in order to preserve his power. 15 The old Communists curse him for destroying Tito's Yugoslavia. Purged Socialist Party leaders detest him for betraying their loyalty. Members of the army's officer corps clearly revile him for using them as scapegoats for the defeats in Croatia and Bosnia. Young men are unwilling to fight a nationalist crusade for Milosevic knowing that his last crusade was nothing more than a cynical attempt to retain power. Refugees from Croatia and Bosnia hate him for selling them out and leaving them destitute. Young people have taken to the streets in protest realising they have little future under Milosevic's regime. Even the Serb leaders in Kosovo, among them the very people whose cause Milosevic seized upon in 1987 to catapult himself to power, are deeply unhappy with his handling of the situation. Given the fact that the Milosevic regime is really nothing more than a simple patronage and crony network with few personal loyalties, it is difficult to imagine a tear being shed or a bell tolling if he were to fall. There is no reason to believe that Milosevic's power will not continue to erode; there is also no reason to harbour illusions that he will not be removed. Despite his weakened, and weakening, position, it would be dangerous for the international community to seek measures that might unseat Milosevic at the present time. Milosevic's fall would create a vacuum that in all likelihood would be filled by an even weaker transitional ruler who would probably have little utility for international efforts aimed at bringing stability to the Balkans. Milosevic's departure could also kick up a new wave of destabilising nationalist hysteria with Vojislav Seselj and his Radical Party riding on its crest. This would deal a serious blow to the Dayton process and slam shut the present window of opportunity for resolving the Kosovo dispute. The international community has also occasionally found Milosevic's influence in Bosnia useful, though as the Bosnian peace process has taken on a momentum of its own his usefulness there has and will probably continue to diminish. Nevertheless, Milosevic did back the "moderate" Milorad Dodik for prime minister of Republika Srpska in January 1998. Milosevic's secret police network has also reportedly worked to enhance security for NATO troops, but it is rumoured that this assistance has come at a price. It is doubtful that Milosevic will, or even can, secure the arrest of Serbs indicted by the International Criminal Tribunal for former Yugoslavia. It is simply reckless to assume he can be pressured into ordering the arrests of Yugoslav army officers indicted for the atrocities at Vukovar in 1991 and of Radovan Karadzic and General Ratko Mladic for the atrocities in Bosnia; if Milosevic ordered these arrests, it would be tantamount to ordering his own political suicide. The international community cannot let Milosevic prolong the Bosnian and Kosovo problems indefinitely. The goal, however, should not be the toppling of Milosevic, it should be to exploit the fact that he fears losing power and get him to move out of the unacceptable status quo, make a deal on some kind of autonomy for Kosovo, get the deal ratified constitutionally, and use his media clout to rally popular support behind it. The pressure on Milosevic should be calibrated to cause him to infer that he will be unseated, not actually to depose him. Barring a major explosion, only if and when Kosovo is resolved should efforts be redoubled to build the democratic institutions that will lead to a smooth transition from Milosevic.

Milosevic's levers of authority and his vulnerability

Milosevic exercises his authority and safeguards his power by means of a number of levers. These include the country's financial controls, the police, the media, and his Socialist Party organisation. Making Milosevic believe that he is moving dangerously close to being overthrown might be accomplished by targeting the levers he uses to control Serbia and undertaking measures aimed at weakening them.

The financial lever

Milosevic's financial lever clearly regulates the flow of energy into the drive shaft of his political machine. Bluntly, in this period of lawlessness, poverty, and uncertainty, most people in Serbia can be obtained for a price that is low; and Milosevic has more money at his disposal than anyone else for rewards and bribes. If the money flow is broken, the engine will begin to pop and splutter, and it is safe to say that Milosevic will no longer feel secure at the throttle and will have to take measures to get it back under control. Milosevic's influence over financial flows begins with his control over the issuance of credits and currency through Yugoslavia's national bank; Beobanka, the country's largest commercial bank; a network of smaller banks; as well as legions of street dealers. He and his closest supporters manage the country's hard-currency assets through these "banks" and through a handful of large commercial enterprises with a labyrinthine network of subsidiaries registered in Russia, Cyprus, Greece, Great Britain, Italy, and other countries. Milosevic also controls the state financial police, a government body that can investigate business activity. The federal customs service, which collects duties on imported goods and issues import and export licenses, also serves as a major source of income and leverage. General sanctions like the "outer wall" and the European Union's suspension of trade preferences clearly limit Milosevic's capacity for obtaining money and narrow his options. But these general sanctions alone are not enough to force him to abandon positions as firmly held as his stance regarding the status of Kosovo. The ability of the Serbian people to tighten their belts and survive with little complaint cushions the impact of the general economic sanctions. The government has so far been able to keep just enough wealth trickling to the low end of the economic food chain for people to live in fear of losing what little they have. The government allows families to receive hard-currency remittances from their relatives living and working abroad. Most city folk and townspeople reduce their food expenses by keeping small plots or relying on relatives in Serbia's peasant villages to augment their food supplies. Many people travel abroad and return with clothing, used cars, electronics equipment, and other consumer goods to sell for profit in the country's grey economy. Given these economic shock absorbers -- and the fact that the economic crisis of 1993, when inflation was measured by the hour, failed to ignite popular unrest -- there is little chance that the current economic sanctions will force Milosevic to take any desired actions. 16 Sharper economic weapons that directly targeted Milosevic's hard-currency assets or the ability of his regime to acquire hard currency might succeed where general sanctions fail. Specifically, freezing his foreign bank accounts or limiting his access to new funds might lead Milosevic to feel his engine sputter and make him more willing to strike a deal on Kosovo to get his funds back. The time for such action appears ripe. United States government analysts estimate the total value of the hard-currency assets Milosevic has at his disposal to be between $200 and $500 million, about the same amount that the country accumulates in its trade deficit in one or two months. Recent monetary fluctuations suggest that the value of these assets has dropped to a level where Milosevic might soon lack the funds necessary to keep his patronage network paid off and meet pension and wage obligations that buy him social peace. There have been wild shifts in the Yugoslav dinar's exchange rate in recent weeks, and Western analysts say the underlying economic fundamentals suggest that the dinar is overvalued by about half. The currency's instability provides a clear sign that the regime handed out too many favours in the run up to last autumn's elections and had to resort to increasing the money supply by issuing unbacked currency and loans. A second sign that the regime is running low on funds is its abandonment of long-standing opposition to the privatisation of state and socially owned assets and hasty efforts to sell them off and get cash. A limited privatisation law went onto the books last summer, and the government quickly sold off a 49-percent stake in the country's profitable telecommunications company to Italian and Greek firms for about $1.05 billion. The regime apparently used the proceeds of the sale to make back payments of pensions and wages in the weeks before the December elections. Some economists say the telecommunications company was the last of the crown jewels Milosevic could have pawned in order to raise cash. But on 4 February, Beobanka, the "bank" Milosevic once managed, entered into a protocol with the London-based West Merchant Ltd., an investment bank, for long-term co-operation on privatisation and foreign investment in Serbia. News reports about the deal said upcoming privatisation deals might involve breweries, the remainder of the telecommunications company, the state power company, a department store chain, an export-import firm, and the national airline. 17 Serbia's efforts to maintain energy imports also show that the country is running low on money. The regime is struggling to arrange barter deals to keep the oil and gas supplies flowing. In 1997 Belgrade struck a deal with the world's largest natural-gas company, Russia's Gazprom, for winter gas supplies. The deal required Belgrade to make a $90-million payment in cash by 1 February, but the rest of $350-million owed to Gazprom was supposed to be paid with bartered goods and services. Serbia and China have been negotiating a similar barter deal. If successful efforts were made to persuade Serbia's oil and gas suppliers to require the regime to pay in cash instead of barter, Milosevic's flexibility would clearly be reduced. 18

The state security lever

The police Milosevic's second means of exerting his authority is the state security service, especially the Serbian police network that illegally seized control of the old federal police service in the fall of 1992. Milosevic controls an estimated 70,000 police officers on the territory of the Federal Republic of Yugoslavia, a figure about the same as the number of draftees and officers in the country's army. The Serbian police also maintain a large network of informers and secret operatives. Milosevic's police control the restive Albanian population in Kosovo. Police agents are engaged in efforts to provide security for NATO troops in Bosnia. The police monitor all political parties in the Federal Republic of Yugoslavia and Republika Srpska, and police stooges establish and operate their own political parties in an effort to fragment the opposition to Milosevic and increase an already high level of voter confusion. Police agents are also used to apply pressure on private business owners and enterprise directors to make donations to the ruling party and to its satellite parties in Mirjana Markovic's leftist coalition. Compromising information obtained by the police has been used to intimidate political candidates who dared challenge Milosevic. Finally, the police have been deployed to monitor, control, and at times crack down violently on opposition political demonstrations. An average street police officer earns about fifty percent more than other low-skill government workers. Until recently, he has received his pay in cash and on a regular basis. There are indications that many police officers are now grumbling about having to wait months to be paid their salaries. The army The army was the keystone of Yugoslavia's Communist regime just as it was the keystone of the Kingdom of Serbia and the Kingdom of Yugoslavia in decades past. Today, the Yugoslav Army is still a lever of control for Milosevic, but things are not well in its ranks. Many officers are bitter for being held up to ridicule for the military fiascos in Croatia and Bosnia. They resent Milosevic's reliance on the police. The financial state of the army is also humiliating. Army officers who enjoyed enviable privileges in Tito's Yugoslavia have been reduced to accepting their pay in coupons they can exchange for bread and other staples at state stores. Some officers have been seen selling radios and other electronic goods in Belgrade's open-air market. The army's chief of staff, General Momcilo Perisic, the man who directed the bombardment of civilians in the Bosnian city of Mostar in 1992 and may someday be called to The Hague to account for it, lashed out at the policies of the Milosevic regime in December and January. In a series of newspaper interviews, he called on the government to take the steps necessary to have the remaining sanctions against the country lifted -- a clear signal that he is willing to accept some kind of deal on Kosovo. Noting that Serbia is now encircled by countries that will either become members of NATO or allies of the Western alliance, Perisic has called on Milosevic to take the steps necessary to gain Yugoslavia's membership in the Partnership for Peace. The general warned of instability in the country, especially in Kosovo, if these steps are not taken. 19 Analysts in Belgrade are almost unanimously of the opinion that the army can do nothing to eliminate Milosevic. The military's ranks are infiltrated by the Serbian secret police. The army is poorly organised and equipped. The morale of its recruits is abysmal and their loyalty, questionable. The promotion policies of the old Yugoslav army selected out many of the most qualified and freethinking young officers in favour of the blindly obedient. That said, however, the Serbs have a long, proud military tradition, and humiliation of the army is something that is not taken lightly.

The media lever

The mass media are the third lever Milosevic uses to maintain his power. He has used the mass media successfully to foment nationalist hysteria and to cool it down, as the situation required. He could clearly use the media again to sell a deal on Kosovo with the Albanians. In Serbia, television is the only mass medium that matters for at least two reasons. First, a large percentage of the population is only partially literate and does not have money to buy newspapers or magazines. Second, many Serbs, especially people living in the villages and small towns, form their opinions by taking cues from a higher authority, and a large slice of the population identifies the news programme each evening on Television Belgrade One as the voice of this higher authority. Attempts by the political opposition to gain a more equitable slice of airtime on Belgrade One have met with fierce opposition from the government. During street demonstrations, workers inside the state television station have been issued automatic weapons; and local journalists have observed that in times of unrest the station is better defended than the army's headquarters or the seat of the government. The government controls the issuance of broadcast licenses and could clamp down on local television and radio stations that were taken over by opposition political parties in the aftermath of the 1996-97 demonstrations. Several dozen small private radio stations, including B-92, the only non-partisan broadcast outlet in Belgrade, have formed their own news-distribution network. Their impact is growing but is still dwarfed by the clout of Milosevic's state television network.

The party lever

Milosevic is the president of the Socialist Party of Serbia, and the party and its satellite parties are the final lever by which he controls Serbia. The Socialist party metamorphosed from the Communist party's grass-roots organisation in 1990 and, in the three years leading up to this transformation, Milosevic and his nationalist message injected the party with new blood, new confidence, and a new sense of mission. The Socialist Party of Serbia of 1998, however, is not the same party that won a resounding victory in its first test at the polls in 1990. It no longer controls an absolute majority in the Serbian parliament. Its candidates met defeat in key local elections in the fall of 1996. It had to scramble to steal the votes necessary to elect Milan Milutinovic, Milosevic's candidate, to Serbia's presidency in December 1997. Milosevic's war mongering from 1991 to 1993 drove away many party members. His abandonment of the Serbian cause in Croatia and Bosnia from 1993 to 1995 alienated many committed nationalists. The promotion of Mirjana Markovic's leftist coalition further alienated many party faithful. The Socialist Party is rumoured to be careering toward a split, just as its sister party in Montenegro, the Democratic Socialist Party, split between the supporters of Milosevic's protégé, Momir Bulatovic, and the supporters of Milo Djukanovic. With no ideology to speak of, it is clear that the Socialist Party remains united only because Milosevic rewards his loyalists with patronage jobs, money, and other favours. It is safe to say that the party would disintegrate if the money ran out or if Milosevic appeared on the brink of falling. If the international community made it look as if it were serious about trying to eliminate Milosevic, it would clearly weaken the cohesiveness of the Socialist Party. One event that might show that the world was serious about doing in Milosevic would be the announcement of a serious effort to investigate him for criminal complicity in the wars in Bosnia and Croatia.


Recommendations As a fundamental component of their strategy to bring a lasting peace to Bosnia, the United States, the EU and NATO-member states should undertake more ambitious measures for resolving the Kosovo dispute. Pressure must be applied upon both Slobodan Milosevic and Kosovo's Albanian leaders. It is presumed that the United States and its allies will maintain the "outer wall" of financial sanctions against Serbia and Montenegro and that the European Union countries will continue to deny Serbia and Montenegro trade preferences until a settlement of the Kosovo crisis is at hand. Tearing down these barriers would give Milosevic the opportunity to delay making the badly needed agreement on Kosovo.

Pressure on Milosevic

Economic measures The governments of the NATO countries, in particular the governments of Greece, Russia, Cyprus, Italy, Great Britain, France, and the United States, should seek to weaken the connectors on the financial levers Milosevic uses to control his political machine in Serbia, by freezing the foreign bank accounts through which Beobanka and the other components of Milosevic's machine are able to operate. The managers and, especially, the shareholders of companies and investment banks that enter into financial transactions, and especially privatisation agreements, with Beobanka and large Serbian enterprises connected to the Milosevic regime should be advised by the governments of the NATO countries of the risks inherent in such activity. Further they should be put on notice that by propping up Serbia's Mafia-style government and economy they are dragging out the timetable for the NATO mission in Bosnia, helping to squander an opportunity for resolving the Kosovo dispute, and prolonging the instability in the Balkans that is already costing the allies time and resources that can be allocated more productively elsewhere. The governments of the NATO countries should find the means, overt and covert, to pressure Serbia's oil and gas suppliers to demand cash for their exports to Serbia and not to accept barter payments. Diplomatic measures Milosevic should be advised that his hold on power in Serbia will not be secure for long if he continues to obstruct a settlement to the Kosovo dispute. He should be warned that, unless he has co-operated in resolving the Kosovo dispute, he will find no asylum if political upheaval forces him and his family to leave Yugoslavia. NATO should inform Milosevic that the services of his police intelligence network in Bosnia are no longer required if they are a part of any quid pro quo. If such services are being provided for a fee or payoffs, the money should stop flowing. The NATO countries with troops in Bosnia should be fully capable of securing their troops in Bosnia without having to resort to help from the secret police of a regime whose policies have created havoc in Bosnia for years and are dragging out the military-mission's timetable. The United Kingdom, Italy, and other countries with commercial sections attached to their embassies in Belgrade should be urged to close them. High-ranking foreign officials should reduce their visits to Belgrade to an absolute minimum. If such visits are necessary, the visitors should make a point of calling on members of the regime other than Milosevic and indicate to them in the clearest terms the cost of the Milosevic's policies regarding Kosovo. The Yugoslav Army's high command should be given concrete promises of the financial, material and technical support and other benefits they stand to reap if the government they serve takes steps to resolve the Kosovo dispute peacefully and once and for all. They should also be reminded of the isolation Yugoslavia will continue to suffer if the situation in Kosovo is not resolved. The governments of the NATO countries should give Milo Djukanovic, the newly inaugurated president of Montenegro, at least a minimum of economic aid even if it means breaking the "outer wall" of sanctions covertly. This will help demonstrate to Montenegrin voters and, especially, members of the Socialist Party of Serbia that dividends can be gained by co-operating with the international community and by taking the first, risky steps necessary for the creation of democratic institutions and a free-market economy. Support for war crimes investigations NATO countries should order their respective intelligence agencies to co-operate with the International Criminal Tribunal for former Yugoslavia (Tribunal) in its efforts to gather information on Milosevic's role in the decision-making that led to the wars in Croatia and Bosnia. The co-operation of the intelligence communities so far has been meagre at best.

Pressure on Albanian leaders

The governments of the NATO countries must clearly, publicly, and repeatedly inform Kosovo's Albanian leaders and the Albanian population overall that Kosovo's independence is a non-starter that will not be recognised. The governments of the NATO countries must investigate and, overtly and covertly, apply pressure on Albanians in Switzerland, Germany, the United States and other countries to stop the flow of funds to extremist groups in Kosovo that pursue their goals through violence.

Building civil society

The construction of civil society is key to the healthy long-term evolution of Serbian political life. The international community must be prepared to provide significant funding to help the Serbian people construct democratic institutions. This investment should be targeted, above all, at municipal-level political organisations and other grass-roots groups in an effort to stimulate democratic changes from the ground up and help provide an alternative to the formation of parties around domineering individual leaders. Funds earmarked for building civil society in Serbia should be considered a component part of an exit strategy for the military mission in Bosnia and factored against the astronomical cost of prolonging that mission. Moreover, the international community has an obligation to provide such assistance because the existing economic sanctions, as necessary as they may be for maintaining pressure on the Milosevic regime for progress on Kosovo and Bosnia, have stunted the natural development of a viable opposition.


1. The General Framework Agreement for Peace in Bosnia and Herzegovina was negotiated in October-November 1995 in Dayton, Ohio, and signed in Paris on 14 December 1995.

2. UN Security Council Resolution 1022 of 22 November 1995. Sanctions were finally removed on 29 September 1996 after the first post-war Bosnian elections.

3. Press conference with John Shattuck, 14 December 1995, Washington Wire, USIA. Summary of the Dayton Peace Agreement issued by United States Embassy, Belgrade, December 1995.

4. Yugoslavia: Economic Assessment, January 1998. United States Government, unpublished document, p. 4.

5. Yugoslavia: Economic Assessment, January 1998. United States Government, unpublished document, pp. 2-4.

6. Precise figures for the Serb and Albanian population in Kosovo do not exist since the province's Albanians boycoted the last census in 1991.

7. Vreme, 4 December 1997, p. 8.

8. Nasa Borba, 31 January 1998; Nasa Borba, 2 February 1998.

9. Vreme, 24 January 1998, p. 12.

10. Ognjen Pribicevic, Vlast i opozicija u Srbiji (Power and Opposition in Serbia), 1997, p. 116.

11. Pribicevic, pp. 116-122.

12. Reuters, 8 August 1997.

13. Pribicevic, p. 57.

14. In March ICG will publish a separate report analysing the Kosovo question in depth.

15. The bishops' conference of the Serbian Orthodox Church condemned the government for cheating in the elections, betraying the Serb lands in Croatia and Bosnia, for leading the nation and the state to the brink of collapse and the people to utter impoverishment, isolated it from the world and has attempted to set the people against each other and draw blood in order to maintain power. See Nasa Borba, 1 January 1997.

16. Pribicevic, p. 15.

17. Reuters, 4 February 1998.

18. Interviews with Western diplomats and Yugoslavia: Economic Assessment, January 1998. United States Government, unpublished document, p. 2.

19. Nasa Borba, 13 January 1998; Interview with Perisic, Vecernje Novosti, last week of December 1997.


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