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Serbia and Montenegro

One Small Step for Mankind, One Giant Leap for the Balkans?

08.04.2002 · Wim van Meurs

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Serbia and Montenegro

For all the talk of "history in the making" in first reactions to the agreement between Belgrade and Podgorica, the spotlight is actually on the dustbin of history: Milosevic's "Third Yugoslavia" is dead and there will be no more incarnations. First reactions to the new-born "Serbia and Montenegro" covered a whole spectrum of emotions, ranging from "a freak of a state" or "a rotten compromise" to "a new beginning." Fact is that Javier Solana seems to have found a middle way in-between federation and confederation - at least for the time being. In three years (at the most!), the day of reckoning will come. For the moment, the political deadlock has been broken and a window of opportunity has been created for reform policies and regional co-operation. A comparison between the agreement of 14 March and the two "platforms" that defined the negotiating positions one and a half years ago throws the embedded compromises and innovations into relief. A second comparison with the political realities in Belgrade, Podgorica … and Pristina reveals the agreement's limitations and deficits. Despite all sobering thoughts, however, the symbolic value and regional consequences of this "small step" should not be dismissed too lightly: The dice have been cast and political actors will have to reposition themselves accordingly.

Breaking the Deadlock

The relations between Belgrade and Podgorica had been deadlocked ever since Milo Djukanovic and his Democratic Party of Socialists (DPS) beat Milosevic's confederates in Montenegro on a pro-independence ticket in the 1997 presidential and the 1998 parliamentary elections. His victory revealed the fundamental flaw of the two-state federation created in 1992 from the remainder of Tito's Yugoslav Federation: Serbia is 15 times bigger than Montenegro in terms of both territory and population. Consequently, the equality of the two unequal partners in the new mini-federation deviated absurdly from the democratic principle of "one person - one vote." As long as Milosevic's SPS de facto ruled in both republics and on the federal level, this structural problem could be ignored. With Montenegro's pro-Western reform policies and Serbia's nationalist paralysis diverging more and more, Montenegro became independent in all but name and the Yugoslav Federation became a dead letter. On the eve of the epochal elections in the fall of 2000, Milosevic eliminated the principle of equality of the two constituent republics in law to restore Serb hegemony.

The deadlock became an acute political dilemma after Milosevic ouster. Milo Djukanovic had made his political fortune on the independence ticket, but under the new circumstances, he was driven by his supporters and political allies to go for a referendum, well knowing that the population is equally divided on the issue and well knowing that the West was prepared go to great length to prevent such a referendum. Actually, in 1996, Djukanovic miscalculated, expecting Milosevic to lose the elections, and opted for independence. In 2000, he miscalculated again, expecting Milosevic to win the elections, and boycotting the federal elections -. As a consequence, his natural allies, the reform-oriented and pro-Western DOS took over power in Serbia, but had to make a coalition with the reactionary Montenegrin opposition on the federal level.
The recent breakthrough after many rounds of fruitless negotiations is not to be blamed on "diplomatic arm-twisting" by Javier Solana only. As all players came to realise that they had manoeuvred themselves and others into a "lose-lose" situation, the conditionality of the EU perspective provided economic incentives as well as a welcome excuse. Zoran Djindjic must have realised that the stand-off and bickering over competencies between federation and republic was to the detriment of the reform drive and international credibility of his political program. His political competitor Vojislav Kostunica saw his lead in popularity diminish in comparison with Djindjic and other younger reformers - a development partly due to the powerlessness of his presidential position. Last, but not least, the nationalist opposition of former Milosevic parties witnessed the once proud Yugoslavia become defunct, with a quasi-independent state in Montenegro and a quasi-protectorate in Kosovo.

In Podgorica, his narrow victory on 22 April 2001 in the parliamentary elections and the rising popularity of the SNP in recent polls have determined Djukanovic's reluctance to implement his promise for a referendum on independence. Torn between his coalition partners who wanted the referendum now and the pro-Yugoslav opposition with the polls showing a waning majority in favour of independence - the votes of the ethnic minorities (in favour) would actually decide on independence , Djukanovic's political survival depends on finding an elegant way backtracking on the "path of independence" - and he knew that all along.

The EU as Honest Broker?

Ever since Javier Solana took on the "mission impossible" to find middle ground between Belgrade and Podgorica, criticism became louder and louder. Surprisingly, Solana's main critics were not found in Djukanovic's Democratic Party of Socialists (DPS). Recently, the Centre for European Policy Studies (CEPS) and the International Crisis Group (ICG) in Brussels published an open letter to Javier Solana concerning Montenegro. One part of their critique concerns the EU's methods of "applying extreme pressure to just one side" in order to "bull-dozer" Podgorica towards the EU's preferred solution. As several participants to the negotiations have indicated, Solana has indeed made ample use of a prospective Stabilisation and Association Agreement between "Yugoslavia" and the EU with its immediate economic advantages and its alluring promise of future EU membership. Thus, the EU used its hegemony as a regional economic power to force a state union on "unwilling partners." After the euphoria more than a year ago of finally having democratic negotiation partners and two constructive and apparently compatible platforms, the actual talks between Belgrade and Podgorica soon stalled in a "consent not to consent" and had to be revitalised by EU intervention and mediation in December 2001. No doubt, Solana's role went far beyond "good offices," but eventually the principle of "regional ownership" will require a democratic verification of the political deal by all three parliaments.

The other half of the critique concerns the actual "dictated" outcome of the negotiations - "a democratic Montenegro in a democratic Yugoslavia." This solution is considered "economically and politically unwise." Solana's attempts to keep Serbia and Montenegro together were more often than not understood as a blunt attempt to save the status quo of the "good old" Yugoslav Federation with some minor, cosmetic modifications. Consequently, the EU would end up polarising the parties and quasi supporting the line of the reactionary SNP nationalists in Montenegro and the parties of the former Milosevic coalition in Serbia. Pro-independence Montenegrin parties, Western think tanks and even some Serbian intellectuals carried this argument. Proponents of Montenegro's independence consistently painted a black-and-white picture of the FRY as the state associated with the reactionary and repressive Milosevic regime and of Montenegro as a paradise of pro-European reforms.

There certainly is reason to doubt the original transition optimism of the Djindjic team and ample evidence of "lagging reforms" in Serbia, due at least partly to the power struggle between Kostunica and Djindjic. The Milosevic past, however, makes a Yugoslavia neither illegitimate as a state nor per se reform-resistant. Nor is Montenegro an unqualified success story in terms of political and economic reform.

The argument that Yugoslavia in its three forms - the Kingdom of Serbs, Croats and Slovenes (1918-1945); the Socialist Federal Republic of Yugoslavia (1945-1992) and the Federal Republic of Yugoslavia (1992-2002) - was "a historic error" or that "the FRY is an anti-European and anti-democratic state" reintroduces the ideal of nation-state and the primacy of national self-determination through the backdoor. Qualifying for "Europe" depends on functional states and their capability of reform towards pluralist democracy and market economy. In this respect, Serbia and Montenegro each have their own specific problems and deficits, but both still have a long way to go. Neither a nation-state nor a federation constitutes a panacea for these reform challenges.

Milo Djukanovic - by now the longest-ruling president in the region - was not born a dissident against Milosevic and conservative nationalism. Nevertheless, once the break between Belgrade and Podgorica had become irreversible, a pro-Western reform orientation was the only option for the quasi-independent mini-state. Despite a series of political, administrative and economic reforms, Montenegro still is among the world's best in terms of international assistance per capita: The accusation of "simulated reforms" to please Western donors seems plausible. A significant part of economic activity - an estimated 40 to 60 per cent - is related to black market, mainly car rackets and cigarettes smuggling. The involvement of political parties and state administration is a foregone conclusion. The state needs foreign aid for social peace in a poverty-ridden country of rising unemployment, frequent electric power cuts and high inflation. The successful introduction of the euro (replacing the German mark as the national currency) earlier this year as such is by no means an indication of economic strength or aptitude: Podgorica is not bound by any criteria of economic convergence and the euro is more convenient for legal and not-so-legal international dealings than for an ailing local economy. Montenegro's economic openness (3 per cent tariff average, 10 per cent for Serbia) may be an asset, but tourism certainly is not its main industry at the moment. To what extent Montenegro will really be able to consolidate its head start in economic reforms into a national economy that is healthy, sustainable and socially equitable remains to be seen. For the time being Montenegro's reform economy has all the characteristics of a political myth.

Once both Kostunica and Djindjic had expressed their willingness to consider a new form of federation with Montenegro (albeit not at all cost), Solana indeed ended up siding with the reactionary forces on the federal level and in Montenegro, cajoling the pro-independence parties into making major concessions to their program. Surely, a strong two-third majority in Montenegro in favour of independence would have had an impact on the EU approach, but a "50 per cent plus one" approach to such a fundamental issue of state sovereignty is neither particularly stabilising nor democratic. (Therefore, the agreement insists on laws on referendum "taking full account of internationally recognised standards.") At least publicly, the EU failed to distance its stabilisation objective from the die-hard conservatism of the local pro-Yugoslav forces. Miraculously, the eventual agreement favours the reformers rather than the reactionaries: A temporary freezing of the status issue in the form of "Serbia and Montenegro" allows pro-Western politicians to pursue their reform agendas with more drive, more concord - as the reform process towards regional and, first of all, European integration offers a broad basis of consensus.

In sum, after the peaceful settlement of the minority conflict in Southern Serbia and the Ohrid Agreement of 13 August defining the road to a new inter-ethnic arrangement in Macedonia, the creation of "Serbia and Montenegro" marks a third feat for Javier Solana, the European Union's High Representative for the Common Foreign and Security Policy. In all three cases, however, due to the fragility of the arrangements and the volatility of political aspirations, today's triumph can easily become a Pyrrhic victory tomorrow.

The Terms of the Agreement

Typically, whereas the 2000 Djukanovic platform dwelled on the injustices of past Montenegro-Serbia relations and Montenegro's "inalienable right to self-determination" (more than a third of the platform text!), the preamble of the response by Kostunica and Djindjic highlighted the merits of federal arrangements, the historic and cultural ties as well as joint economic interests. The 14 March agreement contains only one terse reference to "elements of Serbian and Montenegrin statehood, stemming from the present-day factual situation and the historic rights of the two member states." In Djukanovic's vision the sovereignty and equality of the republics was key, while Belgrade argued on the basis of the "equality and operability" of the new federation.

1. In the foremost set of issues, international status and representation, the current agreement predominantly follows the Belgrade position with a veto on unilateral secession by referendum and one international-law subject. Montenegro will not have international legal personality, but in return, the West has accepted the option of a referendum on independence after three years for the first time. To protect Montenegro against being swamped by Serbs in the joint institutions and representative positions, some (rather specific) safeguards have been built in for proportional international representation by rotation. The elections on both levels and the constitutional amendments set the new state apart from the current deficient FRY without giving up implicit succession under international law.

2. Typically, as far as the more tangible issues of the relations between state and member-states and the division of competencies are concerned, the agreement is largely uninformative. Implicitly, the agreement dissociates itself from Djukanovic's vision of sovereign states delegating part of their competencies to a subsidiary federal level. The Belgrade position contained two potentially conflicting definitions of the federal competencies - (1) the federal units' need and common interest and/or (2) the elementary functions of internal and external operability - and the new agreement implicitly sympathises with "internal and external operability" as basic criteria. In terms of decision-making too, the spirit of the agreement seems to favour Belgrade's "co-operative" over Podgorica's impracticable "consensual" decision-making. As the text, however, contains not a single explicit statement on these issues, until the Constitutional Charter offers clarification ("the modalities for achievement of these goals shall be elaborated in parallel with the Constitutional Charter"), any partisan interpretation is permitted. Conversely, the range of joint competencies and ministries - defence, foreign affairs, internal and international economic relations as well as human and minority rights - copies the Montenegrin proposal with the exception of the common market and the convertible currency (euro).

3. In the five common policy fields, the new agreement clearly combines elements from both positions. As Djukanovic demanded, conscripts will not be forced to serve outside their own republic against their will, but there will be only one federal army (a lesson from Bosnia). In line with the choice on international legal personality, foreign and defence policy are in the realm of the union. In internal and international economic relations, the actual competencies of the federation are less clear as the republics are allowed to keep their separate economies, currencies, and customs services. At this point, the agreement is almost as blank as the Belgrade platform. The domain of human and minority rights is an open question, neither platform foresaw such a ministry that might either become a figurehead or a welcome excuse for the federal authorities to interfere in almost any republican legislation and political decision-making.

4. In terms of state institutions and decision-making, the agreement tends to follow the more pragmatic Belgrade approach based on operability rather than an interpretation of equality. The impracticable mode of the two republican ministers of defence and foreign affairs taking turns at the respective nominal position on the federal level has been replaced by an "exchange of roles" by these two federal ministers and their respective deputies (from the other republic). Having a "real" federal foreign and defence minister strengthens the federal level and so does the abolishment of a strict parity of republics in each federal position: president and vice-president, each minister and his deputy. Taking into account the limited competencies of the federal government the agreement does not foresee a prime minister (unlike the Belgrade model) and the supervision of the ministerial council will be in the hands of the president (unlike the Podgorica model, there is no mention of a vice-president). The unicameral parliament elected by all citizens of Serbia and Montenegro points in the same direction, ignoring demands for a parallel system of republican parity next to individual democratic rights. The "certain positive discrimination" for Montenegro, however, requires specification.

Politicking Elites and Strategic Realignments

Both in Belgrade and in Podgorica key political figures that were not directly involved in the actual negotiations have pretended surprise and shock at the results. Most have recovered quickly and are beginning to reposition themselves accordingly. In Montenegro, Djukanovic, a political survivor of some repute, faces a tough political imbroglio. The president has tried to explain his decision to his supporters by underlining the fact that instead of stopping it, the agreement postpones, but in principle accepts a referendum on independence. Nevertheless, the Montenegrin government is not expected to survive Djukanovic's surprise move: His coalition partner, the Social Democratic Party (SDP) is more radical than the DPS in its drive for independence, but cannot equal the liberal LSCG (supporting the government so far without participation) in its single-minded drive for statehood. SDP leader Ranko Krivokapic has already demanded the annulment of the agreement and an immediate referendum. The DPS' offer to the liberals to join the government coalition seems to be a red herring: In order to stay on top of the developments, Djukanovic will have to come to terms with the oppositional bloc "Together for Yugoslavia," which reacted in more jubilant tones than the ruling parties. First meetings between Djukanovic and his SNP opponent Predrag Bulatovic date back to August 2001 when the referendum seemed a forgone conclusion. Although the president is in for tough negotiations, representatives of the oppositional People's Party (NS) and the Socialist People's Party (SNP) have cautiously signalled respect for Djukanovic "stopping at the brink of disaster" and even support for the agreement. All party leaders seem to be waiting for first indications of the popular mood.

In Serbia, Kostunica, all smiles during the ceremony, poses as the real winner and tries to sweeten the bitter pill for his nostalgic supporters by proclaiming "the beginning of a new historic unity between Serbia and Montenegro." The state envisaged in the agreement would have an improved presidential authority: Election by the parliament rather than the populace will diminish its popular legitimacy, but his competencies are more concretely defined. Its implementation, moreover, would save him the choice between clinging to a largely symbolic Yugoslav presidency and running for the Serbian presidency (and thereby ending the federation single-handedly). Early elections will be a test for the DOS coalition, for Djindjic's ability to keep the 18-party coalition united and for Kostunica to reap the fruits of his declining, but still high popularity. Others like Deputy Prime Minister Miroljub Labus have criticised the multitude of unanswered questions in the agreement, particularly in the economic field. Serb nationalism decrying the loss of Yugoslavia and Kostunica's "betrayal" must realise that he may have secured the best possible deal for nationally minded Serbs, much better than a Yugoslavia existing on paper only. Conversely, many Serb leaders had been more than willing to let Montenegro go its own way, but most certainly did not want to incur a nationalist backlash at home by letting it go.

Thus, apart from the clear decision to name the new state "Serbia and Montenegro," most contentious issues are left open, hoping for a constructive negotiation process to fill in the gaps. Thus, at the end of the day, the agreement of 14 March is essentially a declaration of intent rather than a constitution blueprint. The agreement contains some bitter pills for each negotiating party and some partial victories. For a real negotiation process in regional ownership, this may be just the right mixture.

The verification of the agreement by all three parliaments after elections will make for a hot summer: A mixed commission from the two republican parliaments and the federal parliament (currently not recognised by the Montenegrin government!) will present a Constitutional Charter in June on the basis of parliamentary conclusions. Thereafter, newly elected republican parliaments and eventually a federal parliament elected by the entire constituency of "Serbia and Montenegro" will pass democratic judgement on the state of a new type, dubbed "Solarium" by some sceptics. From the current perspective, it is hard to say who will be blocking the realisation of the agreement and who will be pushing it. Probably, negotiations will take months and it seems quite likely that the agreement will never be implemented in full. A velvet divorce by mutual agreement within the next three years may even be part of Djukanovic's and Djindjic's hidden agendas. Meanwhile, state formation as work in progress may, on the one hand, produce a substantial restructuring of the political landscape and, on the other hand, create a window of opportunity for real co-operation based on shared interests.

Open Questions and Hidden Caveats

Like any good political deal, the Serbia-Montenegro agreement leaves a number of questions unanswered. The first crucial hiatus concerns its ambiguous character between federation and confederation: Implicitly, "Serbia and Montenegro" is a continuation of the 1992 Federal Republic of Yugoslavia (FRY), as it is not a re-federalisation after a declaration of independence, as envisaged by the Djukanovic platform. At the same time, the fact that the Constitutional Charter has to be passed by the parliaments of the member states after elections, however, indicates an institutional break with the (recent) past. Evidently, the negotiating parties have decided to tackle the political status issue first and leave the contentious economic issues open. Pressed for time, the EU seems to have accepted a looser form of union than envisaged in earlier blueprints.

The envisaged "loose union of a new type" would enable a clearer institutional relation between Serbia and the federal level, a precondition for rationalisation and the elimination of the costly overlaps between Yugoslav and Serbian administrations. A number of FRY institutions not foreseen for the new union could be re-designated as institutions of the Serbian Republic (e.g. the National Bank). The main structural problem to be resolved, however, concerns the equality of two so unequal republics. Montenegro will have its veto in the Supreme Defence Council and in the federal parliament and its share of international representation. As long as there is a strategic consensus, the idea of a Montenegrin representing 8 million inhabitants of Serbia and a few hundred thousand Montenegrins in international organisations may even be bearable. In negotiations with IFIs, however, conflicting interests may easily destroy the credibility of the new union, both externally and internally. Implementing the agreement's "special modes of representation for IFIs" will be a challenge. The same applies for the weighting of Montenegro's democratic representation in federal decision-making: How to design a system preventing Serbia from outvoting its junior partner on each and every issue, whilst preventing Montenegro from applying its veto to get a disproportionate say in common policy making?

The main deficit of the agreement - in that respect more similar to the Kostunica/Djindjic platform than to Djukanovic's - concerns the economic integration of the two member-states. Although Djindjic had noted during the negotiations that he cared more for economic than for political integration, each member of the new state will retain its own economic, financial and customs systems and Montenegro its euro currency for the time being, much along the lines recommended in the ICG/CEPS letter to Solana. Montenegro may keep its lower tariffs, its convertible euro currency and a customs barrier between the two republics. Conversely, access for Montenegrins to Serbian institutions of higher education, medical care and other state services beyond the reach of a mini-state like Montenegro is likely to become an issue for negotiations. Although economic separation has many disadvantages, the current asymmetries do not allow for significant re-integration. Economic separation, however, is not so much a setback, but rather the acceptance of current realities.
Federal Vice-President Miroljub Labus criticised the lack of clarity in terms of timetables and economic matters, noting that one year would be a reasonable time-frame for the reintegration of markets. His one-year deadline refers to the expected duration of the negotiations for a Stabilisation and Association Agreement between the new state and the European Union, the first step towards full EU membership in 10-15 years. The EU mediators and the negotiating parties gave priority to breaking the spell of the (political) status question, hoping that new synergies and economic momentum released by the integrative Stabilisation and Association Process towards full EU membership will make up for the evident disadvantages of economic separation. As the EU's promise to support and monitor the intermediate bilateral harmonisation in the economic field and the eventual harmonisation under the aegis of the European common market indicates, the expectation is for economic policies to be more rational and controllable than the emotional and intractable status question. Economic re-integration could take place gradually as Serbia catches up and as EU integration becomes a closer prospect.

Consequences for Regional Stability?

Many in Serbia, nostalgic for the days of Tito, will regret the loss of the name "Yugoslavia" and the ideal of a multiethnic state it once implied. For many in Serbia and beyond, after the experiences of the past ten years, Yugoslavia stood only for Serb ethno-nationalism and ethnic cleansing. Conversely, after the extradition of Milosevic, dropping the name "Yugoslavia" is a second reassuring symbol for many in the region, a farewell to the era of ethnic conflict and human tragedy. Whatever its quality as a functioning state may be, the new name should be listed on the credit side in the balance sheet for "Serbia and Montenegro." Dropping the name "Yugoslavia," moreover, may give a new dimension and impetus to the on-going debate on Serb national identity and the Serbian state.
The pivotal regional question relates to the consequences for the final status of Kosovo (and other potential status questions in the region, e.g. Republika Srpska or the Albanians in Macedonia). The main reason why the EU strongly objected to the idea of Montenegrin independence ever since Djukanovic took office, although the 1991/1992 Badinter Commission had confirmed Montenegro's right to self-determination, was concern for a precedent followed by yet another round of state fragmentation in a region traditionally suffering from too many projects of state and nation building. Although Djukanovic and his coalition partner SDP occasionally invoked the last Montenegrin King Nikola in their bid for independence, the envisaged mini-state was characterised as a civic state with harmonious relations between the Montenegrin majority (62%), the Muslims (15%), the Serbs (9%) and the smaller minorities.
Therefore, Kosovo's status was the main obstacle for Montenegro's independence, although political leaders in Podgorica and Pristina never tired of denying any such nexus. Indeed, the Kosovar politicians will never abandon their aspirations for independence, no matter what kind of constitutional acrobatics the Montenegrins perform. An immediately backlash of a Montenegrin referendum on independence in Kosovo seems unlikely at the moment, but both in Brussels and in the region, the agreement has been applauded as an end to the Balkan trend of never-ending state fragmentation in a Europe characterised by integration and the transfer of sovereign rights.

The International Crisis Group was not the first to raise the question, what consequences the dissolution of the third Yugoslavia would have for the guarantee of its "sovereignty and territorial integrity" in resolution 1244, all the more so as this resolution referred to Kosovo as part of Yugoslavia, not of Serbia. As of now, the ensuing debate among specialists in international and constitutional law has academic relevancy only. "Serbia and Montenegro" becomes the successor state of the defunct FRY and the 14 March agreement includes an explicit precaution for a possible disintegration after three years: "If Montenegro withdraws from the state union, international documents related to the FRY, the U.N. Security Council Resolution 1244 in particular, shall relate to and fully apply on Serbia as its successor." Thus, this weaving fault in resolution 1244 has been repaired. (Strictly speaking, only the unlikely case of Serbia's secession would unhinge resolution 1244.) The suggestion that this provision violates the resolution and re-introduces Serb sovereignty over Kosovo seems far-fetched: The UN resolution could not deny Kosovo being a province of the Serbian republic under the Yugoslav constitution and theoretically Serbia might uphold the defunct "shell" of the FRY even after Montenegro's secession if only because of Kosovo.

Nevertheless, in three years (at the latest), the triangular Belgrade-Podgorica-Pristina dilemma will come to a head again: In quick succession, the term of office of the Kosovar government, the Constitutional Framework for Provisional Self-Government in Kosovo and the Serbian-Montenegrin moratorium on referenda will end. Three years, however, is a long time. What the agreement brokered by Solana may achieve is gaining time rather than playing for time. The new "union of states" erases the delusion of the defunct FRY that had become a danger in itself and offers a basic framework for new trilateral and regional arrangements. Even if the new state would be only a transitional solution, ending the constitutional confusion and political deadlock, it would be a historic achievement in the Balkan region. After all, the Balkans have never been known for giant leaps, and small steps may be safer and just as effective on an arduous road of protracted negotiations and political detours.

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