PM Djukanovic’s Democrat Socialist Party, together with Social Democrat coalition partner, won 10 September parliamentary elections: together won 41 of 81 seats. Opposition Socialist People’s Party group lost seats, suggesting voters alienated by their reluctance to abandon independence issue. EU praised electoral conduct and opened Stabilisation and Association talks. U.S. Sec. Defence Rumsfeld discussed NATO Partnership for Peace membership and possible Montenegrin participation in international security missions during Podgorica visit. 12 ethnic Albanians arrested for suspected plot to launch “terrorist attacks” on polling day.

Parties prepared for 10 September parliamentary and local elections with series of coalition agreements: 7 coalitions, 4 parties and 1 civic-group submitted electoral lists. Military conscription abolished as part of efforts to join NATO Partnership for Peace by end 2006.

President Vujanovic called parliamentary and local elections for 10 September. Opposition Group for Change (now Party) registered as political party. Constitutional Court annulled pre-referendum Minority Rights Act guaranteeing parliament seats to minorities, citing principle of citizen equality. Minorities, some of which had made act condition for supporting referendum, accused government of betrayal; ruling Democratic Party of Socialists offered Bosniak and Croat parties seats via joint slates in September elections. EU adopted new separate mandates for Stabilisation and Association Agreement negotiations with Montenegro and Serbia. Serbia and Montenegro agreed bilateral relations will continue as before independence in most matters.

Parliament declared independence 3 June. Iceland led international recognition, with Russia, all regional countries, EU and U.S. following. Serbia belatedly recognised Montenegro 15 June and moved to dissolve joint institutions. UN and OSCE accepted Montenegro as member.

21 May referendum resulted in victory for independence movement with 55.53% of vote - exceeding EU- imposed 55% hurdle - and 86% turnout. Some unionists, backed by Belgrade, refused to recognise outcome: Serbian President Tadic recognised result, but Serbian PM Kostunica remained silent. EU foreign policy chief Javier Solana, welcomed referendum conduct and recognised outcome.

Campaign ahead of 21 May independence referendum continued amid charges of fraud on both sides, as pro-unionist member of electoral commission arrested for falsifying voter registration forms; later released. Pro-union forces hinted at boycott as polls showed pro-independence forces will probably receive required 55% of votes.

Former President Slobodan Milosevic died of heart attack 11 March in Hague before conclusion of his trial. Fears raised death could mark return to reactionary nationalist politics and derail EU integration process. Serbian government provided quasi-state funeral that passed nationalist torch from Socialist Party of Serbia to Serbian Radical Party. EU extended deadline by which war crimes suspect Ratko Mladic must be arrested to 30 April; failure will halt Stabilisation and Association Agreement negotiations. Belgrade called for 17,000 Kosovo Serbs to quit UNMIK and Kosovo government jobs despite UNMIK’s earlier plea for end of Serb boycott of institutions. Montenegrin parliament set independence referendum for 21 May; took control of all State Union military forces on its territory.

EU Council threatened Serbia with suspension of Stabilisation and Association negotiations if Ratko Mladic not arrested by 5 April. False reports that Ratko Mladic arrested caused media furore. EU FMs also supported Miroslav Lajcak’s formula of 55% majority for Montenegro’s independence referendum; Montenegrin PM Djukanovic accepted proposal. First face-to-face Kosovo status negotiations between Serbian government and Kosovo Albanians held 20-21 February in Vienna, ended inconclusively; next round 17 March. Serbian parliament accepted results of first round of talks but announcements by key international officials that Kosovo independence likely outcome set off political firestorm in Belgrade. Serbs in Bujanovac, southern Serbia, proposed referendum on partition of town into Serbian and Albanian sectors, after Serb concern local Albanians will increase links with Kosovo.

EU warned association talks could be suspended if fugitive war crime suspects Ratko Mladic and Radovan Karadzic not caught. Albanians in southern Serbia issued “Presevo Declaration” calling for inclusion of Presevo in Kosovo future status talks. EU envoy for Montenegro Miroslav Lajcak visited Podgorica for series of talks between officials and opposition on referendum; fourth round began 31 January.

5 members of Scorpions paramilitary group who filmed their execution of 6 Bosniaks in Srebenica in 1995 went on trial before Belgrade war crimes court 20 December. Earlier court sentenced 14 for 1991 war crimes against Croats in Vukovar, first verdict since 2003 inauguration. Venice Commission’s 19 December report found Montenegro’s referendum law in line with international standards, called for dialogue between government and opposition on referendum standards. EU foreign policy chief Javier Solana appointed Czech Miroslav Lajcak representative to facilitate dialogue.