A Fair Exchange: Aid to Yugoslavia for Regional Stability
A Fair Exchange: Aid to Yugoslavia for Regional Stability
Table of Contents
  1. Executive Summary
Report 112 / Europe & Central Asia

A Fair Exchange: Aid to Yugoslavia for Regional Stability

The donors’ conference for the Federal Republic of Yugoslavia (FRY), planned for 29 June 2001 in Brussels, will set the pattern of international economic assistance to Belgrade for the next year or more.

Executive Summary

The donors’ conference for the Federal Republic of Yugoslavia (FRY), planned for 29 June 2001 in Brussels, will set the pattern of international economic assistance to Belgrade for the next year or more. In return for substantial donor support, the international community should require the FRY to undertake a number of specific steps that are essential for increasing regional stability.

An effective strategy of conditionality would require donors to find a new clarity of purpose and cohesion in their relations with the governing coalition in Belgrade.  To date, the United States is the donor that has most explicitly and operationally conditioned assistance on meeting political objectives, though there are some indications that Washington may be prepared to narrow those conditions substantially, if not yet to drop them.   If they refuse to adopt a strong policy on conditionality, whether from misplaced fear of weakening the coalition in Belgrade or for other reasons, major donors will overlook the fact that the gravest threat to Serbia’s fledgling democracy is not the weak economy.  It is rather the powerful legacy of extremism, war crimes and attempted territorial conquest.  If this legacy is inadvertently strengthened through donor aid, regional instability will continue and the threat of renewed conflict remain. 

Aid conditionality is an effective tool because the FRY’s shattered economy relies on donor support for numerous social programs, as well as electricity, debt relief, restructuring, and, in the winter, heating. The events leading up to Milosevic’s arrest in the early hours of 1 April 2001 demonstrated the viability of conditionality-based policies.

This report argues that major donors should use their leverage by conditioning assistance on concrete actions from the FRY government to fulfil its obligations on three issues vital to regional stability:

  • cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague;
     
  • relations between the FRY and Bosnia and Herzegovina, in particular with the Serb-controlled entity, the Republika Srpska; and
     
  • cooperation with the UN Mission in Kosovo (UNMIK).

Until the FRY cooperates with the Tribunal, Serbian democracy will remain frail. However, the FRY has failed to continue the limited degree of cooperation it appeared to embark upon when Milosevic was arrested.  Serbia today is a safe haven for indicted war criminals; according to ICTY’s own calculation, some twelve indictees currently reside there. Although the Federal and Serbian Justice Ministers have stated publicly that war criminals can be transferred to the Tribunal under existing FRY law, Federal President Vojislav Kostunica continues to insist that cooperation requires a new law which he has not used his influence to obtain.  Unwillingness to cooperate with ICTY also impedes full normalisation of Serbia’s relations with Bosnia, Croatia, and Kosovo’s ethnic Albanians population. It likewise hinders improvement of relations with Montenegro, which, in contrast, has actively assisted ICTY.  By protecting Milosevic-era cronies still in office in Belgrade, non-cooperation undermines the Federal and Serbian governments’ ability to implement needed reforms.  ICTY officials believe that Belgrade’s reluctance to cooperate with the Hague Tribunal encourages the authorities in Republika Srpska that – along with Serbia itself – is the other Balkan safe haven for war criminals. 

FRY policy towards Bosnia is cause for serious concern. The Bosnian Serb Army (VRS) remains essentially a dependency of the Yugoslav Army (VJ), and Belgrade continues to support the intelligence service and police in Bosnia’s Serb-controlled entity, the Republika Srpska.  FRY officials at the highest level, including President Kostunica and Foreign Minister Goran Svilanovic, openly link the status of Republika Srpska with the future status of Kosovo.  Senior members of the governing coalition in FRY publicly support extremist Serb parties in Bosnia.

In Kosovo, Belgrade has backed Serb community leaders’ refusal to establish normal working relations with the international administration led by the United Nations. The FRY government has facilitated Kosovo Serb obstruction of the UN mission (UNMIK) and the NATO-led Kosovo Force (KFOR) by subsidising parallel institutions in the northern part of the province. Belgrade’s stance delays productive movement towards resolving Kosovo’s difficulties.  Refusal to express regret for atrocities committed against Kosovo’s Albanians has helped keep wounds from healing.  Continued statements to the effect that the FRY wants to return its army and police to Kosovo, as well as recent calls for partition, increase distrust in the province and instability in the region. Such actions also hinder economic development, causing more Serbs to flee the province due to lack of a viable income.  If the Serb community is to register for and participate in the Kosovo assembly elections scheduled for November 2001, international pressure will need to be applied in Belgrade.

The international community has a chance to influence the FRY leadership to adopt more constructive policies in all three of these key areas if it acts resolutely and in unison at the forthcoming donors’ conference.  The opportunity must not be missed.

Belgrade/Brussels, 15 June 2001

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