Serbia finally has a new government but one that is deeply divided between pro-Western and nationalist forces. Facing two difficult issues – Kosovo status and cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) – its choice is between moving towards European integration or on to a more isolationist path. The government’s composition, deep mistrust among many of its members and the parliament’s nationalist majority suggest it will follow the second option. Pro-Western forces have suffered a significant setback, the government is vulnerable to manipulation by the security services and oligarchs, and the system of divided responsibility for the security services renders unlikely serious cooperation with the ICTY, especially the arrests of Ratko Mladic and Radovan Karadzic. Although Kosovo independence could destabilise the government, it may surprise and last far longer and prove more stable than expected. The West should prepare for Serbia turning increasingly away from Europe and towards Moscow.

The four-month government formation process and accompanying parliamentary debates demonstrated that categorisation of Serbia’s parties as “democratic” and “non-democratic” is outdated. They also clearly revealed the deep, anti-Western and ultra-nationalist nature of Premier Kostunica’s Democratic Party of Serbia (DSS), which is ideologically much closer to the Serbian Radical Party (SRS) of war crimes indictee Vojislav Seselj and Milosevic’s Socialist Party of Serbia (SPS) than to President Tadic’s Democratic Party (DS).

Fearing that new elections might be called that would leave Serbia without a government for another four months and possibly bring the SRS to power, Western governments once again supported Serbia’s “democrats” and strongly pressed the DS to form a government with the DSS. But their success may well prove Pyrrhic, harming the pro-Western parties in unanticipated ways. For one, the West can no longer count on the DS and G17+ to press the DSS and the parliament effectively for a different foreign policy. Those parties are now too out of step with the nationalist parliamentary majority and the premier. The European Union’s strategy of using the prospect of integration and accession to soften Serbia’s stance on Kosovo is also highly problematic under the current government. The EU and U.S. have given away most of their leverage through repeated concessions and now have even fewer policy tools with which to influence Belgrade than before.

Brussels and Washington should resist the temptation of appeasing Serbia further in a misguided effort to purchase acceptance of Kosovo’s independence. Since February 2007, the EU has been saying that it is willing to restart Stabilisation and Association Agreement (SAA) talks and no longer insist on as a precondition the arrest of the most notorious war criminals. The requirement set during the long haggling over a new government – that Tadic and the DS control the power ministries – is not guaranteed under the new coalition. Some in the EU still believe that by re-engaging Serbia via the SAA they can encourage pro-European forces and ease the pain of Kosovo’s formal loss, but this is misguided. The new government will choose Kosovo over Europe; appeasement would weaken, not strengthen pro-Western forces; and in the short term at least, security structures are unlikely to arrest war criminals.

The new government does plan to continue gradual economic reforms but social and political change risks bogging down in disputes between the DS and DSS. The real point of contention between the two will be foreign policy, as the latter attempts to continue nationalist and confrontational policies. Kostunica is likely to try to hide his Milosevic-era nationalist policies behind Tadic’s pro-Western inclinations, making it difficult for Washington and Brussels to confront Serbia effectively on key issues, though it is uncertain how long Tadic will permit himself to be used to defend the Kostunica line, particularly on the ICTY and Kosovo.

The squabbling over a government deepened the DS-DSS rift. Radical leader Tomislav Nikolic’s five days as parliament speaker exposed a serious weakness in the new constitution – the possibility of a parliament-authorised dictatorship – that could become a real threat following a Kosovo status decision. The West may well have to accustom itself to a Serbia that for a number of years is anti-Europe, pro-Russia and unrepentant in its dangerously self-destructive nationalism.

Belgrade/Brussels, 31 May 2007