No. 9 : September-December 2013

Dušan Pavlović


Academic Foresights

How do you analyze the present situation of Serbia?

Serbia has an unstable democratic heritage. In its 135-year history as a modern state, it spent about two thirds of the time in a form of a non-democratic regime. Slobodan Milošević who came to power in 1987 established a sort of hybrid regime in which elections were regularly rigged and human rights trampled. After an attempted electoral theft in 2000, and mass street protest that followed, Milošević stepped down in September 2000. Since then, Serbia is a democratic country with periodic free and fair elections.

Serbia’s political system is that of parliamentary democracy with a directly elected president. The president does not have policy prerogatives, but participates very frequently, because he was elected by a popular ballot, in some aspects of public policy (notably, foreign policy).

In your opinion, how will the situation likely evolve over the next five years?

Two major problems currently trouble Serbia’s democracy: the issue of Kosovo, and the prospect of the so-called Greek scenario (the budget deficit and increasing public debt). It seems that the first issue, that has been on the Serbian agenda for the last 25 years, is coming to a close. Kosovo declared independence and in 2008 from Serbia, and the Kosovo policy, pursued by former President Tadić (2004-2012), assumed a gradual acceptation of Kosovo’s independence.

The previous Serbian Government made already two significant concessions to the Kosovo Albanians over the past four years. First, it accepted the replacement of the UNMIK by the EULEX mission in February 2008 (the former was headed by the UN; the latter by the EU). Second, in the summer of 2011, the Serbian Government accepted that the EULEX mission together with the Kosovo authorities takes over the last two border crossings—Jarinje and Brnjak—that until 2011 were controlled exclusively by the local ethnic Serbs. After two months of protest organized by local Serbs, the Serbian Government put a pressure on the local Serbs to give in, and all crossings are now jointly patrolled by EULEX, ethnic Albanians and local Serbs.

In the meantime, Tadić’s Kosovo policy attracted more followers from the opposite political camp. Although a staunch nationalist in the 1990s (and strongly opposed to the policy of concession to Kosovo after 2000), new president Tomislav Nikolić (elected in May 2012) continued to pursue former President Tadić’s and the Serbian Government’s policy of gradual acceptation of Kosovo’s independence. Nikolić supported the Serbian Government’s policy to sign in mid-April 2013 an agreement with the Government of Kosovo that involves political autonomy for the Kosovo Serbs. The agreement granted autonomy to the local Serbian population, but asks them to accept to be the Kosovo rather than Serbian citizens. This resulted in a lot of resistance by the local Serbian population who are unwilling to accept the agreement. Therefore, the future of the agreement is still not certain, but it is clear that the Serbian Government is determined to close the Kosovo issue, and factually, if not formally, to recognize the independence of Kosovo.

The Kosovo issue is closely tied to the European prospective of Serbia. At the moment, Serbia is expecting to obtain the exact date for the start of the negotiation with the EU (it was intimated it could be some time in January 2014). The EU made clear that the date is conditioned by the implementation of the agreement with the Kosovo Government. As said, the Serbian Government is determined to implement the agreement, although the resistance by the local Kosovo Serbs may prolong it.

The major economic challenge for the current government is to avoid the so-called Greek scenario. The major generator of the public debt in Serbia is the budget deficit, which by the end of 2013 is projected to reach some 6% of GDP. Serbia’s public debt is currently at some 60% of GDP, but the four-year trend in public debt is worrisome.

The high level of deficit in Serbia is mainly structural in nature. It emerged as a consequence of discrete increase in spending for public sector wages, pensions, subventions, social welfare, and tax breaks. This means that the most efficient way to save the money is to restructure public spending by cutting public sector wages, pensions, subventions, social welfare, and do a tax policy reform. Yet, precisely such kind of moves is likely to face political opposition from most coalition partners.

What are the structural long-term perspectives?

Debt and deficit are likely to remain high in the foreseeable future. The Serbian parliamentary system is based on proportional representation that produces coalition governments that are typically composed of one major party, one “junior” partner, and several smaller parties. Each of these actors is a veto player that can block policy changes, or bring the coalition down if the majority in the Government want to push for policy change (say, cut the deficit or reduce the debt). Such institutional design was one of the major obstacles for faster and more substantial reforms after 2000, when Slobodan Milošević stepped down. It seems that the institutional pattern will survive for the next several electoral rounds. Future major policy changes are, therefore, unlikely, unless they attract political support that crosses party lines, which rarely happens.

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Dušan Pavlovic is a political economist. He received his PhD from the Central European University in Budapest in 2002. He teaches political economy with public choice at the Faculty of political science, University of Belgrade (Serbia). His areas of interest are the political economy of democratic institutions, and rational and public choice theory. His latest two books are The Consolidation of Democratic Institutions in Serbia after 2000 (2007), and Writings in Political Economy (2010).

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