Polls called for May 11 as Serbian cabinet steps down (Roundup)

Mar 10, 2008, 14:52 GMT

Belgrade - Serbian Prime Minister Vojislav Kostunica's government formally stepped down Monday and asked President Boris Tadic to dissolve parliament and schedule early elections for May 11.

'It has been agreed that the government of Serbia no more has a common policy,' said a terse statement issued after the cabinet met.

Kostunica said already on Saturday that his government had shattered on its Kosovo policy and accused his pro-European partners of abandoning the fight to keep the province Serbian even after it declared independence with Western support.

Tadic, Kostunica's uneasy ally over the past 10 months, said that he would schedule the elections as asked. As the polls cannot be scheduled more than 60 days before the voting day, he may do so starting on Tuesday.

A caretaker government would steer Serbia until the next cabinet is in place, which may be months beyond the May 11 election.

Before and after the January 2007 poll, Kostunica's caretaker cabinet reigned six months, two before and four after the vote.

The breakaway of Kosovo last month highlighted the polarization of Serbian politics, so the parliamentary poll, to be held together with the previously scheduled municipal elections, would effectively be a referendum on Belgrade's foreign policy.

The nationalist bloc - now including Kostunica's Democratic Party of Serbia (DSS) and the much stronger, but opposition, Serbian Radical Party (SRS) - wants the country to turn away from the West over its support of Kosovo's independence.

With Slobodan Milosevic's Socialist Party of Serbia, which has allied with both the SRS and DSS in the past, the anti-Western bloc would have a majority in the outgoing parliament.

The pro-European group - lined behind Tadic's Democratic Party (DS), includes G17, the smallest party in the outgoing government coalition, and the opposition Liberal Democratic Party - wants Belgrade to continue moving closer to EU membership.

While politicians continue fighting the tug-of-war over the receding Kosovo, the average Serb has already started paying the price of instability.

The Belgrade capital market plummeted by 4.55 per cent Monday, in the largest drop in 10 months, wiping out all gains from the whole of 2007.

A previous sharp decline in May followed signals that Kostunica might join with the SRS to form a new cabinet.

Foreign investments were reportedly being placed on hold as the Kosovo crisis was approaching its climax and the ransacking of Western embassies last month by mobs protesting the secession of the province did nothing to help.

Inflation has been spiralling out of control, while the dinar continued weakening against the benchmark euro, which may jeopardize hundreds of thousands of families with credit, virtually all of which is indexed in hard currency.

'Anything is better than this uncertainty,' the head of the Serbian Commission for Securities, Milko Stimac, told Radio B92. He stressed that without stability there are 'no foreign investments and financial market growth.'

Economic analyst Sasa Djogovic told the Tanjug news agency that it would be good if the elections produce a government with clear goals, instead of 'confusing investors and creating macro-economic turbulence.'

However, on top of two months of campaigning and possibly months of coalition-building after that, pollsters warn that May's elections could produce more of the same - a stalemate which could cost the country even more time.