Nations in Transit 2005

Executive Summary: 

NOTE: Freedom House presents separate ratings for Serbia, Montenegro, and Kosovo to provide a clearer picture of the processes and conditions in the three different territories. Doing so does not indicate a position on the part of Freedom House regarding the territorial integrity of the State Union of Serbia and Montenegro; neither does it indicate a position on Kosovo's future status.

Serbia and Montenegro were parts of the Socialist Federal Republic of Yugoslavia (SFRY), a multinational federation comprising 6 republics and approximately 40 ethnic communities. The SFRY broke apart in 1991, and Serbia and Montenegro came to form the new Federal Republic of Yugoslavia (FRY) in 1992. During the 1990s, Serbia was under the authoritarian rule of Slobodan Milosevic, who is on trial at the International Criminal Tribunal for the Former Yugoslavia (ICTY) in The Hague for genocide, war crimes, and explicit abuses of human rights committed in Croatia, Bosnia and Herzegovina, and Kosovo between 1991 and 1999. Montenegro escaped Milosevic's influence in 1998 when it started to direct its own course toward economic liberalization, the establishment of democracy, and full independence.

In September 2000, a united opposition consisting of 18 parties known as the Democratic Opposition of Serbia (DOS) defeated Milosovic in parliamentary elections and removed him from office. Serbia's first post-Milosevic government, inaugurated in January 2001, quickly initiated reforms aimed at building democratic and market institutions. Although many of these reforms were successful and held great promise for Serbia's future, the murder of Prime Minister Zoran Djindjic in March 2003 and subsequent events led to a deceleration and even a stalling of reforms, thus highlighting ongoing weaknesses in Serbia's democratic institutions. The question remains whether future governments will be committed to pursuing democratic reforms.

Today, Serbia and Montenegro belong to the State Union of Serbia and Montenegro, which replaced the FRY in March 2003 and was intended to accelerate the integration of Serbia and Montenegro into the European Union (EU). However, the confederal character of the state union's joint institutions has given preference to priorities of the individual member states and has allowed them to block decisions deemed contrary to their interests. This, in turn, has resulted in poor governance and transformed the joint state into an obstacle to rather than a vehicle for integration. The state union is kept alive exclusively through pressure from the EU, which brokered the deal to create it in 2002.

On March 3, 2004, a coalition of four political parties formed a new government, and Vojislav Kostunica became prime minister. Overall, the Kostunica government has had varying degrees of success in continuing with the reforms initiated by the Djindjic government between 2001 and 2003. On the one hand, the government has vowed to strengthen the rule of law, relieved pressure on the media, and harmonized some legislation with European standards. In 2004, it also pushed through long-awaited amendments to Serbia's electoral legislation that finally allowed for the election of a president after three consecutive failures. On the other hand, in 2004 the government failed to create a consensus for passing a new Constitution. In addition, it weakened relations with the United States and the EU over its reluctance to cooperate with the ICTY and contributed little to resolving problems related to Kosovo and its future status. The government has also been unsuccessful in fighting corruption, giving in to the vested interests of tycoons from the Milosevic era. Transformation of Serbia's economy has stalled as well, owing to the Kostunica government's fear of the social costs of restructuring, particularly the likelihood of mass layoffs.

By mid-2004, the ruling coalition in Serbia had slipped measurably in the polls. As a result, Dragan Marsicanin, the government's candidate for the presidential elections in June, garnered less than half the support received by the four parties in the December 2003 parliamentary election. Voters unequivocally favored candidate Boris Tadic, whose Democratic Party led the government of Serbia from 2001 to 2003 under Zoran Djindjic. The Democratic Party also had a strong showing in local elections held in September 2004. Overall, the party's success demonstrated that the majority of Serbia's active electorate is willing to pursue more dynamic economic and political reforms. Nevertheless, the Serbian Radical Party, the Milosevic ally that opposes democracy and open markets, remains one of the two most popular parties in Serbia. Its commitment to reversing reforms constitutes a palpable threat to the stability of democracy in Serbia.

In 2004, the government of Montenegro focused its efforts on undermining the state union's joint institutions with Serbia and laying the groundwork for a 2006 referendum on independence. The pursuit of economic and legal reforms was less of a priority. In October 2004, the opposition's boycott of the Parliament, which had aimed since 2003 to weaken the government of Prime Minister Milo Djukanovic, foundered when the Socialist People Party, the largest oppositional party, broke ranks and returned to the Parliament. In 2004, the Montenegrin government remained under the constant watch of nongovernmental organizations (NGOs), which now appear to be more influential than the opposition political parties. Like Serbia's government, Montenegro's governing authority showed little or no progress during the year in fighting organized crime and high-level corruption for fear of endangering its vested interests.

National Democratic Governance. The state union became almost entirely dysfunctional and irrelevant in 2004 owing to the continued usurpation of its decision-making powers by the republic-level governments of Serbia and Montenegro. During the year, for example, the Montenegrin government announced that it would avoid its constitutional obligations and not hold direct elections for the assembly of the state union in 2005. Creation of the Joint Court of Serbia & Montenegro, which is tasked with matters of constitutional law, has still not been completed. Government ministers and deputies at the state level remain answerable to their member states rather than the public. The joint military, for its part, lacks democratic oversight.

Although there is broad consensus about the creation of democracy in Serbia, the Serbian Radical Party, one of the two largest oppositional parties, remains more focused on nationalist and extreme political rhetoric and policies than on serious reform efforts. Although the minority government inaugurated in March 2004 is weak, it creates a reasonable balance of power between the government and the Parliament that was not present in the 2001-2003 period. In general, the constitutional mechanism of the dual executive causes instability, because the president, while having no formal policy prerogatives, often takes issue with the government on specific points. By not disclosing secret files from the Communist era, the government has demonstrated an inability to reform the state security service, which was implicated in the 2003 assassination of Zoran Djindjic.

Despite the opposition boycott, the Montenegrin Parliament and government worked without interruption in 2004. In October, the boycott collapsed and the Socialist People Party returned to the Parliament. Although the opposition does not support independence for Montenegro, the Socialist People Party now appears willing to accept the outcome of a referendum on independence scheduled for spring 2006. Montenegro's judiciary, although formally independent, is subject to government influence. While it avoids cases that could harm state officials, it is quick to fine oppositional leaders for libeling incumbents. The ruling Democratic Party of Socialists, which is a direct successor to the pre-1989 Montenegrin Communist Party, appears to be unable to control factions within the state security service that resist reforms and use their position for political purposes.

While there is public support for democratic principles in Serbia, not all major political parties seem to be endorsing it equally as the only legitimate form of polity. Powers are balanced between the Parliament and the executive, and ongoing reforms have strengthened the independence of the judiciary. However, the police refuse to disclose secret files from the Communist era, and the government has failed thus far to reform the secret service. Security services, including the military, interior, and secret services, are not under democratic oversight. Serbia's new rating for national democratic governance is set at 4.00.

Although support among the population and politicians for democratic principles in Montenegro is strong, there is no consensus among the state's major political parties about independence. Agreement will be possible only after a referendum on independence in 2006. The government has substantial influence over the Parliament and the judiciary. Likewise, the Montenegrin secret police are dominated by the ruling party, which continues to block its reform. Montenegro's new rating for national democratic governance is set at 4.50.

Electoral Process. In 2004, the Parliament removed Serbia's voter turnout requirement and finally made possible the first election of Serbia's president since 1998. The Parliament also removed the 5 percent electoral threshold for ethnic minority parties. The new Law on Financing Political Parties, which made the process by which parties receive and manage their funds more transparent, became effective on January 1, 2004, but it was largely not adhered to during the June 2004 presidential elections. In its electoral report, the Organization for Security and Cooperation in Europe praised the electoral process, assessing that elections in Serbia are generally held in agreement with democratic and European standards. Economic themes and corruption are becoming more dominant in local electoral campaigns. The 2004 presidential and local elections indicated a slump in the government's popularity and an increase in popularity of the pro-reform Democratic Party. However, the 2004 elections also bolstered the morale of the Serbian Radical Party, which is still one of the most popular parties in the country.

In 2004, Montenegro held local elections in three municipalities. The parties campaigned less on local and more on national issues such as independence and corruption. The campaign was followed by increased political activity from top party leaders and national incumbents. The elections' mixed results showed that the electorate is fairly divided between the government coalition parties (which favor independence) and the opposition (which favors joint state with Serbia), with a slight bend toward the former. Electoral legislation and practice in Montenegro in 2004 accorded with European standards.

Serbia's electoral process rating improves from 3.50 to 3.25 owing to the positive development in both electoral legislation and electoral process, which is seen in the removal of the turnout requirement for presidential elections and the 5 percent electoral threshold for ethnic minority parties in Serbia.

Montenegro's electoral process rating improves from 3.50 to 3.25 owing to the conduct of local elections in agreement with European standards.

Civil Society. Despite expectations, the Serbian government failed again in 2004 to adopt legislation defining the status of NGOs. The old legislation (from the 1980s and 1990s) is restrictive and unfavorable to the development of the civil sector. For example, NGOs are not allowed to form or operate if they are not registered with the police. NGOs are also forbidden to take up any economic activity for self-support and are liable for taxes. After the cooperation between the government and the civil sector in 2001, the impact of Serbian civil society on the government's public policy vanished entirely in 2004. The government supports civil society actors in budgetary matters, but this alone is insufficient for the comprehensive development of the civil sector. Substantial funds for NGOs are provided by international donors. Throughout 2004, the media regularly followed the civil sector's activities, and several NGO leaders went on TV to discuss political issues; unfortunately, the increase in public stature that resulted from their appearances did little to influence the government to change its attitude. In Serbia, the public remains less supportive and more suspicious of NGOs than in Montenegro.

In Montenegro, since the passage of important legislation in 1999, civil society has enjoyed a more lax, more liberal environment for its development. The Montenegrin NGO sector is much smaller than Serbia's but appears to be more vibrant. In 2004, several NGOs managed to persuade the government to consider NGO proposals in fighting corruption and protecting the environment. The most active NGOs in Montenegro are those dealing with public issues and public policy. Their existence is dependent primarily on foreign donations, although the government also allocates substantial funds from the state budget. Throughout 2004, Montenegrin NGOs enjoyed more public support for advocacy efforts than did their counterparts in Serbia.

Serbia's civil society rating remains unchanged at 2.75 owing to the failure of the government to improve regulation of the civic sector.

Montenegro's civil society rating improved from 2.75 to 2.50 given the civil sector's growing activism and the government's receptivity to advocacy efforts.

Independent Media. In Serbia, the most important development in 2004 was that the new government stopped harassing and interfering with the editorial practices of private media. This improvement ended the government's custom of applying informal pressure on editors, a policy that had lingered even after the state of emergency was lifted in 2003. This change affected the majority of print and electronic media, which are privately owned. In 2004, the Serbian government maintained control of public media, notably television, which has high public influence. In November, the Parliament adopted the Law on Public Accessibility to Information and appointed a commissioner to disclose information about government work that is of public relevance. However, the law remains unclear about what information is relevant and who decides that question. Additionally, the appointed commissioner was not provided an office, so in practice there is no place where one can submit a request. The quality of the Serbian press deteriorated in 2004 thanks to the increasing popularity of tabloids, which often run fabricated stories and promote hate speech. Journalists continued to be sued by politicians for libel. In response to the increase of fabricated stories, the minister of justice said in 2004 that the government intended to make libel a criminal offense, but the topic was not pursued further by year's end. Journalists are able to form professional associations. Serbian society enjoys free access to the Internet.

In Montenegro, print media are either pro-government or pro-opposition. The only independent daily is Vijesti. Montenegrin national television is not formally under the government's influence, but it openly favors independence from the state union, which has been the major plank in the government's platform since 1998. Montenegrin police did not resolve the May 2004 murder of Dusko Jovanovic, editor in chief of the daily Dan. Jovanovic is believed to have been murdered for harshly criticizing the government and secret service. The inability to resolve his murder created an atmosphere of fear in the media community in Montenegro and the belief that practicing free journalism can be very dangerous.

Serbia's independent media rating improves slightly from 3.50 to 3.25, reflecting a return to the rating prior to the state of emergency now that the government has stopped interfering with the editorial policy of private media and passed legislation aimed at providing free access to information. However, in practice access to information is still denied, legal protections for press freedom are unsecured, and legal penalties for "irresponsible" journalism whether justifiable or not in terms of journalistic ethics remain common practice.

Montenegro's independent media rating remains 3.25 owing to the unresolved murder of Dan editor in chief Dusko Jovanovic and a lack of achievements that otherwise would benefit the sector.

Local Democratic Governance. The new Law on Local Governance in Serbia was adopted in 2002. The legislation failed to entirely harmonize local governance legislation with the 1985 European Charter of Local Self-Governance. The law increased the number of original prerogatives of local authorities but failed to grant substantial fiscal autonomy to local legislatures. Local authorities are able to collect fees to provide utilities (water, garbage collection, and so forth), but the lack of fiscal autonomy prevents them from providing other types of services (such as street repairing or public lighting). Serbian municipalities are allowed only to share in taxes levied at their administrative territory. Municipalities were not returned property that the state took from them in 1996. Local leaders exercise their power independently, especially now that the new law ensures legal protection from national government interference. However, the principle of the dual executive at the local level causes clashes between directly elected presidents and executive councils elected by assemblies, thus bringing about stalemates in a number of municipalities after the September 2004 local elections.

The Montenegrin Law on Local Self-Governance was adopted in July 2003. It gave substantial financial autonomy to local authorities and established a coherent governance structure at the local level. Presidents are elected directly, but their prerogatives are clearly demarcated from those of local assemblies, which facilitates good governance at the local level. The national government, however, interfered with the work of local authorities in the municipalities of Budva and Niksic (where the opposition was in charge) by blocking the municipalities' bank accounts. Municipalities are allowed to hold property, and Montenegrin municipalities can levy their own taxes for providing local services.

Serbia's new rating for local democratic governance is set at 3.75 because the lack of fiscal autonomy at the local level prevents towns and cities from enhancing the quality of existing services and providing new ones. Governance in a number of municipalities is undermined by poor legal solutions that confuse the relationship between the mayor and the assembly's executive council.

In Montenegrin municipalities, executives function without interruption owing to easier relationships with local assemblies. Montenegrin legislation is more liberal and provides higher autonomy for local authorities. However, given the government's occasional interference with local authorities' funds, Montenegro's new rating for local democratic governance is set at 3.50.

Judicial Framework and Independence. In 2004, the new government of Serbia amended several laws pertaining to the judiciary, with the aim of strengthening the independence of judges and harmonizing litigation procedures with European standards. The government failed to protect the rights of ethnic minorities after the escalation of ethnic tensions in Vojvodina in the beginning of the year. The Serbian judiciary in 2004 took up only one war crimes case, while the Kostunica government struggled to avoid cooperating with the ICTY by refusing to hand over war crimes suspects and proposing the voluntary surrender of the suspects.

Despite formal independence, the Montenegrin judiciary seems to be under the influence of the Montenegrin government. For example, it has failed to solve the highly publicized woman-trafficking affair, which dates to 2002 and implicates several state officials in corruption. At the same time, however, Montenegrin courts have demonstrated their efficiency in fining oppositional leaders for libeling incumbents.

Serbia's judicial framework and independence rating remains at 4.25 because the Serbian judiciary is still unable to deal with war crimes cases yet made progress in harmonizing the judicial system with European standards.

For influence of the government on the judiciary and the inability of the judiciary to solve the woman-trafficking affair, Montenegro's rating remains at 4.25.

Corruption. Both the Serbian and Montenegrin governments showed no progress in fighting corruption in 2004. The new Serbian government did not try to investigate the three big corruption scandals from 2003: the sugar affair, the Janjusevic-Kolesar affair, and the Sartid affair. Each of these implicated former or current government officials and were substantiated by reports made by the Council for the Fight Against Corruption. The government ignored these reports, which is indicative of its powerlessness and lack of will to tackle vested interests both in the government and among tycoons who seek to retain economic monopolies.

The Montenegrin government did not make the privatization of large companies more transparent in 2004. Indeed, it was accused of rigging the privatization procedure for the aluminum factory in Podgorica. In addition, Prime Minister Milo Djukanovic is still suspected of having been involved in cigarette smuggling, and one Italian magistrate announced that he might reopen the case.

Because of the Serbian government's lack of will to fight corruption, Serbia's rating remains 5.00.

Montenegro's rating remains unchanged at 5.25 owing to the nontransparent privatization process.

Outlook for 2005. The future of the state union, which was created in 2003 under much arm-twisting from the EU, seems uncertain. It depends on the outcome of the referendum on independence that will be held in Montenegro in spring of 2006, as permitted by the 2003 Constitutional Charter. In the meantime, the so-called twin track, which created the possibility in 2004 for Serbia and Montenegro to pursue EU membership separately and enjoys the support of the European Commission, will enable both Serbia and Montenegro to pursue integration at their own pace. Once the twin track system is in place in 2005, EU assessments of Serbia and Montenegro will no longer focus on the economic harmonization of the two states. In the case of Serbia, for example, the EU focus will be on cooperation with the ICTY.

In 2005, the Serbian government is expected to undertake a restructuring of the public sector, implement new bankruptcy procedures, enliven the privatization that stalled in 2004, restructure state finances, and reduce public spending. Much courage and political determination will be required to tackle these objectives, because serious restructuring of the economy will threaten vested interests. If the Kostunica government remains unwilling to cooperate fully with the ICTY, this will hold back Serbia's progress toward negotiations on the Stability and Accession Agreement with the EU. Serbia will likely try to patch up relations with the United States and the EU by urging war crimes suspects to give themselves up to the ICTY. Serbia could also face early elections in 2005, since the two most popular parties (the Democratic Party and the Serbian Radical Party) are not in the government. The Serbian Radical Party will remain a threat to democracy and a market economy. However, since the parties that removed Milosevic and set the country on the path of reform in 2000 grew aware of the necessity to create a coalition, it is expected that some reformist-oriented coalition will remain in office after these elections.

The Montenegrin government's major goal for 2005 and 2006 is to split from Serbia and achieve independence. It is expected to avoid direct elections for the state union's assembly (which is mandated by the Constitutional Charter for spring 2005) in favor of a referendum on independence. The future of the Djukanovic government seems to be entirely dependent on the outcome of the referendum. Its ability to succeed in this agenda could bring about instability in the region but could also contribute to a quickening of the pace at which Serbia and Montenegro approach the European integration process. Much will also depend on whether the twin track system will enable the countries to move toward the EU faster separately than jointly.

National Democratic Governance: 

From 1998 to 2003, the Federal Republic of Yugoslavia (FRY) was largely ungovernable. To remedy this situation, the European Union (EU) brokered the so-called Belgrade Agreement on Principles, which called for the establishment of the joint State Union of Serbia and Montenegro. Both sides approved the document on March 14, 2002. The EU pressed for the agreement, desiring a single international partner and fearing that the disintegration of the FRY could lead to instability and fragmentation in Macedonia and Bosnia as well. The EU was also reluctant to address the issue of Kosovo's future status. With the Belgrade agreement in place, the State Union of Serbia and Montenegro would be able to start negotiations on accession to the EU.

The Belgrade agreement called for the state union to ensure unhampered movement of goods, labor, and capital between Serbia and Montenegro via a common customs and trade policy. Monetary and fiscal policy, however, remained the responsibility of the two individual states. The agreement considered the governments of Serbia and Montenegro, not the institutions of the state union, to be responsible for policy implementation.

On February 4, 2003, the Yugoslav Parliament adopted the Constitutional Charter, which established the state union. As such, the FRY, created in 1992, formally ceased to exist. The Constitutional Charter called for the creation of a one-chamber Parliament comprising 126 deputies (91 from Serbia, 35 from Montenegro) who are elected indirectly by delegations that reflect the makeup of each state's Parliament. It also called for a state union president elected by the joint Parliament. The president, in turn, heads the Council of Ministers, which consists of ministers of foreign affairs, defense, human and minority rights, external economic relations, and domestic economic relations.

Governance at the state union level was troubled from the outset, and conditions continued to worsen in 2004. At the heart of the problem is the fact that the institutions of the joint state are more concerned with harmonizing the two governments' separate policies than engaging in genuine policy making. Likewise, decision making at the state union level is entirely dependent on the decisions of the member states, and no decision even within the five areas under each state's prerogative can be made unless the two respective governments endorse it. Although the state union was established to facilitate a faster accession process for Serbia and Montenegro, its confederal manner of decision making has actually turned the state union into one of biggest obstacles to EU integration.

Accepting this reality, the European Council of Ministers decided at a meeting in September 2004 to endorse the so-called twin track arrangement to ensure the integration of Serbia and Montenegro with the EU. According to this solution, the Serbian and Montenegrin governments are not required to harmonize their trade and tariffs policies. Instead, both are free to pursue their own policies toward EU accession. The twin track approach removed the dilemma of confederal decision making by rendering the state union even more irrelevant.

In 2004, the functioning of the state union was deliberately obstructed by the Montenegrin government. Although the Belgrade agreement mandated direct elections for the joint parliamentary assembly in 2005, the ruling Montenegrin coalition announced in 2004 that it would not participate. In its view, these elections would strengthen the federal character of the state union. Instead, the Montenegrin government proposed to hold a referendum on independence in 2005. To further undermine the functioning of the joint state, the ruling majority in the Montenegrin Parliament also refused in November 2004 to pass the Law on Elections for the Assembly of the State Union.

The Army of the State Union of Serbia and Montenegro is fully exempt from democratic and parliamentary oversight, specifically in budgetary matters. After several years of requesting lump sums from the Ministry of Finance, the Ministry of Defense now submits a more detailed breakdown, which still falls short of specifying each particular item in the budget. The army is one of the most nontransparent and untouchable institutions in the country, and its constitutional obligations are virtually impossible to enforce. The military court was abolished by the 2003 constitutional reform of the state union, and legislation on the implementation of the Constitutional Charter mandated that military courts be closed by the end of 2003, with all cases transferred to civil courts. Yet the military courts have resisted dissolution and continued to exist throughout 2004.

The unclear status of the military court and prosecution system affected the investigation of two soldiers murdered in military barracks while on guard on October 5, 2004. The military commission announced after one day of investigating that one soldier had killed the other and then committed suicide, thus requesting no further investigation despite evidence suggesting the soldiers had been murdered by a third party. The Council of Ministers appointed a civil commission to reinvestigate the case, and after one month the commission found that a third party was "most likely involved." The case was closed when no clear suspects were identified and seems to have been dropped.

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Serbia continues to be governed under the 1990 Constitution adopted by Slobodan Milosevic. The Constitution established a semipresidential system with a directly elected president modeled after the French presidency under Charles de Gaulle. According to the Constitution, the Serbian president is the supreme commander of the Serbian armed forces (which currently do not exist), has the right to dismiss the Parliament, and enjoys various foreign policy prerogatives. As a result, presidents frequently take issue with the government in a number of policy matters, which more often than not undermines overall governance. (For example, shortly after the inauguration in 2004, the president set up the Citizen Assistance Center with the aim to hear and decide on people's appeals, a role not mandated in the Constitution.)

The Democratic Opposition of Serbia (DOS), which overthrew Milosevic in October 2000, made the electoral promise to adopt a new Constitution within one year. Changing Serbia's Constitution is a difficult process, requiring a two-thirds majority in the Parliament and a majority of the electorate to endorse the amendments in a referendum. Though the DOS coalition controlled two thirds of the Parliament in 2001, a new Constitution failed to be accepted, prompting the Kostunica government to put forward a draft of a new Constitution in 2004 in order to rebuild the constitutional consensus. The government's draft is more or less a replica of the 1990 Constitution. It preserves the existing government structure, maintains the country's low level of decentralization, and defines Serbia as the state of Serbs and ethnic minorities living within its territory. The reform of the Constitution remained deadlocked at the close of 2004.

The first post-Milosevic government (2001-2003), elected by over 50 percent of voters, was composed of 17 political parties but essentially led by Zoran Djindjic's Democratic Party (DS) After the murder of Premier Djindjic in March 2003, the new premier, Zoran Zivkovic, was unable to maintain harmony among the 17 parties, and the government foundered in October 2003 after Social Democracy (a small party with 10 seats in the Parliament) withdrew its support. The second post-Milosevic government, formed in March 2004, is a minority government composed of 4 parties. It is under constant threat of collapse because the Socialist Party of Serbia, still formally headed by Slobodan Milosevic, supports it from the opposition. To survive, the government made potentially damaging promises to the Socialist Party of Serbia, such as not extraditing alleged war criminals. As a direct result, the government has been under constant pressure from coalition partners G17 Plus and the Serbian Renewal Movement (SPO) to fulfill the country's obligations to the International Crime Tribunal for the Former Yugoslavia (ICTY) at The Hague.

In the beginning of 2004, Serbia showed increasing signs of state capture. For example, after failing to secure a place in government from Premier Vojislav Kostunica, Bogoljub Karic a wedding musician turned tycoon from the Milosevic era formed his own movement, Force of Serbia, to promote his business interests. The leading government parties Democratic Party of Serbia (DSS) and G17 Plus appear to be the most permeable to the influence of tycoons. The DSS put up businessman Zoran Drakulic as a candidate for the mayor of Belgrade in September 2004. Businessmen Vuk Hamovic and Vojin Lazarevic financed the DSS electoral campaign of the government-sponsored candidate Dragan Marsicanin and later managed to block the restructuring of large public enterprises (electricity and oil refining), keeping their monopolistic ties intact.

The government failed to resist the influence from management of two companies: C Market (a supermarket chain) and Knjaz Milos (a mineral water bottler), which pressured the government to stall foreign takeovers of these two large companies. (Both were partly privatized in the 1990s.) The government attempted to arrange the sale of Knjaz Milos to the preferred investor (Danone of France) and pressured the Security Exchange Commission, an independent body in charge of takeover bids, to reject the bid of another investor (FPP Balkan Ltd. of the Cayman Islands). Worth ¬55 million (US$66.5), the transaction was completed only when the government withdrew from the process. The commercial court, a body known for acceding to government influence, is stalling the takeover of C Market after the Slovenian supermarket chain Mercator expressed interest.

As a minority coalition, the Kostunica government is dependent on the Parliament and has to negotiate with deputies for every piece of legislation. This creates a reasonable balance between the government and the Parliament, as opposed to the 2001-2003 period, when both the Parliament and the government were controlled by the DS. The most acute problem is the absence of reform in the state security sector. The security service has functioned in the same manner since the beginning of Yugoslavia and was a hotbed for profiteering and organized crime during the Milosevic era. Its major purpose has been political. During the Milosevic regime, the service was used to penetrate the opposition, defame or eliminate political adversaries, and secure unhampered business for a newly created class of tycoons. In the mid-1990s, the service set up the Unit for Special Operation (informally called the Red Berets). The unit was composed of fighters and criminals who fought the Croat and Bosnian armies and plundered civilian homes in Croatia and Bosnia from 1991 to 1995. The unit protected the newly developed business interests of organized crime, chiefly smuggling oil, narcotics, and cigarettes.

The Milosevic government encouraged and tolerated this practice and ultimately transformed the unit into a death squad deployed against the regime's political adversaries. In 2000, Red Berets organized the killing of Ivan Stambolic, former president of Serbia, and in 1999 it attempted to kill Vuk Draskovic, oppositional leader from the 1990s. The unit is allegedly responsible for a number of other murders during the 1990s.

After the October 2000 regime change, evidence indicates that Red Beret leadership worked with the Zemun gang, which is allegedly linked to the killing of Djindjic, to continue lucrative, crime-related businesses. Although the state security service at this time was formally under the control of the first post-Milosevic government, attempts to reform the service failed. The government appointed a new head in 2001 but under pressure from the Red Berets removed him and appointed yet another head in 2002, whose deputy served as a mole for the Red Berets and the Zemun gang. In early 2003, the government appointed a special prosecutor for organized crime, and the Parliament passed related legislation. As a swift response, Prime Minister Djindjic was assassinated on March 12, 2003, an act allegedly organized by the Red Berets and the Zemun gang with assistance from members of the state security service and judiciary.

After the Djindjic assassination, the government disbanded the Red Berets and commenced Operation Saber to dismantle the Zemun gang. Yet the state security service remained more or less intact. After the Kostunica government took office in 2004, the service remained outside the scope of reforms. Kostunica's DSS monopolized both the Ministry of the Interior and the secret service. The latter is still being used as a political tool to defame opponents by leaking information from secret files to tabloid newspapers or to monitor elections. It is unclear whether the current head, Radomir Bulatovic, is powerless to reform the service or deliberately stalling reform. One critical step in the reform of the service would be to disclose secret files from the Communist era, which would expose the activities of numerous individuals still working in the service.

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Beginning in 2003, Montenegrin governance was threatened by an opposition boycott of the Parliament over the decision of public broadcaster TV Montenegro to end live broadcasts of legislative sessions. By October 2004, this strategy crumbled, and the largest oppositional party, the Socialist People Party, returned to the Parliament. Currently, the opposition is in disarray and appears to be fighting from within more than opposing the ruling coalition. The fate of the Milo Djukanovic government seems to hang entirely on the referendum on independence scheduled for 2006.

With the opposition out of the Parliament for most of 2004, the ruling coalition dominated and the Parliament worked without interruption. The judiciary in Montenegro also appears to be heavily influenced by the government, operating through informal ties among relatives and friends who are able to obstruct or facilitate the judicial process. The woman-trafficking affair, which began in 2002, offers evidence to support this statement.

As in Serbia, the state security service is unreformed in Montenegro. Deputies of the Democratic Party of Socialists (DPS), the dominant partner in the ruling coalition, have complained publicly that a faction of the secret service is out of control and functions on its own, and the issue was being debated in the Parliament by the end of 2004. While the DPS claimed the service should remain under the control of the government, the Social Democratic Party (SDP), the minor partner in the government, wanted to put the service under a parliamentary board's supervision. The debate ended suddenly without explanation.

Electoral Process: 

The DOS coalition that removed the Milosevic regime in October 2000 collapsed in November 2003. The largest party to come out of this coalition was the DS and after the presidential and local election in 2004, the Democratic Party emerged as the strongest party in Serbia. The current government is composed of the DSS, G17 Plus, the SPO, and New Serbia. All are regarded as democratic and committed to economic and legal reforms as well as European integration.

Two large parties typically considered part of the Milosevic regime are the Serbian Radical Party and the Socialist Party of Serbia. Both continue to embrace extreme ethnic nationalism and are substantively opposed to a market economy, democratic practices, and European integration. In addition, electoral lists for the 2003 campaigns of both parties were headed by two ICTY indictees Vojislav Seselj and Slobodan Milosevic.

In 2002 and 2003, Serbia failed three times to elect a president. After Milan Milutinovic's mandate expired in January 2003, the position was taken by the chairwoman of the Parliament, Natasa Micic, who extended her mandate for another year. The electoral threshold for the presidency was unreasonably high: Over 50 percent of the electorate must cast a ballot for the election to be valid. The Djindjic and Zivkovic governments (2001-2003), by deliberately maintaining the turnout requirement, made it next to impossible to elect a new president, thereby securing their governments' power. These successive electoral failures damaged public confidence in elections and political participation and engendered a strong sense of electoral fatigue among voters.

On February 24, 2004, the Parliament removed the turnout requirement, and a new president, Boris Tadic, was elected on June 28, 2004. Turnout was nearly 50 percent. Tadic's contender Tomislav Nikolic, from the Serbian Radical Party (formally headed by Vojislav Seselj, who is currently facing war crimes charges at The Hague), attempted to reimpose the issue of endangered Serbian national interests by insisting on the territorial integrity of Kosovo (implying that Kosovo is a part of Serbia) and refusing to cooperate with the ICTY. In contrast, Boris Tadic, now DS leader, pointed out the need for cooperation among political forces in Serbia and between Serbs and major international actors. Corruption was also a campaign issue. Tadic managed to distance himself from the corruption scandals that plagued the Democratic Party from 2001 to 2003, which is one of the major reasons for his win.


Table 1. Official Serbian Presidential Election Results, June 2004

Candidates First Round (June 13): In Votes First Round (June 13): In % Secound Round (June 28): In Votes Secound Round (June 28): In %
Boris Tadic (Democratic Party [DS]) 852,230 27.3 1,681,528 53.24
Tomislay Nikolic (Serbian Radical Party [SRS]) 939,695 30.1 1,434,068 45.40
Bogoljub Karic (Power of Serbia [PSS]) 602,342 19.3 - -
Dragan Marsicanin (Democratic Party of Serbia [DSS]) 413,935 13.3 - -
Ivica Dacic (Socialist Party of Serbia [SPS]) 112,405 3.6 - -
Total 3,117,339 93.6 3,115,596 98.64

Source: Serb Republic's electoral commission. (There were 15 candidates in total.)

Tadic beat Nikolic in the runoff by 8 percent. However, Tadic fared worse than Nikolic in the first round and needed the support of other democratic forces (notably Kostunica's DSS) to achieve the second-round victory. The final results indicate that pro-reform and pro-democracy support against the old regime parties is still strong, but the gap is narrowing (table 2). The most likely reason is voter dissatisfaction with the slowness or absence of change. At the same time, with the apathy that occurred after the regime change in October 2000, the electorate that supported the old regime parties seems to be growing active again.

Table 2. Electorate Supporting the Democratic Forces and the Old Regime Parties

Year Reform Forces Old Regime Ratio
September 2000 2.4 2.0 1.2
December 2000 2.4 1.2 2.0
September 2002 2.1 1.1 1.9
December 2003 2.0 1.4 1.4
June 2004 1.7 1.4 1.2

Columns 2 and 3 are rounded to millions of votes.


The 2000 parliamentary electoral law set the electoral threshold at 5 percent, which was a major reason no ethnic minority party was elected to the Parliament in the December 2003 elections. The new Parliament amended the law in February 2004 by scrapping the threshold for ethnic minorities. The Organization for Security and Cooperation in Europe (OSCE) stated in its report that the "presidential elections held in Republic of Serbia on June 13, 2004, were conducted largely in agreement with OSCE and Council of Europe's standards of democratic elections." Local elections were observed by Council of Europe and European Commission delegations to Serbia, who noted only that voting booths did not provide for complete voter privacy.
Legislation on the financing of political parties adopted by the Serbian Parliament in July 2003 became effective on January 1, 2004. The law enables political parties to tap budget resources for electoral campaigns and regular operations (the latter entitlement is 0.15 percent of the total budget of the Republic of Serbia, which in 2004 was approximately ¬8.7 billion) Each party receives an amount proportional to its parliamentary representation. The law aimed at limiting the influence of private donations on the work of political parties by encouraging members to pay smaller dues rather than having a few wealthy members sponsor the party. Individual members can contribute up to 10 times the average monthly wage in Serbia, whereas legal entities (such as businesses) can give up to 100 times the average wage (which in 2004 was approximately ¬200 (US$242). Donations from foreign countries, organizations, anonymous persons, public sector firms or firms possessed by the state, humanitarian organizations, religious communities, importers, exporters, and so on are forbidden.
* * *

Parliamentary elections in Montenegro were last held in 2002. The ruling coalition was composed of the DPS and the SDP, which secured 47.9 percent of the vote and 39 seats (out of 78). The coalition is led by Milo Djukanovic, former Communist apparatchik and leader of the DPS since 1989.

The Montenegrin party scene is divided into two camps. One is dominated by the DPS and the SDP, both of which seek to dismantle the State Union of Serbia and Montenegro and split off from Serbia. The second camp is led by the Socialist People Party, which does not support independence.

The issue of independence has dominated Montenegrin politics since 1998, and the majority of voters in favor see Milo Djukanovic and his party as the true representatives of Montenegrin sovereignty. According to the survey made by the Center for Democracy and Human Rights (CEDEM) in June 2004 (see chart), the two parties that make up the government still enjoy the largest support. The DPS is the most popular party in Montenegro with 23.3 percent, and its coalition partner holds 4 percent. This government coalition has attracted voters because it insists on the independence of Montenegro. According to another poll made by CEDEM in December 2004, 41.5 percent of the respondents are for independence, whereas 35.2 percent are against it (8.7 did not vote, and 14.6 percent are undecided).

Most of the parties that make up the second camp are pro-Serbian, favoring the survival of the state union and stronger relations between Serbia and Montenegro. This camp is dominated by the Socialist People Party, which splintered from the DPS in 1998 and holds 10.3 percent of voters. The Group for Changes (GZP) a nongovernmental organization (NGO) but potentially a significant actor in the next elections holds 10.1 percent of voters. Currently, the GZP belongs to no camp but would most likely join a coalition with the DPS in the future. Abstaining and undecided voters represent 19.3 percent and 9.9 percent, respectively. These large percentages probably reflect increasing public disappointment with politics and politicians in Montenegro.

Civil Society: 

In the 1990s, various NGOs in Serbia were treated particularly harshly by the Milosevic government. Those involved in public policy were declared menaces to society, accused of terrorist activity, and harassed by the police. Several NGOs (Otpor, G17 Plus, the Center for Free Elections and Democracy [CESiD] and many others) played a significant role in overthrowing the Milosevic regime in 2000. Although there is no official record on the number of NGOs in Serbia, the Belgrade-based Center for the Development of the Nonprofit Sector estimates the total at around 25,000. Only about 3,000 are considered active, with approximately half focused on civic activism. Most NGOs are located in Belgrade (35 percent), Vojvodina (25 percent), south Serbia (10 percent), and central Serbia (8 percent). The most dominant NGOs are those that engage in a range of activities (12 percent) or social problems (12 percent), education and research (12 percent), humanitarian work (9 percent), the environment (9 percent), and local development (8 percent).

NGOs are still regulated by laws from the socialist era such as the Law on Civic Associations of the Socialist Federative Republic of Yugoslavia from 1990 and the Law on Social and Civic Association from 1982. One of the main weaknesses of such laws are the provisions that open the registration process to political influence by indirectly giving power to the executive administration and police to accept or reject applications from NGOs. NGO registration is obligatory, and organizations must be founded by a minimum of 10 persons, which is too demanding and runs contrary to the spirit of Article 11 of the 1950 European Convention of Human Rights. To remedy the situation, the Center for the Development of the Nonprofit Sector drafted the Law on Associations in 2002. The Ministries of Justice and Local Self-Government failed to forward the draft to the Parliament in 2002 and 2003. The Kostunica government appeared to have completely forgotten this legislation in 2004.

NGOs are forbidden to engage in economic activity for self-support. The Serbian Law on Income Tax (2001) does not provide tax exemptions for individual grants to NGOs. The Serbian Law on Corporate Tax (2001) allows corporations to deduct up to 3.5 percent of income for "medical, educational, scientific, humanitarian, religious, environmental protection, and sports purposes." (The same solution is provided in Montenegro's Law on Corporate Tax. In addition, Montenegrins may deduct up to 3 percent of their taxable income for the same purposes.) Corporations in Serbia may deduct 1.5 percent for cultural purposes. The law does not list other charitable options, such as human rights advancement, consumer protection, support for democratic development and free market institutions, and anticorruption efforts, because corporations are not encouraged to support NGOs engaged in areas critical to democratic development.

Cooperation between the government and the civic sector began to develop in 2001-2002, when NGOs and think tanks were included in formulating new economic policies, reforming the system of public administration, and commenting on other policy priorities in the post-Milosevic period. In 2003, the direct influence of NGOs and think tanks on the government shrank, as the political consensus among those who ousted Milosevic began to collapse. This trend continued in 2004, with cooperation seeming to vanish completely after Kostunica's government took power in March.

The inauguration of the Kostunica government also encouraged some unreformed state institutions to revert to the harassment of individuals and groups that existed prior to 2000. For example, in March 2004 the Helsinki Committee for Human Rights released a book by journalist Vladan Vlajkovic on the abuse of power in the military. The military court confiscated the complete printing of the book, detained Vlajkovic, and prepared to try him on charges that the book disclosed top state and military secrets. Despite the provocative title, Military Secret, the book was merely a content analysis of accessible public information about the army's involvement in politics and its harassment of the oppositional leaders during the 1990s. Vlajkovic was later released.

One rather unusual form of civic activism has been the self-organization of individuals whose property was confiscated by the Communist regime in 1945. The Milosevic regime, which in some ways was an extension of the Communist regime, had no intention of rectifying this injustice. Surprisingly, though, none of the post-Milosevic governments has mustered the political will to take on the issue, either. Civil society has thus stepped in to try to fill the void. The Restitution Network and the People Initiative collected 15,000 signatures to put up the Law on Restitution and the draft law Against Temporary Disposal of Confiscated Property in 1945 for parliamentary debate. The Serbian Parliament, however, refused to consider the proposal. After appealing to the Constitutional Court and exhausting all legal means in Serbia, the two NGOs pressed charges against the State Union of Serbia and Montenegro with the European Court of Human Rights. The Serbian government has promised several times since 2001 to pass a denationalization act but had failed to do so by the end of 2004.

The most visible NGOs in Serbia deal with public policy, political and electoral processes, and protection of human and ethnic minority rights. One of the most active NGOs in Serbia is CESiD, which focuses on election monitoring and was instrumental in ensuring the victory of the opposition against the Milosevic regime in September 2000.

The most active groups tend to be those that receive funds from abroad and thus have sufficient resources to support their activities. The government also sponsors NGOs from the budget. The bulk of government funds goes to the Serbian Academy of Science, religious communities, and sports organizations, which leaves only a small pool for civic activism. A rare example of an NGO financed with private funds from domestic donors is Nasa Srbija, which provides for children who lost their parents in the 1991-1999 wars. Another example is the Karic Foundation, a humanitarian group sponsored by the Karic brothers, whose wealth is estimated at over US$1 billion.

Most current foreign donors are EU- and U.S.-sponsored organizations and foundations that fund humanitarian and health work and, to a lesser degree, democracy development, human rights, media, conflict resolution, and gender equality programs. Yet the decline in these resources is beginning to affect the work of NGOs. CESiD, for example, observed the June 2004 presidential elections but because of a lack of resources could not observe local elections in September. The decline in resources will make some NGOs change their status and activities, and others will have to shut down. For instance, CESiD started organizing roundtables (as a cheaper form of activism) where citizens could meet their local representatives in order to be better informed for local elections. European Movement in Serbia was campaigning actively during the local elections under the slogan "Think globally, act locally." Several NGOs campaigned with the slogan "Get out and vote!"

* * *

Whereas the Djindjic government paid lip service to trade unions and dismissed workers, the Kostunica government has pandered to the largest trade unions: Nezavisnost (250,000 members), the Alliance of Independent Trade Unions (588,000 members), and the Association of Free and Independent Trade Unions (60,000 members). In his inaugural speech on March 3, 2000, Premier Kostunica stated that the government's aim was to restructure public enterprises without layoffs. In September, the government announced amendments to the existing labor legislation (adopted in 2001) that would make conditions for layoffs more difficult and enable workers to participate in company profit sharing.

Although both trade unions attract a great number of workers, most of the social and labor protests in 2004 were not organized by either one. The social protests in 2004 were mainly fragmented, taking place in smaller companies facing bankruptcy and privatization. The largest labor protest was organized by the miners of the Bor mine, who held the highway from Belgrade to Nis for 24 hours under a blockade, fearing the government might shut down the mine. The government quickly gave in and endorsed a generous financial package to appease protesters.

Several larger protests in 2004 were a consequence of unresolved restructuring of firms privatized in 2002 and 2003. The new owners attempted illegally to enlarge their share in the total ownership stock, refused to fulfill obligations from the contract, or dismissed workers against contract provisions. This caused worker protests, which in turn prompted the new owners to deploy private guards for protection. The guards beat workers, causing the Alliance of Independent Trade Unions to announce that it would organize armed squads to fight back.

* * *

The public in Montenegro is receptive to NGO activism. By the end of 2002, the total number of NGOs rose to almost 2,000 in Montenegro. NGOs are registered with the Registry on NGOs, a body established by the 1999 Law on Nongovernmental Organizations. It is estimated that about 10 percent of registered NGOs are active. Approximately 500 people are officially employed by NGOs. Most NGOs in Montenegro are involved in culture, art, education, socio-humanitarian activism, ecological matters, and the development of civil society and human rights. About 60 percent of NGOs are located in the wider region of Podgorica, Montenegro's capital.

Most Montenegrin NGOs are financially dependent on foreign donors. Domestic support is minimal, amounting to 0.08 percent of the Montenegrin gross domestic product in 2002. Article 26 of the 1999 Law on Nongovernmental Organizations obliged the government of Montenegro to financially support the NGO sector. In 2000-2002, support was between ¬300,000 and ¬350,000 (US$422,700) a year. In 2001, the government failed to execute this budget provision; in 2002, it simply transferred the amount to political parties for their electoral campaigns.

The Montenegrin civil sector has increasing influence on public policy and state administration. In 2004, for example, a network of NGOs reacted to the adoption of conflict of interest legislation. Environmental NGOs conducted a public campaign calling for the law to allow incumbents to keep their positions in public enterprises (Article 15). Bowing to public demand fomented by NGOs, President Filip Vujanovic refused to sign the bill and sent it back to the Parliament. The Parliament passed it on the second reading and declared it a law in June, but the decision marks the first time in Montenegro that a politician returned a bill at the urging of NGOs.

In mid-2004, the government of Montenegro signed a contract with the government of the Serb Republic of Bosnia-Herzegovina to dam the Tara River in order to build the Buk-Bijela hydroelectric plant. NGOs organized a petition to block the law on building the plant and presented signatures to the Parliament. After several parliamentary parties supported the petition, the Montenegrin Parliament agreed to put the project on hold and invited international experts to conduct a special feasibility study and environmental impact assessment for the proposed plant. The final decision on the hydroelectric plant will be taken sometime in 2005. Such tangible policy interventions by NGO lobbying could not have occurred in Serbia in 2004.

Less successful were several Albanian NGOs from the municipality of Rozaje that launched an initiative in 2004 to advocate the creation of subnational regions. Constitutionally, Montenegro has no regions, whereas Serbia has 29. According to the initiative, Montenegro would be divided into 19 regions, of which 3 would be Albanian. The claim was backed by the so-called Albanian National Army in Montenegro, which threatened to blow up important buildings in Podgorica if the government failed to support the plan. Although NGOs claimed that the proposed plan followed European trends of regionalization, practically all political parties (including the two Albanian parties in Montenegro) rebuffed the demand, after which the initiative died off.

Independent Media: 

The Milosevic government was known for openly harassing the media. In 1998, the Serbian Parliament passed the Law on Information, which introduced draconian fines for media that criticized the government. Although this law was scrapped after the Djindjic government took office in January 2001, the harassment of media did not end. The Djindjic government formed the Bureau for Information, headed by Vladimir Popovic Beba, which pressured media to adhere to the government's line. The bureau's operations climaxed during the state of emergency in March and April 2003, when Beba and the minister of culture held closed meetings with the editors of the most influential print and electronic media, instructing them how to cover the events surrounding Djindjic's assassination. Unfortunately, the harassment persisted even after the state of emergency was lifted in 2003.

When the new government took office in March 2004, it put an end to making veiled threats and placing pressure (political and other forms) on editors of independent, privately owned media. The cessation of harassment the most significant change for independent media in 2004 affected most of Serbia's media, the majority of which are privately owned. The government has maintained state influence over public radio and television and appointed Aleksandar Tijanic as general manager of Radio Televizija Srbije (RTS), the national broadcaster covering all of Serbia. Tijanic minister of information under the Milosevic government in 1996, Kostunica's adviser in 2001-2003, and mastermind of the Dragan Marsicanin (DSS) campaign for the June 2004 presidential elections has worked to keep the public broadcaster's profile relatively unbiased. His leadership has advanced the quality of broadcasting in terms of both production values and content. Yet the government refuses to allow RTS to achieve financial independence, keeping it under budget financing that amounted to ¬45 million in 2003 and approximately ¬33 million (US$39.8 million) in 2004.

The media sphere in Serbia is regulated by the following laws: Law on Broadcasting, Law on Public Informing (not to be confused with the previously mentioned Law on Accessibility of Public Information), and Law on Telecommunications. The Law on Public Informing, adopted on April 22, 2003, specifies a new set of protections for freedom of speech and the media. The only restrictions allowed are on broadcasts or publications that call for the violent destruction of the constitutional order, endanger the territorial integrity of the country, propagate war or hate speech, or advocate any type of social discrimination. The law meets international standards for the protection of media freedom.

The 2002 Law on Broadcasting provided for the Broadcasting Agency, a body tasked with issuing licenses and monitoring the content of media outlets, although license issuance has not yet been implemented. The agency has a three-member council as its supreme body. Owing to election irregularities in 2003, two council members left and had not yet been replaced by the end of 2004. Although its major task is the issuance of broadcasting licenses, the council had issued no licenses by the end of 2004. It is currently estimated that approximately 1,300 electronic media outlets are operating without licenses. Among these, RTS 1, RTS 2, BK TV, TV Pink, and TV B92 anticipate receiving licenses to broadcast nationwide. Many see the council's inactivity as the state's strategy for controlling broadcast media, which have a larger public impact than print media.

In November 2004, the Serbian Parliament adopted the Law on Accessibility of Public Information. State officials are now required to disclose any information of public relevance if requested by citizens or media, but it remains unclear what exactly the public has the right to know and who will define what information is publicly relevant. The enforcement of this act will be further complicated by the fact that Serbia has an outdated and relatively inapplicable system that allows the government to arbitrarily decide which information is considered classified. The Law on Accessibility of Public Information specifies five cases where access to information can be denied. The vaguest provision states that the right to information can be denied "if its disclosure weakens the ability of the state to control the economy or makes it difficult for the state to accomplish justified economic interests."

Other indicators suggest that allowing free access to information is government lip service more than a committed effort to establish democratic practice. The Parliament elected Rodoljub Sabic, a politician from the Social Democratic Party (SDP) as the commissioner tasked to decide on the disclosure of information issue. A number of NGOs protested this appointment, claiming that a politician should not run such an office because he can easily be influenced by the government and that the appointment significantly lowers the state's credibility on the access to information issue. The commissioner, on the other hand, complained that by the end of 2004, the government had done nothing to help him establish the office. There was no location where citizens could request information or be received, and the commissioner had to pay for the position's official seal out of his own pocket.

Like the Djindjic and Zivkovic governments before it, the Kostunica government has not yet resolved outstanding legal cases from the Milosevic era related to the killings of journalists. Slavko Curuvija, owner of The European and founding father of tabloid journalism in Serbia, was killed in April 1999. According to the secret report titled Curan, which was leaked to the press in 2001, the secret service followed Curuvija 16 hours prior to the execution. The secret police were suspected of having organized the murder, but the post-Milosevic police appear to be holding up the investigation. Something similar is happening with the case of Milan Pantic, a journalist from the city of Jagodina who investigated organized crime and corruption at the local level. He was gunned down on June 11, 2001. The police managed to compose a composite drawing of the killer but failed to solve the case.

The 2004 report of the Independent Association of Serbian Journalists stated that around 300 journalists face charges before domestic courts, mainly for libel and inflicting emotional distress. The bulk of the charges were brought by individuals, not by the state prosecution or ministers, as had been the practice under Milosevic. The journalists found guilty were fined ¬1,300-¬2,600 (US$1,570-US$3,141) The daily Politika was fined ¬4,300 (US$ 5,197) for defaming Aleksandar Tijanic during the state of emergency in 2003 when Tijanic, current general manager of RTS, filed suit against the paper.

The fact that Serbian journalists are frequently in court is indicative of the poor quality of the press, which more often than not deals with the private lives of public personalities rather than public policy issues. This tendency was corroborated in a study by a team of lawyers employed by Media Center, an organization set up by the OSCE in 1994 to support free media. Released in 2004, the study was based on a two-month content analysis of daily newspapers and tabloids. Among 172 surveyed articles, 55 percent contained libel, 6 percent insult, and 10 percent other misdemeanors. The study concluded that the high proportion of libel articles were a consequence of unprofessional and careless attitudes among journalists and editors.

This type of "journalism" has become the norm in tabloids, whose popularity has skyrocketed in recent years and further undermined journalistic professionalism in Serbia. The most popular among them is the daily Kurir, which prints around 450,000 copies, now beating the former lead daily, Vecernje Novosti, with its circulation of 250,000 copies. Dailies such as Kurir, Nacional (printing 45,000 a day), Balkan, and Glas Javnosti base their popularity on cheap prices, bombastic headings, and fabricated stories.

Tabloids are increasingly engaged in promoting hate speech to boost their popularity and sell more copies. For example, in December 2004 the tabloid Nacional ran an article on the Croat ethnic origins of public persons. The article defamed Milko Stimac (president of the Security Exchange Commission), Aleksandar Sostar (president of the national water polo team), Ivana Dulic (minister of agriculture in the current government), and Branka Prpa (head of the National Historic Archives) by referring to their Croatian ethnic origin. The message was clear, although not stated explicitly: Why do we need Croats in such important positions? Although hate speech is subject to prosecution according to the 2003 Law on Public Informing (Article 17), the government and public prosecutor tolerate this practice.

The Law on Broadcasting forbids the involvement of one media outlet owner in the ownership structure of another outlet. BK TV and TV Pink are the two largest private TV channels and have a tremendous impact on the Serbian public. BK TV is owned by Bogoljub Karic, and TV Pink is owned by Zeljko Mitrovic. Both gained fabulous wealth as media barons under the patronage of the Milosevic regime. The most dominant foreign owner is Westdeutsche Allgemeine Zeitung (WAZ) of Germany. WAZ seeks to enlarge its share in Serbian newspaper production and already has a stake in the daily Politika (printing around 100,000 copies a day), 58 percent of the daily Dnevnik, and 50 percent of the Montenegrin daily Vijesti. In 2004, WAZ expressed interest in buying out the majority stake in the daily Vecernje Novosti.

* * *

TV Montenegro, a public broadcaster that covers the whole of Montenegro, is a public enterprise in the republic's hands. The state finances the work of RTV CG from the budget. For 2004, it allocated ¬1.6 million (US$1.93 million), whereas for 2005 it is planning to provide ¬1.3 million (US$1.57 million). RTV CG clearly supports the government's line on independence and most of the government's policies as well. Yet the TV broadcaster has recently opened up to other views and the opposition after the 2003 scandal, when the opposition decrying RTV CG as biased for stopping its live broadcasts of parliamentary sessions left the Parliament.

According to the Law on Radio and TV of Montenegro passed in 2002, RTV CG has set up the Council of TV Montenegro, a body made up of 10 independent media experts who decide on the program content of the public broadcaster. During their mandate, these media experts are banned from performing any other public duty and from working for or holding an interest in the public broadcaster. Members of the council are elected by the Montenegrin Parliament but are nominated by various groups, including the University of Montenegro, the Montenegrin Academy of Science, theaters, museums, the Institute for Media, professional journalists associations, and NGOs.

Montenegro also has local TV public channels, but they receive little in the way of financial support from local governments. For example, the municipality of Niksic is planning no financial support for TV Niksic in 2005 (although the municipal budget projection for that year will be increased to ¬400,000 [US$483,261]), claiming there are other things that need to be financed. Local radio stations are supported by the Montenegrin Broadcasting Agency. But financial help from the agency amounts to some ¬40,000 (US$48,312) on average per month for each of 13 public local radio stations.

Montenegro has a variety of printed dailies serving a population of more than 600,000. The most popular newspapers are Pobjeda, Vijesti, and Dan. Financed by the Parliament, Pobjeda supports the Djukanovic government. Dan backs the oppositional Socialist People Party. Openly biased reporting lessens the quality of print media. Vijesti, an independent newspaper owned by WAZ, appears to be the only daily that takes an impartial approach to covering the news. Although Montenegro itself prints no tabloids, a greater number of them are coming from Serbia to be sold in Montenegro, which predictably lowers the quality of the Montenegro print media space.

Besides two public channels controlled by the state, Montenegro has few private TV outlets. TV In runs mostly entertainment shows but has some political programming that is considered to be supportive of the Djukanovic party. TV Montena is the most independent TV broadcaster, whereas TV Elmag appears to be a carbon copy of the Serbian TV Pink, engaged in the promotion of popular culture with poor political coverage.

The most significant media event of 2004 in Montenegro took place on May 27, 2004, when Dusko Jovanovic, chief and editor of the daily Dan, was gunned down. The police immediately began an investigation, offering ¬1 million (US$1.2 million) for information on the murder. The minister of the interior promised he would step down if the killers were not caught (but he failed to specify a deadline). Many believe that the investigation was conducted in a hurry and that the person detained in 2004 and sentenced is not directly responsible for the crime. Public opinion seems to be that the person arrested for the murder of Jovanovic has no clear motive.

Dan, one of the most popular dailies in Montenegro, was known for its sharp criticism of the government and the secret service. The courts consider the case solved because someone was sentenced. The public disagrees and considers the case unresolved. The Montenegrin opposition immediately accused the government and state security service of having organized the killing. Another version says that Jovanovic was killed by a secret service faction that is now under no one's control. Although the government denied involvement, the fact that the killing was not solved six months after it took place created an atmosphere of fear among journalists and the belief that the practice of free journalism in Montenegro can be highly dangerous.

Local Democratic Governance: 

Serbia is a centralized country. The chief aim of the new Law on Local Governance, adopted in 2002, is to decentralize Serbia's governing system by way of harmonizing it with the 1985 European Charter of Local Self-Government. The new law increased the number of prerogatives of local government from 13 to 35 but did not provide substantial fiscal autonomy for municipalities. The law established three types of municipality funds: original, loaned, and additional.

Serbia has 29 regions and 169 municipalities. Regions are purely administrative units with no governance prerogatives whatsoever. Judging by the various drafts of the Serbian Constitution that have been released so far, the upcoming constitutional reform in Serbia will almost certainly preserve the substance of the country's current administrative structure.

The Constitution and legislation grant Vojvodina, in the north of Serbia, its own parliament and executive council but no courts. It can decide on a number of matters (education and culture, for instance) but has no authority to pursue economic, fiscal, trade, monetary, social, or privatization policy independent from Belgrade. Neither Vojvodina nor municipalities are entitled to autonomously collect taxes, tap financial markets, issue municipal bonds, possess property, or provide incentives for investments.

Since 1999, Kosovo, a disputed area to the south of Serbia, has been an international protectorate of the United Nations and NATO, thereby revoking any of Serbia's executive prerogatives over the territory.

The absence of more substantial fiscal autonomy leaves municipalities dependent on the state budget and the government. Local legislation is not entirely harmonized with the 1985 European Charter of Local Self-Government where it states: "Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers." Cities and municipalities are allowed to share in revenues collected from product and service sales tax, income tax on self-owned businesses, leasing, real estate, and games of lottery winnings in the amount of 8 percent (if these taxes are collected in their administrative territory). Municipalities may levy fees from citizens for the use of public assets, such as forests and forest land, grazing and agricultural land, and the construction of roads. Yet these revenues are paid into the state budget first and then transferred to municipalities. No municipality is allowed to manage its own budget account. This lack of fiscal autonomy prevents municipalities from expanding services (for street repairs and public lighting, for example) and enhancing existing ones. The 2002 local self-governance reform also failed to return property that the state had taken from municipalities in 1996. In its sixth report released in December 2004, the Council of Europe states that the system of local self-governance is in need of comprehensive reform.

Under the old legislation, the state had the right to dismiss the municipal assembly and introduce stopgap measures if it is found that local self-government bodies "severely violate common interests." For example, in Novi Pazar, the municipal assembly was dismissed in 1996 and the town placed under the state's coercive administration until 2000. The 2002 law postulated only two reasons to justify the dismissal of the municipal assembly and introduction of forced administration: if the municipality "fails to convene for over three months" or "fails to adopt the charter or budget within the period specified by law."

Legislation for local elections adopted in 2003 imposes unreasonably high obstacles to local electoral processes. One of the greatest is the signature collection requirement for mayoral candidates in large cities, which is set at 3 percent of the city's electorate. In the case of Belgrade, a city of 1.4 million eligible voters, individuals are required to collect 42,000 signatures to be considered valid candidates. (By extreme contrast, candidates for Serbian president are valid with only 10,000 signatures, or about 0.15 percent of the country's total electorate of 6.5 million.) The requirement not only proved time-consuming, but prompted some candidates to falsify signatures in Novi Sad and Belgrade, which in Novi Sad led to the disqualification of some candidates in the 2004 local elections.

Local elections in Serbia were held on September 19 and October 3, 2004. The DS is currently the strongest party in Serbia, followed by the Serbian Radical Party. The democratic candidate beat the radical candidate in Belgrade (50.3 percent to 48.3 percent) but lost to the radical candidate in Novi Sad (49.1 percent to 49.9 percent). The Democratic Party and coalition parties won presidencies in 25 municipalities, while the Serbian Radical Party won in 19 (table 3). Local elections were not held in Kosovo, which is exempt from the judicial and executive sovereignty of the Serbian government.


Table 3. Number of Mayors or Municipality Presidents Won at Local Elections in Serbia, September and October 2004

Political Party Number of Mayors or Municipality Presidents
Group of Independent Citizens 23
Democratic Party (DS)  22
Democratic Party in coalitions with Hungarian parties 3
Serbian Radical Party (SRS) 19
Socialist Party of Serbia (SPS)  12
Democratic Party of Serbia (DSS)  10
Other parties  9
G17 Plus 5
Coalition of Smaller Parties  5
New Serbia 5
Socialist Party of Serbia in coalitions 4
Force of Serbia (PSS) 3


The Assembly of Vojvodina also amended its electoral rules shortly before the September 19 local elections, changing the electoral system and number of electoral units. According to the new rules, 60 deputies are elected in a two-round system, with another 60 elected by a proportional system. The whole of Vojvodina has been redesigned into one single electoral unit with a 5 percent electoral threshold or about 30,000 votes which does not apply to ethnic minority parties. (Ethnic minorities must pass a so-called natural threshold of 1.7 percent, or between 12,000 and 18,000 votes.) Also, ethnic minority parties need collect only about 3,000 signatures to validate their candidates, which is half of what other parties are required to collect.

Although the Serbian Radical Party won the greatest number of seats in the Assembly of Vojvodina, the majority went to the new governing coalition comprising the Democratic Party, the Alliance of Vojvodina Hungarians, the Coalition for Vojvodina, and Bogoljub Karic's Force of Serbia (Table 4).


Table 4. Selected Results for the Assembly of Vojvodina after the September 2004 Provincial Election

Name of the Party Number of Seats
Democratic Party (DS) 34
Alliance of Vojvodina Hungarians 11
Coalition for Vojvodina 7
Force of Serbia (PSS) 7
Serbian Radical Party (SRS)  36
Socialist Party of Serbia (SPS) 7
Democratic Party of Serbia (DSS)  7
G17 Plus  2


According to the 2002 legislation, local government bodies are the municipal assembly, president of the municipality and municipal council, and the city assembly. The asembly is elected for a four-year term and should have between 19 and 75 deputies. The asembly must convene at least once every three months. Should the assembly fail to convene during that period, the government of the Republic of Serbia has the right to dismiss it.

The Office of the President of the Municipality is a newly created executive institution that is directly elected for a four-year term. Cities with legal status (there are only four of them) have mayors. Other cities are municipalities and have presidents of municipalities. Municipal presidents share their executive prerogatives "to directly implement and ensure the implementation of decisions and other by-laws of the municipal assembly" with the municipal council, which is elected by the local assembly. As can be seen, the new local legislation established a dual executive system similar to that found at the state level. Municipal councils are intended to assist presidents in their work. Yet mayors have no influence over the selection or removal of members of the council. The principle of a dual executive has already created obstacles in the functioning of local bodies where assembly deputies and the president do not come from the same party. In the city of Nis, for example, the mayor, who ran as an independent candidate, resisted cooperating with the assembly-appointed council; predictably, this stalled local governance.

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Montenegro is divided into 21 municipalities, with no regions or provinces. A recent demand for the regionalization of Montenegro came from several Albanian NGOs that proposed the creation of 19 regions, 3 of which would contain Albanian majorities. The demand was quickly rebuffed by the government and all political parties, including the Albanian parties.

New legislation on local self-governance in Montenegro was adopted in summer 2003. The law gives more substantial autonomy to local administration, allowing local municipalities to possess property, collect revenues, and decide how to expend them. Each municipality directly elects the president, who forms the cabinet and pursues municipal policy.

Local governance is not always stable thanks to party infighting. For example, in the municipalities of Budva and Niksic, the two mayors (both from the Liberal Alliance Party) resigned in 2004, most likely because of internal strife in the party. The Liberal Alliance Party was unable to put forth new candidates for the mayoral positions, which have been temporarily filled by coalition partner Socialist People Party, although this move runs counter to the coalition agreement signed before the previous local elections.

Governance in Budva and Niksic has experienced another obstacle in the form of state government interference. The government claimed that the municipalities had not fulfilled their financial obligations to the national administration and blocked their bank accounts with Montenegro Banka, thus making it impossible for the local governments to function and pay salaries to local officials. (The Montenegrin state has the majority stake in Montenegro Banka.)

In August 2004, local elections were held in the municipalities of Tivat, Zabljak, and Herceg Novi. The DPS won the assembly and mayors of Zabljak and Tivat and the assembly in Herceg Novi, whereas the Socialist People Party, the largest oppositional party, won the mayor of Herceg Novi. Interestingly, the chief issues in the Montenegrin local elections were national in nature. Independence and corruption dominated public discourse at all levels. These themes attracted top party leaders, who more than ever before were engaged in the local elections. The overall results from these elections suggest a fairly equal division of the electorate between the two dominant political camps in Montenegro. Local assemblies and their executive councils were formed shortly after the election without obstacles. According to international observers, the local elections were conducted in line with European electoral standards.

Judicial Framework and Independence: 

The only court at the state union level is the Court of Serbia and Montenegro, made up of eight judges (four from each member state) who are appointed for six-year terms. The court has administrative, constitutional, and first-instance prerogatives, and its rulings are obligatory without the right to appeal. Article 46 of the Constitutional Charter is explicit in stating that the court settles disputes between member states and decides whether the constitutions and laws of member states agree with the charter and laws adopted by the union-level assembly. Therefore, the court is in charge of ensuring the implementation of direct elections as obliged by the 2003 Constitutional Charter, something the Montenegrin government and the president of Serbia and Montenegro, Svetozar Marovic, have announced they will not call for. The court was constituted by the end of 2004 (after a one-year delay), but it is equipped with neither administrative staff nor office space in Podgorica, where it is supposed to be located.

The judicial system of Serbia consists of communal, county, and commercial courts, the Serbian Supreme Court, and the Serbian Constitutional Court. The province of Vojvodina has no judicial system. Kosovo has a judicial system entirely detached from the Republic of Serbia. Serbian courts are in charge of criminal, civil, and administrative cases, and the system of commercial courts handles trade and economic disputes as well as bankruptcy and privatization deals.

In an attempt to strengthen the independence of judges and courts, the 2001 judicial reform in Serbia established two new bodies, the High Council of the Judiciary and the Grand Personal Council. The reform also introduced a court of appeals and an administrative court, which are to be set up by 2007.

The judiciary appears to be operating more independently than in the 1990s and the 2001-2003 period, with noticeably less pressure from the government. Yet it is still rather slow, inefficient, and overloaded. For example, the average time required to shut down a business, a procedure handled by commercial courts, is 7.2 years. Judges require training to keep up with recent European judiciary practices, especially with regard to the protection of human and ethnic rights. Although judges earn a higher wage than the average citizen (average wage at the end of 2004 was around ¬200 per month [US$241]), they are underpaid, which opens the door for arbitrary decision making, abuses, and corruption.

After the 2000 regime change, Serbian authorities significantly modified the policy toward ethnic minorities. The federal Parliament adopted the Law on Protection of Rights and Freedoms of Ethnic Minorities (aka the Law on Minorities) in February 2002. The act defines ethnic minorities as "any group of citizens that is representative in number, has strong and long-lasting ties with [Serbia and Montenegro], and has some peculiarities such as language, culture, national or ethnic belonging, origin, or confession by which it differs from the majority of citizens and whose members care to jointly maintain their identity, culture, tradition, language, and religion."

The most important institution introduced by the Law on Minorities is the Federal Council for National Minorities, which, along with a second tier of national councils, represents ethnic minorities before the state administration in the areas of education, language, and culture. Primarily advisory in nature, the council has little authority to formulate or pursue policies that are important to minority cultures. The Serbian government has set up the National Council for Ethnic Minorities, which was largely inactive in 2004. By the end of 2004, 11 national councils had been established.

Despite the stated goal to develop institutional safeguards for ethnic minorities, the government has not always ensured real protection for them. The local branch of the Helsinki Committee for Human Rights published a report in 2004 on human and ethnic minority rights under the title In Conflict with Ethnic Identity. The committee criticized the government for neglecting the rights of ethnic minorities in 2003 and 2004. In a separate report, the Helsinki Committee for Human Rights referred to 294 ethnic conflicts since the beginning of 2004, most occurring in the province of Vojvodina. Some cases included physical force, but most were verbal mistreatment (hate speech and insults) as well as destruction of the tombs and graves of members of ethnic minorities. As a result, one Hungarian family from Subotica left Serbia and asked for asylum in Hungary. (Vojvodina is a multicultural province comprising about 40 ethnic groups. The most dominant are Serbs at 1.3 million, while the largest ethnic minority is Hungarian with 14.28 percent, or approximately 300,000.)

Late in 2004, when the government had delayed reacting for several months to the ethnic conflicts in Vojvodina, the issue became internationalized. The Hungarian government pushed the EU Parliament to consider the issue, and the Parliament as well as the Parliamentary Assembly of the Council of Europe officially rebuffed the Serbian government for failing to protect ethnic rights, notably those of Hungarians. Half a year after the first events took place, the Serbian police claim to have resolved around 70 cases related to the conflicts.

However, the Serbian police failed to act on March 17, 2004, when a violent interethnic conflict between Kosovar Albanians and Serbs spilled over into Serbia. In response to the violent events in Kosovo which erupted when rumor spread that three Albanian children who drowned in the Ibar River allegedly had been chased by a group of Serbs with a dog several thousand Serbs took to the streets, plundered and demolished the Belgrade mosque, and burned down the mosque in the city of Nis. Some observers believe the police may have deliberately tolerated the demolition by not reacting until a couple of hours after the mosques had been destroyed. The Belgrade police had not take up the investigation on this matter by the end of 2004.

Roma are the most disadvantaged and poorest ethnic group in Serbian society and are typically discriminated against in education, employment, and many other areas. Roma are also frequently forbidden access to public places. In 2004, the Serbian Supreme Court reconfirmed its 2000 decision against racial and ethnic discrimination. The decision embraces a testing method used to prove the existence of ethnic discrimination by the Humanitarian Law Center in 2000. The center had sent 12 persons (6 Roma, 6 non-Roma) to the swimming pool in Krsmanovaca in the city of Sabac. The doorkeeper banned 3 Roma from entering the pool because of their ethnicity. Referring to Article 26 of the International Pact of Civic and Political Freedoms, the Supreme Court upheld that the management of the swimming pool must issue a public apology, which set a precedent for future similar cases.

The judicial reform that began in 2001 was continued in 2004. These efforts include reducing the role of the Parliament and government in selecting, appointing, and removing judges by giving more prerogatives to the two new bodies the Grand Personal Council and the High Council of the Judiciary. The former is an independent and expert body that nominates judges and court presidents, and the latter is tasked with ascertaining grounds for their removal. The formal appointment and removal of judges and court presidents is reserved for the Serbian Parliament.

In 2004, the Kostunica government proposed amendments to several other laws pertaining to the judiciary. The Parliament abolished Article 15b of the Law on the Fight Against Organized Crime, which implied that preventive police detention could last up to 24 hours without a court warrant. The amendment to the penal code states that for offenses foreseeing a punishment of 40 years' imprisonment, detention can last for one to four years. If suspects are not found guilty within four years, they are to be released. The Parliament also adopted a new Law on Litigation. The act is harmonized with EU standards and is supposed to maximally reduce the amount of time people spend litigating in courts. The Parliament amended the Law on Judges by introducing a supervisory board within the Constitutional Court tasked with internal control over the work of judges. The supervisory board can launch a procedure to remove judges before the Grand Personal Council, which decides on their removal.

In 2003, the government set up two separate departments for war crimes and organized crime as part of the Belgrade local court. The department for organized crime in 2003 took up the following cases: the 2003 killing of Zoran Djindjic (for which over 40 people have been charged); the 2000 killing of Ivan Stambolic (Serbian president removed by Milosevic in 1988); 16 people arrested for drug dealing during an unspecified period; and the October 1999 attempt on the life of Vuk Draskovic, one of the main oppositional leaders at the time. The department for war crimes has been less active. So far, on March 9, 2004, it took up the Ovcara case, where 17 people are charged with murdering 192 Croat civilians in 1991 in an agricultural field near the city of Vukovar. These killings are the second largest mass crime after the 1995 Srebrenica massacre that took place in Bosnia. The trial has progressed well, most likely because the indicted are low-ranking soldiers. (The three high-level Serbian officers responsible for the crime are currently awaiting trial at the ICTY.)

Although the court's separate departments for organized crime and war crimes were intended to ensure faster trials, the most significant case among them, the Djindjic murder trial, started to drag its feet in 2004. The trial is frequently interrupted because lawyers for the defense often leak uncorroborated information to the public, breaking the process by creating confusion. The defense and some people from the administration want to declare a mistrial.

One of the most significant issues in Serbian politics in 2004 was the government's cooperation with the Hague-based ICTY. However, this cooperation faltered in 2001 under Djindjic and ultimately ground to a halt in October 2003 (under the Zivkovic government) when Carla del Ponte, the chief ICTY prosecutor, presented four new indictments and demanded that Serbia hand over the four generals cited for their involvement in war crimes in Kosovo in 1999. Under Vojislav Kostunica, who has been known for rebuking the ICTY even before assuming the premiership in March 2004, the government has been struggling to avoid cooperation with the tribunal by refusing to extradite. The Serbian government has argued loudly that most war crimes suspects should face trials at home rather than be sent to The Hague. However, since its inauguration in March 2004, the Kostunica government has done nothing to encourage local prosecutors to indict suspects, domestic police to arrest them, or local courts to try them.

The Serbian judiciary is neither willing nor able to deal with war crimes mainly because the dominant public opinion in Serbia still does not endorse the view that Serbs, in general, can be held accountable for committing war crimes. For example, a public opinion survey by the Ministry of Human and Ethnic Minority Rights in July 2004 showed that 62 percent of respondents believed that the four Serbian generals wanted for war crimes in Kosovo in 1999 are innocent (in addition, almost half consider the generals to be heroes) and should not be sent to The Hague, whereas only 4 percent believed they were fully responsible, and 23 percent thought they were responsible to a degree.

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Montenegro's judicial system is similar to Serbia's: inefficient, slow, and under government influence. The courts in Montenegro still have no budgets, and judges are underpaid, which makes them subject to political influence, bribery, and other types of corruption. At the moment, approximately 65,000 cases are waiting to be processed by the Montenegrin courts.

The Montenegrin judiciary failed to solve the woman-trafficking affair that began in 2002 when a woman from Moldova, brought into Montenegro for purposes of sex, accused several officials from the government and the judiciary of sexual harassment. The state prosecutor dropped the case in June 2003, claiming that "there were no elements for further investigation." Several NGOs, led by Safe House, urged the new state prosecutor, Vesna Medenica, to reopen the case. Medenica removed her deputy, Zoran Piperovic, for his personal involvement in the affair but was unable to reopen the case because the key witness, the Moldovan woman, was taken out of the country by the OSCE mission, which later remained silent about the woman's whereabouts. Many believe that several state officials were involved in the affair, but because of family and other ties between the politicians and the judiciary, it was never established who was responsible.

In contrast, the Montenegrin judiciary was rather efficient when Premier Djukanovic pressed charges against Miodrag Zivkovic, leader of the Liberal Alliance Party, for libel. The prosecutor acted promptly, and the local court quickly found Zivkovic guilty and fined him ¬8,000 (US$9,659). Another example of political influence in the judicial system is the case of Danilo Vukovic, editor of the daily Dan. In September 2004, he was fined ¬14,000 (US$16,903) for libeling Premier Djukanovic.

According to the new Montenegrin penal code put into force in April 2004, libel is no longer considered a criminal offense and is sanctioned only by a fine. There are proposals that the new Serbian penal code, which is supposed to be adopted sometime in 2005, should penalize minor libel with a fine but regard serious libel as a criminal act.


Corruption in Serbia was the project of the government under Milosevic. Practically the whole state apparatus was corrupt, and some institutions, such as the state security service, were designed to support corruption along with organized crime. After the regime change, the level of corruption declined, but post-Milosevic governments have not done much to eliminate corruption. By the end of 2004, the government had still not adopted the national strategy for the fight against corruption worked out by the Council for the Fight Against Corruption.

In the 2004 annual report by Transparency International, among 146 countries surveyed, the State Union of Serbia and Montenegro is ranked 97th along with 6 other countries. (The state union's position improved from last year, when it ranked 106th.) The Corruption Perceptions Index for Serbia is 2.7. (The index ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians. The best-ranked country has an index of 9.7.) Another investigation of corruption in the state union was undertaken by the World Bank and the European Bank for Reconstruction and Development. Their joint study, published in 2004, examines the level of corruption in 26 transitional countries and distinguishes between small and big corruption. (The former exists at the level of public administration, hospitals, or schools, and the latter affects the highest official levels.) In small corruption, the State Union of Serbia and Montenegro ranks 10th, whereas in big corruption it ranks 21st.

During 2003, the first post-Milosevic government was under constant attack by the opposition (notably the Serbian Radical Party, the DSS, and G17 Plus) for being involved in corruption. Some of the most infamous cases in 2003 were the sugar affair (the reexport of sugar into EU countries), the case of Sartid (a rigged sale of a steel factory), and the Janjusevic-Kolesar affair (a money-laundering case that implicated two government officials). Although the DSS and G17 Plus, the two most dominant parties in the Kostunica government, ran their 2003 electoral campaign promising to fight corruption, the government did little to resolve the above-mentioned cases in 2004.

Indeed, the Kostunica government showed little interest in reacting to warning reports published by the Anticorruption Council. The council was set up in 2002 with the goal of informing the government on large-scale corruption cases inside and outside the state administration. In 2002 and 2003, this council received no funding from the government, causing many to accuse the Djindjic government of paying lip service to the council's demands. (Eight members left the council in 2002 and 2003.) The Kostunica government, in contrast, provided ¬136,000 (US$161,905) in 2004 and is planning to give another ¬183,000 (US$217,857) in 2005 for the work of the council. Yet the government ignored the four reports released by the council in 2004 (two on the 2003 sugar affair, a report on corruption in privatization, and a report on the sale of Sartid).

In December 2004, the council released a report on the Nacionalna Stedionica (NS), a private bank founded in 2001. This bank received the privileged right to pay off 84 percent of the state debt from the 1980s in the amount of ¬4.5 billion (US$5.35 billion). The job was transferred to the NS without a public tender by the National Bank of Yugoslavia, led at the time by Mladjan Dinkic, the current minister of finance in the Kostunica government. Moreover, the National Bank provided free office space for the NS. The report shows that the NS was involved in numerous dubious financial transactions with Evroaksis Bank, where a large stake is held by businessman Vuk Hamovic, campaign sponsor of Kostunica's party. The government, however, did not act in response to these reports, thus leaving open the question of corruption.

Three years after announcing it, the Serbian Parliament in April 2004 finally enacted the Law on Conflict of Interest. According to this legislation, conflict of interest is defined as "the conflict of public and private interest when an incumbent has a private interest that can affect the performance of some public role." The law applies to all government and administrative officials but does not apply to the judiciary and prosecution. The law forbids incumbents while performing public duty to be part of a company's management or board of directors in which the state has a stake. Officials are obliged to report their personal financial statements 15 days after they take office as well as 15 days after they step down. However, the law fell short of imposing legal sanctions on violators: If an incumbent breaks the law, the board shall merely publicly reprimand the official. To decide on conflicts of interest, the law sets up the Republic Board, a nine-member independent body elected by the Serbian Supreme Court, the Parliament, and the Law Chamber (an association of lawyers). The board was constituted with a seven-month delay but was not given office space, and it remained inactive by the end of 2004.

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In Montenegro, the structure of corruption is similar to that in Serbia. The widespread nature of corruption in Montenegro is reflected in data from 1998 to 2003, where 1,065 criminal cases, according to official data, contained charges for abuse of official positions or bribery. No data were available for 2004. Yet the Montenegrin government has still not adopted the national strategy for the fight against corruption. In 2004, the Montenegrin Parliament passed a number of laws that indirectly reduce corruption, including the Law on Public Procurement, the criminal code, the Law on Money Laundering, and the Law on the Public Prosecutor.

After two years of hesitating, the Parliament adopted the Law on Conflict of Interest in June 2001. Article 15 allows public officials to join boards of companies in which the state has a stake. Some NGOs criticized the Montenegrin Parliament for accepting this solution because it runs contrary to the idea of eliminating conflict of interest. The Parliament, however, remained insensitive to this unified call and made no changes.

The Law on Conflict of Interest requires high-ranking state officials to report their assets before taking office, but provisions for implementing and monitoring these requirements are poorly detailed in the legislation. The government has set up several independent bodies in its efforts to reduce corruption: the State Revision Institute, the Unit for the Fight Against Organized Crime, the Commission for Observing the Privatization Process, and the Office of the Ombudsman. The most active has been the Commission for Public Procurement, which has ruled in a number of appeals, and the Agency for Fighting Money Laundering, which in September 2004 managed to block a huge money transfer from another country.

In Montenegro, corruption for the most part relates to a privatization process that is largely nontransparent. The Group for Changes, an NGO with an undisguised interest in becoming a political party, objected to the sale of Jugopetrol to the Greek energy consortium Hellenic Petroleum. The Group for Changes claims that the sale was nontransparent and corrupt. In addition, the consulting firm that advised the government's agency of privatization received a fee in the amount of ¬3 million (US$3.57 million), which the Group for Changes claimed was unreasonably high. The Group for Changes also criticized the sale of Kombinat Aluminijum Podgorica , the largest industrial facility in Montenegro, again pointing to the sale's lack of transparency. Chief among the objections was that the government sidestepped a public tender and negotiated the sale directly, with only one bidder. The price and name of the bidder were still being kept secret by the end of 2004.

2005 Scores