Bloomberg News

Serbian President Steps Down Seeking Re-Election

April 04, 2012

Serbian President Boris Tadic, the nation’s most popular politician, stepped down eight months before his term ends, to link a new presidential election to the May 6 general vote and help his party remain in government.

He announced the decision today as opinion polls show a widening lead for the biggest opposition group over his Democratic Party at a time when the economy is faltering, the dinar trades is the weakest in a decade and unemployment rises.

Tadic, who pushed former Yugoslavia’s biggest state closer to joining the European Union and turned over suspected war criminals more than a decade after the Balkan civil wars, is leading his party’s campaign across the country. Unlike his Hungarian colleague Pal Schmitt, who was toppled amid a plagiarism row, Tadic seeks to win the elections and return to power.

“I have decided to cut short my term in office, in line with the Constitution,” Tadic told reporters in Belgrade, adding that he will sign and send the letter of resignation to the parliament speaker tomorrow. “I will take part in the next elections full of optimism.”

Serbia’s dinar slipped to 111.6722 to the euro at 10:10 a.m. in Belgrade from 111.6557 to the euro before the news. The main stock market index of 15 most actively traded assets was 0.2 percent down on the day, at 527.76 points, barely a quarter of what it was in 2007, the year before Tadic was re-elected and his party formed a coalition government with dozens of smaller parties.

Elections Full of Tension

The 53-year-old head of state is handing over his mandate to Parliamentary Speaker Slavica Djukic-Dejanovic, a member of the junior coalition partner Socialist Party, which is a junior partner in the ruling coalition and the party of former Serbian strongman Slobodan Milosevic.

Socialist leader Ivica Dacic opposes the plan for elections to be held on the same day and is prepared to run against Tadic, according to Blic newspaper.

“The elections will be difficult, full of tension,” and it will be up to the “citizens to say which path they want to choose,” Tadic said, adding that his offer is “that we continue along the same path” of Serbia’s EU integration.

Tadic would defeat his main challenger, Tomislav Nikolic, the leader of the Serbian Progressive Party, according to a Nov. 3 opinion survey, the latest available to measure political leaders’ popularity. Tadic won the presidential elections twice, in 2004 and 2008, defeating Nikolic both times.

Charismatic Leader

The president’s Democratic party trails behind him in popular support and would win 29.1 percent of the votes, while the opposition Progressives would get 33.2 percent, according to a March 26 opinion survey conducted by Belgrade-based Faktor Plus pollster in the week starting March 18 among 1,184 people and with a margin of error of 3 percent. The survey did not provide ranking for Dacic.

“Tadic is a charismatic leader” with strong support among the people and in many cases, those who vote for one leader also vote for his party, Vladimir Goati, who chairs Transparency International’s Serbian arm, said in a live program on B92 television. “That’s why other parties are afraid of all elections being held at the same time. Tadic remains ahead of all other” party leaders, he said.

The presidential vote must be called at least 90 days before the president’s term in office expires and held within 60 days, according to the Constitution. Tadic took office on Feb. 15, 2008.

Cabinet’s Record

Prime Minister Mirko Cvetkovic’s Cabinet, which took office in July 2008, just months before Serbia felt the worst pinch of the crisis caused by the collapse of Lehman Brothers Holdings Inc., ends its term with the dinar 32 percent weaker than in 2008, unemployment 10 percentage points higher and public debt of 14.4 billion euros ($19.2 billion), or 45 percent of GDP, marking a 16 percentage-point expansion over four years.

The election campaign has focused on pledges to fight corruption, organized crime, the economic sluggishness. Politicians have promised to lure billions of dollars of new investments and create new jobs at a time when 1.7 million people in a country of 7.2 million have formal employment and take home an average wage equivalent to 360 euros ($480). Serbia’s economy is forecast to grow 0.5 percent in 2012.

IMF, EU Talks

The IMF suspended its $1.3 billion precautionary loan program with Serbia in January, after it became clear that this year’s fiscal gap would amount to 5.25 percent of GDP, rather than the agreed 4.25 percent, excluding sovereign guarantees and the government’s new bond sales. The lender will wait for a new government to take office and to re-negotiate the pact.

The country officially became an EU candidate on March 1 and is still waiting for the date of entry talks. The Progressives have backed Serbia’s EU path so far, even though they have made it clear their first-choice ruling partner is former Prime Minister Vojislav Kostunica, whose program calls for abandoning EU membership and closer cooperation with Russia.

The Socialists, whose rule was marked with bouts of hyper- inflation and currency denominations in the 1990s under Milosevic, promise never to cooperate with the IMF because of the lender’s “wrong policies” and would print money to kick- start the sluggish economy. They also stress Serbia’s right to “protect its sovereignty in Kosovo,” the province that unilaterally declared independence in 2008.

Tadic said he seeks EU entry without recognizing Kosovo’s independence.

The government has stepped up spending on subsidies ahead of the vote and used cash from its reserves to finance the fiscal deficit, which soared past 41 billion dinars in the first two months of 2012, compared with a three-month cumulative target of 26 billion dinars agreed with the IMF.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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