Bloomberg News

Serbian Ruling Party May Lose Elections on EU-Inspired Austerity

May 03, 2012

The Serbian Democratic Party may lose May 6 general elections, while its leader, President Boris Tadic, will be forced into a runoff as voters reject moves to bring the former Yugoslav republic to the European Union.

The ruling party, which won EU candidacy status, presided over the capture of war criminals and cut spending to meet International Monetary Fund demands, and its two allies would take 27 percent. That compares with 32.5 percent for the opposition Serbian Progressive Party, according to a survey by Belgrade-based Faktor Plus, which polled 1,126 Serbs in the last week of April. Tadic is neck and neck with Progressives leader Tomislav Nikolic in the concurrent presidential race.

As governments from Ireland to Italy fall in a wave of anger over austerity, Tadic’s strategy to link a presidential vote to general elections to help his party may have fizzled. Voters are drawn to nationalist rhetoric about Serbia’s claim on Kosovo, accuse Tadic of ceding sovereignty to the EU and call for more spending to ease unemployment of 24 percent.

“People don’t think that those in power are doing their best,” to combat the effects of the crisis, said Predrag Lacmanovic, Faktor Plus’s executive director, in a phone interview yesterday. “With so many people dissatisfied about how they live, campaigning on continuity and more of the same is not productive.”

The Democratic Party will run on a combined ticket with the League of Social Democrats of Vojvodina and the Social Democrats, two smaller parties. It can also count on the combined 13.3 percent support from its coalition partners, the Socialist Party, the Party of United Pensioners of Serbia and the United Serbia Party.

Opposition Parties

The Progressive Party is running with three smaller parties on a ticket, including a group led by millionaire Bogoljub Karic, Nova Srbija of former Infrastructure Minister Velimir Ilic and the Movement of Socialists led by a former Communist Party activist Aleksandar Vulin. Other parties running in opposition are the Serbian Radical Party, which would take 5.5 percent, while the Democratic Party of Serbia had 5.7 percent, according to the Faktor survey, which had a margin of error of 3 percent.

The Cabinet of Prime Minister Mirko Cvetkovic was the first to serve a full term since strongman Slobodan Milosevic was overthrown in 2000.

During its time in office, Radovan Karadzic, Ratko Mladic and Goran Hadzic -- the three most-wanted war-crimes suspects from the civil wars accompanying the breakup of Yugoslavia -- were captured and transferred to the International Criminal Tribune for the Former Yugoslavia in The Hague to stand trial.

Candidacy Status

The government also won official EU candidacy status on March 1, putting it in line with Montenegro to join the Brussels-based bloc as the EU expands deeper into the region once encompassed Yugoslavia. Slovenia joined in 2004 and Croatia will become a member next year.

Tadic wants to continue efforts to join the EU, renegotiate protections for Serbs living in Kosovo and reshape the economy to focus on cars, electronics, software development, high technology and renewable energy.

“These are extremely important elections,” Tadic said on May 3 in a televised speech. “They are of crucial importance for the next 10 years in Serbia, bearing in mind…challenges that Serbia has been facing all these years.”

Foreign direct investment totaled 5.5 billion euros (7.27 billion) during the government’s four-year term, or 40 percent of the total 14.6 billion euros that flowed into Serbia since Milosevic’s ouster more than a decade ago.

Economic, Monetary Declines

Still, the past four years have coincided with the global economic and European debt crises. The dinar has lost 30 percent, unemployment rose 10 percentage points, public debt increased 16 percentage points to 14.4 billion euros and the average take-home wage is now 360 euros ($476) per month.

Job prospects, higher wages and the fight against corruption are more important to voters than future EU membership, said analysts including Milan Nikolic, the director of the Belgrade-based Centre for Policy Studies.

While Tadic and his party “have concrete results,” Nikolic said, the Progressives “are banking on anger and discontent resulting from lost jobs, benefits and declining wages.”

A continued effort to draw foreign investors from the EU is “our best bet to overcome the effects of the global crisis,” Tadic said during an April 24 campaign stop in Ljig, a small town of 3,000 people about 50 miles south of the capital Belgrade. A week earlier, Fiat opened a 1 billion-euro ($1.3 billion) car plant in nearby Kragujevac that was rebuilt from an old factory making Zastava vehicles.

Looking East

By contrast, Progressive Party has promised to bring into a coalition the Democratic Party of Serbia, a nationalist- conservative party run by former Prime Minister Vojislav Kostunica, who has called for abandoning EU membership plans and forge tighter political, economic and investment ties to Russia, Belarus and Kazakhstan.

“Whatever happens, Serbia must maintain the continuity of its relationship with foreign investors,” said Franjo Bobinac, the management board chairman of Slovenia’s Gorenje d.d., the biggest home appliance maker in the former Yugoslavia. “What we need is predictability.”

Tadic, meanwhile, will probably fare better than his party over the weekend, as he moves into a second round against Nikolic. Recent polls also don’t reflect the effect of recent speculation that Nikolic bought his university degree, which may weaken his party’s support as well, said Vladimir Todoric, of Belgrade-based New Policy Centre. The second round will take place on May 20 if no candidate garners an outright victory.

Shift in Popularity?

“Estimates show that in the past two weeks the Democrats have strengthened and that their so-called contrast campaign, or negative campaign against the Progressives, is showing results,” Todoric said.

In Ljig, Ruzica Ivanovic contemplated how to split her vote as she stood in front of her stationary store, which sells Chinese-made schoolbags, toys and notebooks and posted an $827 profit for 2011.

Her parliamentary preference will be for the Serbian Radical Party, the right-wing nationalist group whose leader Vojislav Seselj is standing trial before the United Nations war crimes tribunal in The Hague.

As for president, she is sticking the Tadic, a sign that his support may be stronger than polls suggest.

“He’s still better than that traitor Nikolic,” she said.

To contact the reporters on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net; Misha Savic in Belgrade at msavic2@bloomberg.net

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


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