Serbia & Montenegro (1987-2007) – From Hope to Disaster


In most east-European countries old, new political forces equipped with new system of values overthrew rigid communist elite. Unlike that, in S&M, old, compromise-oriented communist political elite (in Serbia led by Ivan Stambolic) was overthrown by strong and rigid communist regime of Slobodan Milosevic in Serbia, Momir Bulatovic and Milo Djukanovic in Montenegro. These two regimes utilized long lasting Kosovo issue to gain public support. They refute peaceful transformation of Yugoslavia (or its peaceful dissolution with the rest of Yugoslav republics) and started advocated war politics in the region.

The hope in course of historical fall of communism converts into disaster. The war started and S&M joined forces in military events in Croatia and Bosnia & Herzegovina in effort to keep “all Serbs in one country”.

Instead of building a new system of market economy and individual freedom S&M fostered war politics. The crucial turn point in starting war was Montenegro support of Milosevic’s politics.

General Pattern of Ruling

Milosevic, Bulatovic and Djukanovic were methodologically old style communists with democratic rhetoric’s and style. They inherited old intelligence services, army, and police and controlled all state media and great majority of private media. As a support to Milosevic’s politics weakened, the use of state forces and propaganda proportionally became stronger.

At the beginning of his political raise Milosevic had considerable support from all institutions (academia, media, church, distinguished intellectuals, etc.), and had not have need to resort to more radical forms of ruling. As public supports wakened he uses more and more of state apparatus to control political situation in the country. Serbian intelligence service (DB) had its people infiltrated in main oppositional parties, media and universities. At the end of his reign he lost support in army and police and partly in intelligence.

Milosevic’s dictatorship was soft; he uses force only when he thought it was necessary in order to keep his regime firm in place. But this time-to-time utilization of force was brutal; many political opponents were killed and were molested.

Staged Democracy

From 1990 S&M entered into parliamentary democracy, and changed constitution in order to foresee consequences of Yugoslavia dissolution.

But it was staged democracy; elections from 1990 were neither free nor fair, although Milosevic and his counterparts in Montenegro had considerable public support. Opposition to Milosevic was not so strong and it was badly organized. Yugoslav Army and Serbian Police brutally suppressed huge demonstrations in Serbia’s capital city Belgrade in 1991.

Milosevic used Yugoslav Army both against other Yugoslav republics and domestic opponents.

Staged Hyperinflation

Soon after breakup of Yugoslavia in 1992, S&M entered into common state named “Federal Republic of Yugoslavia” (FRY) and proclaimed continuity with former Yugoslavia. UN imposed sanctions to FRY  (1992) and economical and political conditions progressively worsen.

In order to finance military policy and domestic public spendings, Milosevic’s government deliberately produced world record braking hyperinflation (1994).  Domestic currency was ruined and people started to spend their savings in foreign currency. The regime badly needed fresh money, and it managed to get it, at the expense of rapid and drastic impoverishment of population.

Black market economy became the main economy. Underground and the state worked together in various arrangements (drug, fuel, tobacco trafficking). And this bond remains unchanged up until the very end of Milosevic regime.

War and Peace

From 1990 to 1995 S&M fostered war politics. In the beginning of the war they used Yugoslav army, and later they helped and support military forces of Serbs in Bosnia and Herzegovina and in Croatia. Both Milosevic in Serbia and Bulatovic and Djukanovic in Montenegro utilized war politics to homogenize nation in order to evade real economical and political issues. But the pressure of international community (US and EU), catastrophically bad economical situation in the country, and public support decline, persuaded Milosevic to sign Dayton Peace Treaty. Both Milosevic and his Montenegro collaborators took advantage of this event, represented it as peace victory and took credit for it.

War Legacy

Legacy of war was criminalization of the state. The underground connected with the state and state (=intelligence) operated with underground. Intelligence has its paramilitary forces governed by leading men from underground, and had operated in Croatia and Bosnia & Herzegovina. Famous Zeljko Raznatovic “Arkan” and Milorad Ulemek “Legia” were well known criminals who operated for the state’s intelligence office (former UDBA, in Milosevic time DB and now BIA). The situation was similar in Montenegro, although there state poses no paramilitary forces, but there was strong link between “businessmen” and politicians.

Coalition Break-Up

As the peacetime came about, more and more have domestic political issues emerged, and Milosevic’s politics found itself on unstable ground. Opposition block became stronger and gained more public support. As a result, he lost 1996 local elections. Opposition won in almost every large city, including the capital. Caught by surprise and entirely unprepared, he immediately abolished the election results. That triggered huge daily oppositional and student’s peaceful rallies that lasted for almost three months.  In the end, as an outcome of domestic and international pressure Milosevic recognized election results, and for the first time endured major political failure.

From 1994 and on, Djukanovic and Bulatovic started fighting over political primacy in Montengero. Djukanovic won and this marked the beginning of clashes with Milosevic. At that time Djukanovic politics was in no way different from Milosevics, he inherited state and police apparatus that has for long time been controlled by Milosevic and he continued to use it in the way that Milosevic had done before.

Kosovo Conflict and NATO Intervention

In order to remain on power, Milosevic did what he had known best, started a new war. Although the Kosovo issue was very old and cumbersome, Milosevic’s solution of the crises implied suppression and radicalization. He managed to maintain peace in Kosovo by sending great number of police units in province that was just short run solution. Instead of insisting on dialogue between Serbs and Albanian, he repelled moderate Kosovo-Albanians political elite and intellectuals, thus opened the door for more radical political movements in Kosovo. General pattern is also shown here: radicalization = political survival.

The radicalization produced paramilitary forces of Kosovo-Albanians, and the war started. Milosevic employed troops and great number of Kosovo-Albanians were forced to leave the country. This provoked international respond, and NATO started with bombing campaign of FRY for three months in 1999.

At the time Milosevic used the situation to get rid of political opponents in Belgrade. DB organized assassination of famous opposition journalist Slavko Curuvija at the peak of NATO bombing. In 2000. DB assassinated Ivan Stambolic (Milosevic’s former opponent and former communist prime minister of Serbia) and tried to assassinate at that time prominent oppositional leader Vuk Draskovic.

President Djukanovic policy became gradually more distant toward his Serbia’s counterparts. During the bombing campaign he welcomed Zoran Djindjic (prominent oppositional leader) as he fled Belgrade in front of Milosevic’s henchmen in an effort to safe his own life.

The Kosovo conflict ended with signing up peace treaty in Kumanovo (1999). President Milosevic lost yet another war, and the last option remained. The crackdown against his own citizens.

5th October

After the intervention the situation in Serbia was unprecedented, oppositional political parties were frightened and fractioned. Milosevic tried to compensate Kosovo failure by terrorizing own citizens. Democratic Party (Zoran Djindjic) and youth movement “Otpor” (“Resistance”) started gathering and demonstrating. Milosevic responded with force and police arrests of a great number of “Otpor” and opposition members.

Milosevic announced early elections on September 24 (2000). He and his political party SPS (Serbian Socialist Party) were convinced in undivided support of public opinion. But they were wrong. Zoran Djindjic managed to unify Serbian opposition and form Democratic opposition of Serbia’s (DOS –consisted of 19 political parties) with its presidential candidate Vojislav Kostunica (leader of Democratic Party of Serbia – DSS). In spite of media propaganda and various kinds of intimidations and terror Vojislav Kostunica and DOS won elections. Despite obvious election failure Milosevic refused to accept election results. This provoked huge upheaval and massive rally in October 5th 2000 that eventually overthrew Milosevic regime.

Events of 5th October were organized mainly by Zoran Djindjic and his Democratic Party (which he was leader of). On that eve Djindjic managed to get assurance that army and state police would not use force on demonstrators. He also contacted JSO commander (JSO – Unit for Special Operation, former paramilitary organization at that time a part of Serbian state police) Milorad Ulemek to be assured that this military unit would not engage in demonstration breakup.

Demonstrations were successful (over 800 000 people were involved). On 6th October, with mediation of Russia’s foreign minister Igor Ivanov , Milosevic recognized the  election results.

Reformer and Conservator

Vojislav Kostunica became president of FRY and on September republic election DOS won again and Zoran Djindjic became Serbian prime minister. Energetic leader as he was, Zoran Djindjic started working hard on country reformation.

His government had many burning economical issues to tackle with. Nevertheless, great political obstacles remained:

– Kostunica insisted on continuity of former regime, Kostunica inherited and embrace the old federal structure (hard core communist structure that incorporated federal army and intelligence). He advocated policy of “continuation but not retaliation”.

– Sudden Djukanovic’s insistence on independence of Montenegro from common state and Djukanovic unwillingness to cooperate with Djindjic.

– Although Djindjic was prime minister he inherited Milosevic’s state police and intelligence. In fact he has no real power, and had not have support from other branches of government.

Serbia entered the state of diarchy. Energetic reforms on republic level were constantly been endangered by stats quo politics of Vojsilav Kostunica on the federal level. Without Kostunica’s approval Djindjic organized arrest of Milosevic and his departure to The Hague. This brought up the final split in DOS, and Kostunica’s DSS left the coalition, consequently becoming opposition  (on republic level).

Vast majority of media were backing Kostunica (even state run television station RTS that was supposedly under Djinjdics jurisdiction). Well known from the experience of transitional countries in Eastern Europe, any significant reforms usually lack public support. Kostunica used political and social demagogy of nationalism to gain public support.

Under the Djindjic government Serbia managed to accomplish noticeable reforms, but the side effects of drastic reforms produced public discontent and bitterness.

On the other side, Djukanovic politics was paradoxical at first glance. He rhetorically supported Serbian reformers but in fact he gave indirect support to Kostunica by not engaging in federal issues with Serbian reformers and staying aside. In fact this situation suited him well in order to gain political support in Montenegro on an account that “nothing has changed in Serbia” and that the main political goal should be independence. What indeed happened is that Djukanovic, as one of the Milosevic’s disciple used Milosevic’s general pattern of ruling by introduction the great political story of nation building and national self-defense, in spite of huge economical problems in his own country.

Economic Policy During Djindjic’s Government

Zoran Djindjic has started far reaching reform programme immediately after taking office in January 2001. Among his priorities were reforming public finance, privatization or liquidation of state enterprises and banks and integration of economy into the international order. After some success at the beginning, with adoption of very free market laws such as Privatization and Labor Laws, liquidation of four major state owned banks and introducing basic transparency into the public finance, Djindjic’s approach to economy quickly turned out to be halfway and unable to make clear cut off from Milosevic system. Political and underground interest groups, immensely benefited from Milosevic’s dirigisme economic policy and favoritism in 1990s, that were disoriented after the October 5th, quickly recovered from the first shock and organized its lobby groups again.

That lobbies, recaptured the state and from 2002 started again to influence state economic policy. After the initial liberalization of foreign trade through abolishing most of the discretionary power of the state and reducing taxes, further liberalization was successfully resisted.

Restrictions of entry for foreign banks were introduced in order to protect domestic management from bankruptcy. Every foreign bank entering Serbian market should buy one domestic bank previously. Public consumption as a percentage of GDP even increased compared to Milosevic’s time.

Record on tax cuts was mixed: some of them were cut, some even increased. There was a little measure to decentralize economic power. Central government in Belgrade still has most of the fiscal and regulatory means for handling economy in its hands

On the other hand, IMF and WB praised Djindjic’s reforms from their inception but later on became more skeptical.

Coup d’etat  and Assassination

In 2003 the political climate in Serbia was in no favor of Serbian reformers. Zoran Djinjdic and his government were on constant media lynch. It was not just because of economical measures that the government implemented. But also because his commitment to undermine Milosevic’s political legacy.

In order to do so he had to dismantle – first of all – Serbian intelligence (DB) and reform the police. In doing this he embraced huge problems, because it was hard to find suitable men for the job, vast majority of service professionals were involved in various kinds of illegal activities during 90’.

He removed the leader of the service which prompted  the swift response of JSO. Milorad Ulemek organized insurrection of JSO. The unit blocked the main Belgrade’s bridge in full arm force. It was first coup d’etat. Kostunica and his DSS gave support to this event. He sad that “everybody has right to protest, physicians in white uniforms, solders with guns and tanks…” The state was powerless, Djindjic had to make compromise and to change the leading men of BIA, he resisted changing the minister of police (which was also demanded).

In spite of all this, Djindjic’s government continued to implement economical reforms, and Djinjdic started reorganizing the police (by forming “Zandarmeria” parallel to JSO) with idea to undermine illegal state services. But this was in fact  “the cat and mouse” game. The preparation for huge clash with organized-state criminal was on its way when assassination happened. Ulemek, JSO and well-known Serbian underground (“Zemunski klan”) organized the assassination.

It became certain that Kostunica and his politics gave unopposed support, and there are many indications that he was not jus indirectly involved (his main collaborators and assignment instructors  were Aco Tomic – chief o federal intelligence, man in permanent contact with Ulemek and Rade Bulatovic presently chef of BIA who was in contact with the group “Zemunski klan”).

Political aspects of assassination were clear. The action was called “Stop to the Hag”. It was reaction to Djindjic’s politics of reforms.

But energetic response of republic police came off with police action “Sabre”. Assassinators were arrested and Ulemek ran away. Police hour was introduced, and for almost three months state of emergency took effect only eventually ending when government of Zoran Zivkovic announced election in 2003.

Present Situation

After the elections Kostunica became prime minister of Serbia. He held minority government with support of Milosevic’s unreformed SPS. Djindjic’s democratic party lost the elections. Meanwhile, Montenegro held referendum and became independent state in 2006.

The trial to Djindjic’s murderers has not jet finished, due to constant obstructions not only from underground but also from the side of official policy.  Milosevic political legacy is still strong in Serbia and radicals (Serbian Radical Party (SRS)– the strongest political party in Serbia) and partly Kostunica are its continuators.

Kostunica put back in service all the people who were discharged of duties during and before “Sabre”. He stopped and rolled back Djinjdic hard gained reforms of intelligence and police by dismissing large number of highly skilled professionals. He even dismissed the most successful police officers who led the famous police action “Sabre” and who were responsible for arresting Djindjic’s murderers.

As Kostunica took the power, he immediately stops the reforms of the previous government. He completely stalled the privatization (for almost one year not a single state owned enterprise was sold), radically increased the government spending and worsen economic situation in the country. As Djindjic’s government succeeded in cutting of the inflation from 40% to 7,1% from 2000 to 2003, Kostunica’s government managed to double inflation and to increase administration.

In 2006 Kostunica’s government fall down, but he is still prime minister, and his coalition rules because the new government is not yet formed.

It is hard situation for democracy oriented political forces in Serbia. The strong advocates of democracy in Serbia are Democratic Party (Boris Tadic, president of Serbia), and Liberal-Democratic Party (led by Cedomir Jovanovic – Djindjic’s main associate and the group of hard core Djindjic’s associates and followers), and few non-parliamentary political organizations. The cloaked democrats are Kostunica’s DSS and G17+ readily cooperative with old regime parties.  Very influential parties of old regime that entered parliament are SPS and SRS. Although DS gained the largest number of pro-democratic votes on the last election (in overall SRS got the largest number) it cannot form government by itself. It has to work with Kostunica and others in order to do that.

The situation is not much better in Montenegro. Economy of Montenegro survived sanctions and war during 1990s in the similar way like Serbian. It was based on government-sponsored smuggling, organized by intelligence service. Senior officers of Montenegrin UDBA became richest man in the country as well as their Serbian counterparts. Flow of commodities was exclusively controlled by police, and regime of public controls of export and import business provided privileged nomenclature with extreme rent-seeking profits.

A new financial-political elite has arisen. Just like in any other transition country, but by far more pervasive, nomenclature of ex communist party and its political police became owner of most of the industry and exclusive controller of large portion of country’s business.

 Aleksandar Novakovic & Ivan Jankovic