Serbs give Progressives mandate for reform with landslide victory

By bne IntelliNews March 17, 2014

Andrew MacDowall in Belgrade -

So the gamble of Serbia's popular and energetic deputy prime minister, Aleksandar Vucic, has paid off. Preliminary results from the March 16 snap election show that Vucic's Serbian Progressive Party (SNS), the largest party in the current parliament, won with a massive 49% of the vote, or 157 seats in the 250-seat parliament, more than even the most optimistic polls were predicting. This gives Vucic a mandate for sweeping reform, will realise his aim of becoming prime minister, and could potentially allow his party to rid itself of its current coalition partner, the Socialist Party of Prime Minister Ivica Dacic, which won around 14% of the vote.

The result will also vindicate Vucic's decision to call the snap elections in a country pretty tired of them (turnout was around 52%); his party of former ultra-nationalists converted to the cause of EU membership have always felt they underperformed at their first outing at the polls in 2012 and wanted to build on the great strides the country has made since then, which includes signing a deal over the country's erstwhile province of Kosovo, starting EU negotiations and launching a wide-ranging corruption campaign.

The Progressives could form a government on their own, but Vucic has indicated that with painful reform measures in store, the party will seek coalition partners after the election to build a broad-based government. Vucic said after the results were becoming clear that that he will put a limit of May 1 on coalition talks. "The programme for a new government will be drawn up over the next few days, and all the work will certainly be completed by May 1," Vucic told a news conference at the SNS headquarters. "Rather, the SNS is willing to extend its hand to everybody and to hear ideas and suggestions about how something good can be done for Serbia."

The other parties that cleared the threshold to enter parliament were the NDS of the pro-EU former President Boris Tadic (6%), and Tadic's former party, the Democrats (5.5%). Three minor ethnic minority parties will also be represented: Sulejman Ugljanin's SDA Sandžak (1.09% - 3 mandates), the Alliance of Vojvodina Hungarians (3.01% - 9 mandates), and the Riza Halimi-led Party for Democratic Action (0.89% - 2 mandates).

Bratislav Grubacic, a political commentator and a member of the Progressive Party's board, tells bne that there are three main candidates for coalition partners, any or all of whom could be brought into the government: the SPS or the NDS. Both have been making overtures to Vucic, and all could bring benefits to an SNS-led government, but all also have potential pitfalls.

Partner problems

Many assumed that the election was originally called so the SNS could rid itself of the SPS, which given its ties with state-owned companies and conservative voter base is not a natural ally for reform. But the famously tenacious Dacic, a kingmaker in the two previous governments and head of the powerful interior ministry, will certainly look to dig his heels in and bringing the party in would certainly boost the parliamentary majority.

Tadic has international credentials and enjoys the favour of many in the SNS hierarchy - Bosko Jaksic, an editor at Politika, Serbia's oldest daily newspaper, said that Progressive party leaders were anxious that the NDS enters parliament in the hope it would prove a pliable partner. But the former president is tainted by the economic problems of his spell in power and splits in his party.

Beyond the nitty-gritty of parliamentary horse trading, other serious questions remain: most importantly whether Vucic really has the stomach for painful economic reform, and whether Serbia risks concentrating too much power in the hands of a man with an authoritarian past.

The outgoing government has the historic pluses of a landmark deal with Kosovo and the start of EU accession negotiations to its name. It has also signed important deals with the United Arab Emirates (UAE), including a $1bn loan (part of a package of up to $3bn, the government hopes) inked in early March, an agreement on arms industry cooperation, and the sale of 49% of the national airline to Abu Dhabi-based Etihad, which has taken management control of the re-branded Air Serbia and already appreciably improved services and connectivity.

But otherwise its economic record is less than stellar, with the deficit set to grow to the largest in Europe this year, and debt above 70% of GDP (the theoretical legal limit is 40%). The government could rightly say this was partly the legacy of its Tadic-led predecessor.

But its commitment to the sort of root-and-branch reform and fiscal consolidation the SNS is promising was seriously called into question by the January resignation of technocratic economy minister, Sasa Radulovic, an economist and Silicone Valley entrepreneur appointed in September. Radulovic resigned over lack of progress in labour liberalisation and privatisation, and said in a statement that: "the chief obstacle to all reforms was and remains the office of the first deputy prime minister [Vucic]".

Those reforms include the sell-off of around 100 state companies; changes to the laws on labour, privatisation and bankruptcy; and public sector cutbacks that could affect 300,000 to 500,000 workers, as Vucic told local media in October. But actually implementing the tough measures including privatisations, labour-market liberalisation and public sector cuts is likely to prove much harder than rhetoric suggests.

A Belgrade civil society figure tells bne that even if Vucic does want reform, powerful vested interests in Serbia, including within his own party, will be difficult to face down. Party activists and backers may seek sinecures and favours. "That's the way it's always been done - and if Vucic wants to use his mandate to change that, he will face serious opposition from within the SNS and all but one or two other parties", the figure says.

Critics say that the government, like its predecessors, seems too willing to attack and marginalise its opponents through the press. Vucic has an uncomfortable history in this area - he was minister of information under strongman Slobodan Milosevic, including during the Kosovo War, when he imposed stringent controls on the media - though few expect a return to this era, particularly now the Serbia is on EU tracks.

But in a statement to bne, Vucic's spokesman strongly rejects the idea that the SNS leader's commitment to reform is only skin-deep. "Regarding reform, the SNS and Vucic have proved in the past year that they are tough enough to have initiated the fight against corruption and to make the necessary decisions in order to open accession talks with the EU," he says. "They also took the necessary decisions last November to raise VAT on high public salary earners and begin a balancing of the state budget. So any opposite claim on that issue is simply ridiculous."

Jaksic feels that Vucic is indeed committed to taking the country by the scruff of the neck, but echoes concerns by some figures that imperial overstretch could be a risk. "He does have something messianic, wants to get job done and is very keen that the job is done, but at the same time I think he faces the problem that he doesn't have enough real professionals around him that he can rely upon, and that's the reason that he is slowly taking care of everything - there's a danger of concentration of power and the cult of the personality. He must be careful."

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