When the Seam Starts to Rip…

Interview: Serbian Deputy Prime Minister Miroljub Labus

In Serbia, the heightened debate over Kosovo is laced with the fear that solutions giving the province a special status and eventually leading to full independence could serve as a model for a similar scenario in Vojvodina, says Deputy Serbian Prime Minister Miroljub Labus. “Everyone who is focused on the Balkans in some way should be aware of that. The government will face a dismal political agenda in 2006.” Labus does not believe that anyone will seriously try to replace the government in office, because it is always more convenient to criticise than to carry the burden of governance.

By: Tanja Jakobi

A man has no idea how much a load of 100 kilos weighs until he gets to carry it. Then he gets a second load, then a third… one political problem after another. And the day is just too short with 24 hours – only after the tape recorder was switched off did Deputy PM Labus allow himself to make a whole-hearted observation that, squeezed in between negotiations with the IMF and the EU, discussions and resolutions on Kosovo and a tug-of-war in the Serbian Parliament, describes the spirit of PM Kostunica’s Government better than any formal answer to a reporter’s question ever could.

These political burdens keep Labus assured that, contrary to general convictions, he actually wakes up each morning as Deputy Prime Minister of a government in full swing and not an outgoing Executive. “If the Serbian Radical Party and the Democratic Party really wanted to depose us, they wouldn’t find it too difficult to find the three parliamentary votes they need. But which of them would take over the work load? It is always much easier to stay on the sidelines and criticise.

“…the Government has entered its third year in office with solid chances to endure the complete four-year mandate. If for no other reason than because 2006 looks dismal before it has even arrived, plagued with arduous political trials and uncertainty; and minor, uncertain victories.”

Why did we allow ourselves to count down the days until the IMF’s ruling over whether the three-year arrangement had a positive or negative outcome, instead of securing a new arrangement?

We are not counting the days. We are concluding a three-year arrangement… After this we will have fully resolved the issue of foreign debt, which will record a significant drop in relation to our GDP. We want to maintain good relations with the IMF in the future and we are currently negotiating the type of arrangement we could make next. Since we have borrowed 150 per cent of our quota from the IMF, the rules are that there will have to be a stricter monitoring procedure for our country. The Government is now discussing what form of co-operation with the IMF would suit us best. We think this is important because we want to lend support to our international credibility even at a time when we do not have full macroeconomic stability with respect to inflation and the balance of payments.

A month ago you had a successful closure with the IMF yanked out of your hands by the vote on Pension Law amendments?

The Parliament is a sovereign authority and although the Government has a majority of seats, this does not mean it can have its own way over each and every issue.

Back in 2000, when the relationship with the IMF was renewed and the one-year and three-year arrangements were put on paper, proceedings seemed to flow more smoothly. Now everything begins with maybe: maybe we’ll start negotiations with the IMF; maybe we’ll reach agreement, but no one knows when. Why are things so sluggish now?

It’s quite natural actually. When we started off with new arrangements nothing was regulated. There was a blank sheet and, thus, progress was fast in that phase. However, the law of diminishing returns is present everywhere in nature. Each subsequent phase is harder to finish and the time span required for completion keeps widening.

As someone who figured as the leader of the reform process, what is your take on the course of transition in Serbia? Do you feel somewhat overwhelmed by the whole endeavour? Haven’t all the strains and obstacles sapped you dry?

Politicians here do not have to enjoy their success, but they have to keep their gaze fixed on the next hurdle. When we entered negotiations with the IMF five years ago, the issue of whether inflation would be nine per cent or 13 per cent wasn’t even on the table. Now it is, because it is a deeper issue of macroeconomic stability.

The previous government included some of the best Serbian economists, while some of those who have taken over their seats are barely competent to work in their field of expertise. How would you describe this change within the Government?

I wouldn’t like to go into details about whether ministers are doing their jobs properly. Part of our success is due to the fact that ministers from G17 Plus are reform-oriented and do their job well. Several other ministers are also doing a good job and, hence, we have a critical mass for changes that result in visible progress. Naturally, I would like us to have this quality of work in some other areas as well, above all in the judiciary, but this seems to be a more difficult task than streamlining economic reforms.

What are the priorities in 2006? We have Kosovo, the EU, and the IMF. Is there room for elections on this agenda?

I don’t think there will be any elections, but in saying this I have to stress that we are talking about degrees of chance. 2006 will be a year of great political challenges, but from the perspective of EU integration it will be a year of tangible results. From an economic perspective it will be a good year as well, because the time is ripe for all we have done to yield results. The level of economic activity in the last quarter of 2005 gives weight to such forecasts.

Looking from the outside, it seems the Government does not have a clear strategy for, and vision of, Kosovo. If we look at negotiations with the EU, all we can see in press reports is that various representatives of the Government have been silencing each other?

These are minor details. We have a platform and a strategy for negotiations with the EU and the only problem is posed by a dysfunctional state union…

As for Kosovo, it is true that we are behind schedule, but we are dealing with a complicated matter. A year ago we knew what we were not going to accept. Now we are starting to shape the contours of what we want. We have a clearly defined starting position, so it remains to be seen how the other side will react and how Marti Ahtisari will facilitate the process.

Nevertheless, DSS has returned to the “we aren’t handing over Kosovo” rhetoric after a long period of calm, when everyone is aware that there will have to be serious and radical compromises.

From my point of view it is important to respect two principles and find a balance between them. The first is territorial integrity and sovereignty and the second is human rights. There is a well-grounded anxiety over territorial integrity and sovereignty. I think it is no coincidence that issues of minority rights in Vojvodina and special status for this province have surfaced just ahead of negotiations over Kosovo. Some people feel that pressure politics are being applied here and that the practice of raising issues of territoriality and special status as an intermediary stage towards changing borders could spread to Vojvodina if we succumb during negotiations over Kosovo and Metohija. When the seam starts to rip, there is no stopping it anymore.

People around us and in Europe have to understand that these anxieties are quite plausible. Everyone who takes part in policy making in the Balkans has to know whether they are searching for a solution with their course of action or if maybe their partial interests are being satisfied at the expense of Serbia’s reputation and territorial integrity. I will state the opposite: this kind of behaviour could provoke a reaction that will not be useful to anyone.

Could this resemble a process similar to the dissolution of the former Yugoslavia, only on a smaller scale and without war?

The problems that flew out of the Pandora’s Box that snapped open with the break-up of Yugoslavia still loom large, and those who allowed the break-up to happen the way it did cannot shift the burden of responsibility onto us. There will not be war or conflict, that is for sure, but we cannot rule out a tightening of relations in the region. The interests of Serbia have to be taken into account in each of these matters, because there is simply no stable solution otherwise.

Although other people acted as chief negotiators during the break-up of the old country, chiefly Milosevic, it seems that we still have a tendency in Serbia to undermine our own credibility with internal rows and either the lack of a clear vision of what we want, or by failing to articulate this vision before the international community. Why are we making things difficult for ourselves yet again?

We still have unfinished business with problems that came about with the break-up of the former Yugoslavia. We are a country that has only recently emerged from conflict; there is an overwhelming unemployment rate, the country is in transition and, on top of all that, it has to resolve some basic issues of international status. You cannot expect everyone to whistle the same tune in a situation like this, because different layers of society are hit in various ways by what is happening right now.

On the other hand, a number of political parties that tried to settle the issue of Kosovo by applying force still have significant electoral support. These parties have also garnered significant support because people have great difficulties making ends meet and usually everyone starts accusing the government when times are hard. This applies to all states in transition, but what exacerbates the problem here is an unresolved basic issue of status at a juncture when the Government is putting effort into a sensible solution through dialogue, but on the other hand faces the prospect of being penalised by voters for leading a responsible policy of economic and political reforms. We then have to ask who will resume these negotiations or lend support to their outcome.

What is your personal take on all that? It seemed that you were more involved in all the important debates under late PM Zoran Djindjic’s authority and that you had more impact on political and economic issues. As G17 Plus, you have now surfaced with a somewhat different platform centred on Kosovo. Is it because you do not feel fully comfortable in this style of government?

We came out with this somewhat outstanding idea after the election results in Kosovo that shocked everyone, both here and abroad. We put forward a proposal to co-operate with the world and to schedule an international conference. At that time we had no support either in or out of the country, since the Serbian Government was not recognised as a legitimate negotiator back then (he only recognised negotiators were Kosovo Serbs).

Today the situation is different, because the Serbian Government is also a valid negotiator. Opinions have also changed here about how to solve the problem of Kosovo within a wide-ranging definition of autonomy, and different solutions are possible… In the meantime, the Prime Minister and the President of State have emerged with some solutions to which we now lend our support. What we suggested was one of several options that lie on the table and all of them should remain open for the time being.

When is it realistic to expect a fresh one-year arrangement with the IMF?

I think they have made clear that it is not sensible to start negotiations before we know who the negotiators are, in other words, before the referendum in Montenegro, meaning that we cannot expect them to start before June 2006.

You said that 2006 could be a year of privatisation. How might this privatisation work in practice if our credibility is dented by the absence of an arrangement with the IMF and an unstable political situation in Kosovo?

Our aim is to conclude the process of privatisation by the end of 2006, but I cannot offer any guarantees, because if there are no investors there is no privatisation. The investor community, on the other hand, is aware that we are keen to finish this process in as soon as possible and, accordingly, keep lowering their offers. The issues of Kosovo and the process of privatisation are not directly interlinked, but the course of negotiations over Kosovo gives a general flavour to political stability in the country and investors are very sensitive in that respect.

Calculated risk

Another problem that arose during IMF negotiations was that of the concession for the Horogos – Pozega motorway. The IMF saw a high risk in this project and said the feasibility study for this concession was all wrong.

Of course there are risks, but ask the people from the IMF how they would embark upon a risk-free project to build a motorway. If the state borrows money they say it overstretches the foreign debt, and if it gives concessions there is a risk the budget will be unable to support them. But you cannot build a road without some risk. The IMF looks at these matters merely by calculating the balance of payments, while the Government has to include calculations of the balance of payments, inflation and economic growth. You can’t have the last of these three without building an infrastructure to support it.

Does this mean you were unwilling to forego this plan during negotiations with the IMF?

We can understand the IMF and their focus on balance and inflation, but this kind of narrow policy is detrimental to economic development and we are the ones who have to find a sensible measure between development and macroeconomic stability. This is the central issue of negotiations at the moment.

Achieving consensus

Foreign diplomats would like to see written consents by DSS and DS on the same piece of paper for an agreement on Kosovo? This opens up the issue of political consensus that seems beyond reach at present?

It goes without saying that the sooner we reach a consensus, the greater our chances of gaining a solution in accordance with our interests. But the fact is that a structure for negotiations of this kind is still in the making in Serbia.

Gauging reputations

When you compare the international reputations of late Prime Minister Zoran Djindjic and current Prime Minister Vojislav Kostunica, isn’t there an obvious discrepancy?

I wouldn’t like to draw such comparisons. In the first year of office there truly was a dilemma over whether this Government was capable of leading a pro-European and pro-reform policy. There is no such dilemma anymore. You could criticise us for being too slow with reforms, and we are unsatisfied with their pace as well, but there is no questioning our pro-European and reformist orientation.