Former Milosevic aide takes power in Serbia, EU uneasy

BELGRADE Fri Jul 27, 2012 10:21am EDT

Ivica Dacic speaks during the 8th Congress of Socialist Party of Serbia in Belgrade in this December 11, 2010 file photo. REUTERS/Marko Djurica/Files

Ivica Dacic speaks during the 8th Congress of Socialist Party of Serbia in Belgrade in this December 11, 2010 file photo.

Credit: Reuters/Marko Djurica/Files

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BELGRADE (Reuters) - The former spokesman of late strongman Slobodan Milosevic took power in Serbia on Friday, telling Europe and the Balkans to forget the past and not fear the return of a political alliance that once led the country to war with NATO.

After 12 hours of heated debate, lawmakers in the 250-seat Serbian parliament voted 142 to 72 to endorse Socialist Party leader Ivica Dacic as prime minister at the helm of a coalition with nationalists.

The alliance condemns to the opposition benches the main reformers who ousted Milosevic in 2000, raising concern in the West that Serbia might veer from the path they took towards joining the European Union.

Dacic said EU membership was "a key goal", but that he would not be made to answer anymore for Serbia's dark past.

"If they say the word Balkan means 'blood and honey', there's been enough blood, it's time to feel the taste of honey too," the career politician told the assembly during a debate that ran late into the night.

"Serbia is offering the hand of reconciliation, to all. Let's not deal anymore with the past, let's deal with the future."

The West is closely scrutinizing Dacic's ascent to the most powerful post in Serbia - in alliance with President Tomislav Nikolic's nationalists - for any sign that the country may drift from the EU path chosen by the seven states carved from old federal Yugoslavia.

Nikolic and the Socialists last shared power at the close of Milosevic's disastrous 13-year rule, when his forces expelled almost 1 million ethnic Albanians from Kosovo and NATO bombed in 1999 to wrest the province from him.

Dacic, 46, was Milosevic's spokesman, railing against the West. He now says Serbia's future is in the EU, but Western diplomats admit to doubts over whether he is willing and able to carry out the political and economic reforms it will take.

"A key goal of this government will be the acceleration of European integration and maximum effort to secure a date for the start of accession talks," Dacic said.

KOSOVO CHALLENGE

His government inherits an economy sliding into recession, a jobless rate of 25 percent and a shrinking, ageing population scraping by on an average net monthly wage of 340 euros ($420).

In a speech that cited economists John Maynard Keynes and Paul Krugman and American industrialist Henry Ford, Dacic dismissed calls for "belt-tightening" at the cost of pensions and pay, saying only economic growth would bring down Serbia's growing debt burden of 55 percent of output.

The West says Serbia's progress towards EU membership rests on it coming to terms with the loss of Kosovo, an impoverished territory steeped in history and myth for many Serbs but recognized by almost half the world as independent.

Dacic said he was ready to continue EU-mediated talks with Kosovo aimed at "normalizing life for all citizens". But Serbia would never recognize it as independent, he said.

The EU says it won't have to, at least explicitly, but it will have to loosen its grip on a Serb-populated slice of Kosovo's north, and stop obstructing the country's development.

That will determine how quickly the EU opens accession talks, after making Serbia a candidate for membership in March.

Later on Friday, EU foreign policy chief Catherine Ashton and Enlargement Commissioner Stefan Fule welcomed the new Serbian government but warned about the need for reforms and dialogue with Kosovo.

In a joint statement Ashton and Fule said they "expect the new government to continue to deliver on the European integration agenda, regional cooperation and reconciliation, including ... early resumption of dialogue between Belgrade and Pristina and swift implementation of the agreements reached."

Ex-Yugoslav republic Slovenia joined the EU in 2004. Croatia is next in 2013 and Montenegro began talks last month.

Dacic was interior minister in the last government with the reformist Democratic Party from 2008, until voters punished the Democrats for perceived elitism and an economic downturn.

The new coalition includes the technocrat United Regions bloc, whose leader Mladjan Dinkic becomes finance minister. Trying to settle markets, Dinkic says Serbia will revive a frozen loan deal with the International Monetary Fund.

Diplomat Ivan Mrkic, ambassador in Cyprus under Milosevic at a time when, reformers say, millions of dollars were siphoned out of Serbia via Nicosia, became foreign minister. ($1 = 0.8130 euros)

(Writing by Matt Robinson; Editing by Mark Heinrich)

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