Summary of Recommendations

This paper examines the current constitutional debate on the future of the Federal Republic of Yugoslavia, and finds it to be frustratingly short on content. It considers the motivations of the major political players and explores the interests of various groups of citizens. It finds that there may be a real opportunity for ambitious forward-looking politicians in both Serbia and Montenegro who are willing to address the concrete concerns of those citizens most directly affected by the constitutional debate, even prior to a referendum in Montenegro.

A referendum on Montenegrin independence, as announced by the Montenegrin authorities for spring 2002, cannot serve as a substitute for substantive dialogue between Belgrade and Podgorica. A referendum is likely to bring one of only two outcomes: a narrow majority in favour of independence, or a narrow majority against. Neither result would answer the question of how to establish a functioning federation, or how economic and social relations between Serbia and Montenegro should develop in the event of separation. Unless there is serious dialogue in the meantime, a referendum will leave the real issues unresolved.

This is the moment to begin serious inter-republican dialogue and a search for common interests. For the outside world, this is the hour for mediation: offering the services of an honest broker helping to identify common ground in advance of any referendum. Our paper offers an Agenda for Dialogue to help stimulate this process. It suggests that a positive dialogue between Serbia and Montenegro, supported by the federation presidency, could be structured around three components:

I. The first step would be to develop a Joint Declaration of Core Principles which are to be respected in any constitutional settlement. Such a declaration could be debated and adopted as a resolution in the Republican and FRY parliaments. The focus should be on reassuring ordinary citizens and facilitating a more constructive public debate. These core principles might include:

i) The border between Serbia and Montenegro will remain open, facilitating free movement of people between the two republics.

ii) All sides commit themselves to adopting liberal citizenship arrangements. Citizens of the Republics of Serbia and Montenegro will have rights equivalent to those exercised across the European Union by citizens of EU member states. Protection of the rights of ownership of property and businesses will be guaranteed in both republics. There will be free choice of residence, including for the purposes of study or retirement.

iii) The current business environment between Serbia and Montenegro must not be allowed to deteriorate any further. Joint efforts will be undertaken to ensure free movement of goods, services and labour, and to develop a co-ordinated approach to legislative reform that affects the business environment.

II. In parallel with the development of a Joint Declaration on Core Principles, the two republics should set up inter-republican working groups to improve co-ordination in practical areas, with the aim of delivering concrete benefits to citizens. It is remarkable that FRY has a special relations agreement with neighbouring Republika Srpska and a special envoy for relations with Kosovo, but that Serbia and Montenegro have no fora for inter-governmental co-operation. Suitable areas might include: institutionalised co-operation between law enforcement agencies; co-operation and co-ordination of reform efforts in areas of republican responsibility (judiciary, education, etc.); co-operation in the development of transport infrastructure, with a view to facilitating travel between the republics; co-operation in telecommunications to lower the costs of inter-republican communications; and continued co-operation in cultural and sporting affairs.

III. The final and most complex phase of the dialogue would require an open debate on the main features which the two republics would expect from a new constitutional settlement. Rather than starting from theoretical constitutional considerations, these issues should focus on the three key areas which both republics agree should remain the province of joint institutions: defence; foreign policy; and economic union. The dialogue should concentrate on articulating common interests, designing credible decision-making mechanisms and identifying the financial basis for joint institutions.

~ Table of Contents ~

The Fata Morgana of a Referendum 1

Non-talks 3

Two proposals 4

Political interests in Belgrade 5

The Federation and the reform agenda 7

Yugoslavia’s citizens 9

Business 10

Travel 11

Telecommunications 12

Citizenship 12

Cultural links 12

An Agenda for Dialogue 13

1. A statement of core principles 14

2. Inter-governmental co-operation 14

3. The three pillars of a new constitutional settlement 15

3.1. Defence structures 15

3.2. Foreign policy 16

3.3. Economic union 16

Conclusion 17

Politics, interests and the future of Yugoslavia:

an Agenda for Dialogue

The Fata Morgana of a Referendum

For much of the past year, the confused constitutional situation in the Federal Republic of Yugoslavia has left the Yugoslav federation trapped in limbo: neither one state nor two.[1] As Yugoslavia has sought to return to full membership of the international system, the costs of this unfortunate state of affairs have continued to rise.

After a series of unsuccessful efforts to initiate a dialogue between Belgrade and Podgorica on the future of the FRY, federal president Vojislav Kostunica, Montenegrin president Milo Djukanovic and Serbian prime minister Zoran Djindjic finally met on 26 October 2001, only to conclude that the two proposals of a union of sovereign states and a renegotiated federal compact were irreconcilable. “We have tried today to bring our two positions closer, and we concluded that this is not possible”, Kostunica announced after the meeting, adding that “this practically means that the Montenegrin public should vote on the issue in a referendum.”[2] According to Djukanovic, the parties agreed that “there is no need for a further exchange of arguments well-known to one and the other side and to the broader public. We agreed that continuing to waste time does not serve the interests of either Montenegro or Serbia in advancing our desire to create a European future and to set out on a road of constitutional procedures which meet democratic standards.”[3]

Over several years, the prospect of an independence referendum in Montenegro has been the fata morgana of Yugoslav politics – always on the horizon, somehow never getting any closer. The Montenegrin authorities have now announced a referendum on independence to take place in spring 2002. Given the threat of boycott by the opposition SNP and disagreement even among the pro-independence parties on basic questions such as the minimum turn-out required, it remains far from clear if and when the referendum will take place. However, even if it does go ahead, it will not resolve the deadlock in relations between Serbia and Montenegro, and cannot serve as a substitute for substantive dialogue between Belgrade and Podgorica.

If all segments of the Montenegrin electorate were to participate, the most likely outcomes are a slight majority in favour of independence, or a slight majority against. The Montenegrin leadership’s preferred outcome – a vote in favour – would not equate with a broad consensus within Montenegrin society, nor would it guarantee international support, nor deliver the union of “brotherly states” with Serbia which Djukanovic has promised the citizens of Montenegro. Conversely, a vote against independence, although it may be welcomed in Serbia and abroad, would not dispose of the independence issue. Most importantly, it would not even begin to answer the question of what to do with the current, dysfunctional federation. As in the former Czechoslovakia, the key to whether the federation stands or falls lies in the choices made by political elites in the two republics.

This is not the first time in the history of the Third Yugoslavia that a referendum has been used as a substitute for serious constitutional debate. The Federal Republic of Yugoslavia (FRY) was proclaimed in haste in April 1992 on the ashes of socialist Yugoslavia (SFRY). It was built on the assertion that Serbia and Montenegro was the continuation of the former SFRY, from which the other four republics had unilaterally seceded – a proposition rejected by the international community, which treated the FRY as a new state. The constitution was drafted in haste by a small circle of experts and promulgated by an SFRY parliament from which most of the elected delegates had long gone. A referendum was held in Montenegro, but only on the question – do you want a common state with Serbia? – not on the constitution itself.[4] In the absence of any real constitutional process, the new constitution simply replicated many features of the old Yugoslavia, particularly its heavy emphasis on equal representation and consensual decision-making in federal bodies. Only much later did anyone begin to consider whether this was appropriate in a highly asymmetrical, two-member federation, where one republic boasted over ninety percent of the population and economic resources.

Table 1: An asymmetrical federation[5]

	Serbia	Montenegro	Total*
Population	92 %	8 %	8.4m
GDP (estimate)	92.5 %	7.5 %	DM 17,756m
Federal budget	100 %	—	DM 1,529m
Yugoslav Army	99 %	1 %^**	DM 1,071m
Seats in FRY Lower house	78 %	22 %	138
Seats in FRY Upper House	50 %	50 %	40
FRY government positions	50 %	50 %	10

* excludes Kosovo

^** contributions in kind by Montenegrin public-utility companies (electricity, water, etc.)

As it transpired, the new state never functioned as envisaged in the constitution. The federal structures were freely ignored by both Belgrade and Podgorica, and after 1998 were rapidly dismantled. As one Belgrade institute has said, “the Constitution was observed as ill as it was proclaimed, and most of all by those who proclaimed it”.[6]

To resolve the current constitutional confusion, the two sides will need to answer the questions that were not properly addressed in 1992. Is Serbia willing to share power on a parity basis with Montenegro? Are the Montenegrins prepared to renounce some autonomy in order to benefit from being part of a much larger economy? No referendum, particularly one held in only one republic without substantive alternatives on the table, will absolve the political leaders of the responsibility of answering these questions.

Non-talks

The joint admission of failure in October was preceded by a series of talks about talks which had ended, predictably enough, in disarray. On 19 September, federal president Kostunica sent out invitations for a meeting in Belgrade on the federal question. The Montenegrin president and prime minister refused to attend because of the presence of federal prime minister, Dragisa Pesic, a Montenegrin from the opposition SNP whose mandate is not recognised by the Montenegrin government. In the circumstances, Serbian prime minister Zoran Djindjic also announced that he saw no reason to participate.[7] Kostunica accused Djindjic of being “insufficiently engaged in the preservation of the federal state, to put it mildly”,[8] while Djindjic maintained that the meeting had been hastily organised and ill-prepared. “It should have been preceded by ten or more informal meetings to prepare the ground. We should take a step back so that officials can meet several times and reach agreements in principle on important subjects. Agreements cannot be made in front of the cameras.”[9]

So far, none of the leading politicians has been willing to take on a proactive role. Kostunica has declared that it is up to the Montenegrins to decide what he describes as a “Montenegrin-Montenegrin issue”.[10] Slobodan Samardzic, constitutional adviser to Kostunica, commented in a recent interview:

“People want to see reforms, changes, some movement forward… If the federation survives – good, if Serbia becomes independent, which depends on Montenegro – this is also not a bad option. For this reason, DOS politicians have a good space for manoeuvring”.[11]

This flexibility masks a surprising passivity in the face of an issue as basic as the survival of the state. At the same time Serbian premier Djindjic seems content to leave the lead to Kostunica, noting that “for as long as Kostunica has the initiative, I think we should give him a chance.”[12] Montenegrin president Djukanovic, openly committed to the goal of independence, has so far preferred to play for time, waiting for a more favourable political environment at home.

Meanwhile, as the leading politicians quarrel, each successive political crisis drives the two republics further apart. If in the summer of 2000 it looked as though the FRY might be heading for violent collapse, the prognosis is now less dramatic but not much more positive: a steady deterioration in relations, leading to a messy and protracted divorce.

Two proposals

There are two proposals currently on the table. In 1999, the Montenegrin government presented a platform on new relations between the two republics, which was then reformulated in December 2000. It offers a union of two independent states. The response from Kostunica in January 2001 advocated restructuring the existing federation. The principal elements of the Kostunica document were repeated in a new proposal by DOS representatives and the Montenegrin “Together for Yugoslavia” coalition, approved by the federal parliament on 30 August 2001.

Both of these proposals tend to skirt around the more difficult issues. The Montenegrin document foresees a union of two independent states with a common foreign and defence policy and a common market, including joint monetary and customs systems.[13] In these areas, the role of the central bodies – a unicameral assembly, a president and a council of ministers – would be limited to the co-ordination or harmonisation of policy between the two member states. Central regulation is not contemplated. The Montenegrin proposal begs the question of whether Montenegro is really willing to compromise in areas where its interests diverge from Serbia’s – for example, by abandoning its independent currency and central bank, or raising its customs rates to Serbian levels. Without prior agreement on the decision-making procedures, weak central organs would quickly become deadlocked.

The Serbian document foresees a federal president and government elected by a bi-cameral federal parliament, a federal court, a national bank, and an ombudsman. The federation would have exclusive responsibility for foreign policy, defence, border control, the monetary system, customs, contracts and tort law, securities and judicial and administrative procedure. The federal assembly would lay down basic principles in a number of other areas, including human rights protection, property relations, transportation, communications, taxation, banking and foreign trade, which would then be elaborated further by the republican parliaments.[14]

The Serbian document glosses over the problem of how power would be shared between the two republics at federal level. How would the two republics contribute to the formulation of a “common” foreign policy? Would legislation to guarantee the common market require approval by both republican governments? Would the Montenegrin members of the Supreme Defence Council have a right of veto over the deployment of the Yugoslav army, even though 95 percent of the budget and personnel would come from Serbia?

The shortcomings in the Serbian proposal raise the question of whether the pro-Yugoslav forces in Serbia expect to be able to dominate the federal institutions, as they have since their inception, or whether they are really willing to share equal power with the Montenegrins, as envisaged in the 1992 constitution. If one measures the Belgrade establishment by its deeds, one gets the impression that power-sharing is not on the agenda.

The Milosevic-era practice of overruling the Montenegrin representatives whenever they fail to support the Serbian interest has continued under the new regime. The most dramatic example was the transfer of Slobodan Milosevic to the Hague Tribunal in June 2001. The Montenegrin federal representatives, led by the pro-Yugoslav and formerly pro-Milosevic Socialist People’s Party (SNP), refused to support the passage of a law on co-operation with the Tribunal, fearing a backlash from their own constituency in Montenegro. With the donors’ conference approaching on 29 June, the DOS ministers in the federal government adopted a governmental decree on co-operation, which was then suspended by the federal constitutional court pending a review of its constitutionality. Under heavy pressure to resolve the matter before the donors’ conference, the Serbian government bypassed the federal constitutional court by applying the statute of the Hague Tribunal directly as a general rule of international law,[15] and by extension applying the Serbian republican constitution over the federal constitution. The decision was signed by Serbian prime minister Djindjic at an emergency session of the Serbian government on 28 June and printed in the official gazette on the same day.[16] As widely reported, the extradition was carried out in time to allow the donors’ conference to proceed.

The extradition crisis and a number of similar incidents[17] illustrate graphically the Serbian attitude to the federation whenever the interests of the Serbian and Montenegrin representatives diverge. The Serbian government may support a fair-weather federation, but its willingness to subject its vital interests to a Montenegrin veto is in doubt. This structural dilemma lies at the heart of the Yugoslav question, contradicting the notion that the future of the federation is for the Montenegrins to decide.

Political interests in Belgrade

Given the division within Montenegrin society over the question of independence, a solution from the Montenegrin side looks unlikely, even if a referendum proceeds in the spring. So why are Serbian politicians unwilling to take the initiative? The answer seems to be that, in some circles, keeping the federation in limbo seems to offer short-term, tactical advantages.

Serbian prime minister Zoran Djindjic, the strong man at republican level, professes to be largely indifferent to the fate of the federation. When accused of this by Kostunica, he responded: “the fact is that what is today called the federal government is only a duplicate of the Serbian government, since it has no jurisdiction over Montenegrin territory. I regret that this is so, but it is through no fault of mine. This is not within my area of competence. I have an obligation as prime minister to protect the interests of the citizens of Serbia and I do not want to view a fiction as God-given.”[18]

In the meantime, Djindjic benefits from the status quo. In an increasingly public and acrimonious political contest with Yugoslav president Kostunica, the current constitutional confusion works to his advantage. He has built an extremely strong power base at republican level, where he controls the key institutions. Djindjic is able to command a majority in the Serbian parliament without the support of Kostunica’s Democratic Party of Serbia. In the Serbian government, the division of posts among the 18 DOS parties left Kostunica’s party with only the health ministry and a single deputy prime minister, before it withdrew from the government altogether in mid-August. Kostunica is unable to demand a stronger position within the Serbian government without alienating the smaller DOS parties.

This leaves Kostunica paying the political price for the status quo. On the one hand, he is Yugoslavia’s most vocal supporter, yet unable to arrest its slide into irrelevance. On the other hand, he is the one Serbian politician most clearly disadvantaged by the current arrangements. Despite being the leader of the most popular political party in the country, he has little direct power and is easily marginalised by his DOS “allies” at Serbian level. He seems increasingly frustrated by his limited access to the real corridors of power. He has openly attacked the Serbian government’s record: “Reforms have neither been carried out nor launched. The government is not acting adequately, it is bulky, insufficiently operative, and it does not pay much heed to the principles of a legal state in its decrees and conclusions.”[19] He has also fought to increase his informal influence over republican institutions, particularly the security services.

However, so long as Kostunica remains president of a purely fictional federation, these conflicts are mere shadow-boxing. Djindjic pursues his own agenda undeterred, while Kostunica’s political star slowly wanes. In December 2000, Kostunica’s personal approval rating sat at 59.3 percent, dwarfing Djindjic’s 5.7 percent. By August 2001, Kostunica’s approval had declined to 32.1 percent, while Djindjic’s had climbed to 13.1 percent.[20]

If the Yugoslav federation were to be dissolved, or restructured to limit its powers even further, Kostunica may be tempted to contest the Serbian presidency at the next election. Djindjic is in no hurry to bring this about. For his part, Kostunica remains immobilised by his ideological commitment to Yugoslavia and his refusal to give ground to Djukanovic in the constitutional debate.

The Federation and the reform agenda

One group that may become drawn further into the constitutional fray are the pragmatic and influential advocates of economic reform in Belgrade, whose most prominent face is the deputy federal prime minister, Miroljub Labus.

The reformist wing of the Belgrade political establishment, led by figures from the influential economic think-tank G17, entered government largely agnostic on the Montenegrin question, but determined to advance the goal of economic reform and oversee the country’s reintegration into the international financial institutions. A year into the process, it has become apparent that the constitutional confusion is acting as a brake on the reform process, particularly concerning Yugoslavia’s external economic relations.

At present, the Yugoslav state has no common customs or monetary system, no joint fiscal system and no capacity to implement a common economic policy. The two republics (and Kosovo) each collect their own revenues and control by far the largest share of public funds (see Table 2). Even formally, the federation is largely dependent on republican institutions to implement its decisions.

Table 2: 2001 budgets in FRY (million DM)[21]

Planned expenditures 2001	Federation	Serbia	Montenegro
Total budget expenditures	1,529.1	4,312.3	438.2
Defence	1,071.0	-	-
Foreign Affairs	90.6	-	5.5
Interior Affairs	10.7	566.7	54.3
Social Affairs, Labour, Health	119.6	598.5	58.4
Education, Science, Sports	2.4	807.5	140.2
Customs Administration	28.9	-	4.0
Extra-budgetary expenditures