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Serbia and Montenegro agree death of Yugoslavia
By Will Hardie
BELGRADE, March 14 (Reuters) - Montenegro shelved its independence plans on Thursday to form a new union with Serbia, consigning Yugoslavia to history in a deal the West hopes will avoid more violent redrawing of Balkan borders.
"We have taken an important step forward for the stability of the region and of Europe," European Union foreign policy chief Javier Solana said after signing a draft constitutional framework with leaders of the two republics.
Under heavy EU pressure, Montenegrin President Milo Djukanovic agreed to a three-year moratorium on a breakaway referendum for his small coastal republic and committed to reshape Yugoslavia as a union called "Serbia and Montenegro."
Yugoslavia, whose painful breakup spawned four of Europe's bloodiest conflicts since World War Two, would finally cease to exist but without disintegrating into more unstable parts.
But it will only happen if Djukanovic can overcome heavy opposition from allies and voters who want full independence.
After a decade of Balkan wars, the West fears Montenegrin independence would signal to ethnic Albanians in Kosovo and Macedonia and to Serbs in Bosnia that borders are negotiable, tempting them to seek separation by violent or other means.
Even Thursday's compromise deal raised hopes of independence for Kosovo among some Albanian politicians. Kosovo, now administered by the United Nations, remains part of the union.
"This agreement will accelerate the process of independence for Kosovo, because from today Yugoslavia no longer exists," said Ruxhdi Sefa, a senior official from the province's third largest party the Alliance for the Future of Kosovo.
Serbia and Montenegro, the only two of Yugoslavia's six republics not to break away since the old federation started to unravel along ethnic lines in 1991, will now draft a new constitution, along with federal leaders.
Parliaments will need to agree the document, which will replace the current Federal institutions with a new "Union" parliament, president, cabinet and army.
HARD SELL FOR MONTENEGRO
Djukanovic will find it hard to sell the deal to key pro-independence allies at home and many analysts say Serbia and Montenegro have diverged so far that it is questionable how long their new union can last.
The two agreed broadly to harmonise their economies but the document contained no detailed solutions to how to realign their highly different financial systems. Djukanovic said Montenegro would not backtrack on de facto freedoms it already enjoyed.
"I think the political public in Montenegro has every reason to be satisfied with what we have achieved with this agreement, most importantly all results of economic reforms that Montenegro has achieved over the past year have been preserved," he said.
Montenegro stopped using the Yugoslav Dinar currency in 1999, adopting instead the German mark and its successor, the euro. It was not clear how this, or the two republics' distinct markets and parallel customs systems, would be reconciled.
Djukanovic is eager not to endanger aid and rapprochement with the West but is under pressure from pro-independence Liberals on whose support his minority government depends.
Liberal Alliance leader Miodrag Zivkovic said he was shocked and called the deal a betrayal. Djukanovic's Social Democratic Party (SDP) allies also branded it a "great step back."
"Montenegrin citizens and voters are cheated, because this decision represents something which is unacceptable from a political, moral and patriotic stand," SDP spokesman Novak Adzic said. "Montenegro will have less independence."
The pro-Yugoslav opposition Socialist People's Party said Djukanovic's independence project had now completely failed.
But Djukanovic sought to soothe worries, assuring Montenegro's 615,000 people they could reconsider relations with Serbia, which has a population of 10 million, in the future.
"The agreement does not jeopardise the basic right of every people to re-examine after a certain period their stand on the future of their state," Djukanovic told reporters.
ALLURE OF EUROPE
All sides were motivated by ambitions shared across the Balkans to forge closer ties with the affluent European Union, which said they had taken a step in the right direction.
"This is good news for Europe and for the future of the Western Balkans on their road to the EU," EU Commission Foreign Relations Spokesman Gunnar Wiegand said in Brussels.
Yugoslav President Vojislav Kostunica and Djukanovic were to attend a summit of EU leaders in Barcelona on Friday to be feted for agreeing the deal, a further step in calming the Balkans.
Kostunica said the new state would embody a break with the former regime under Slobodan Milosevic, who led Yugoslavia into international isolation.
Kostunica's job will be replaced by a less powerful position in the new union, which analysts said may hasten a showdown with his ruling coalition rival, Serbian Premier Zoran Djindjic.
Elections for new institutions would force a shakeout in Serbia's unwieldy 18-party ruling alliance. Kostunica's party could run against Djindjic and his allies and Kostunica himself may challenge Djindjic for the Serbian premiership.
12:50 03-14-02
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