Serbia is heading to the polls on Sunday (11 May) in a general election which could see the ultranationalist Serbian Radical Party (SRS) gain control over the Balkan country. As campaigning has wound down, voters appear to remain polarised between the far-right SRS led by Tomislav Nikolic and the pro-Western coalition formed around President Boris Tadic's Democratic Party (DS). Serbia's election was called three years ahead of schedule in March 2008 due to the collapse of the year-old coalition government over disagreements between Prime Minister Vojislav Kostunica's Democratic Party of Serbia (DSS) and the DS over Kosovo and further European integration. The latest poll, conducted by the Centre for Free Elections and Democracy (CeSID), indicates that the SRS is likely to get 32% of the vote, Tadic's coalition 31%, Kostunica's group (comprising the DSS and New Serbia (NS)) 12% and the Liberal Democratic Party (LDP) headed by Cedomir Jovanovic 5%. According to the CeSID, the Socialist Party of Serbia (SPS)-led group, which some have predicted would be kingmaker in the post-election period, would only get 4% of the vote making it ineligible for seats in the parliament where a 5% threshold applies. The principal and intertwined campaign issues upon which the election has been fought are Kosovo and Serbia's relationship with the European Union (EU). Both topics have polarised not only the electorate but also Serbia's principal politicians making the building of a coalition government, which is going to be likely since none of the parties are predicted to get over 50% of the vote, a serious challenge.

Main Issues: Kosovo and the European Union

The upcoming elections are widely being perceived as a referendum on Serbia's European integration, with the three main parties differing fundamentally in their outlook on the issue. The SRS, DSS-NS and DS all agree that Kosovo should be an inalienable part of Serbia, however, they are totally polarised in how to approach the EU after its endorsement of Kosovo's 17 February unilateral declaration of independence.

Powerful Nationalist Rhetoric

The ultranationalist SRS, led by Vojislav Seselj who is currently on trial at the United Nations (UN) International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague, is the strongest single party in the outgoing parliament. He has conditioned Serbia's integration with the EU as a unit on the assumption that the bloc acknowledges Kosovo as an inalienable part of Serbia. However, this is in stark contrast to reality, as Kosovo is already an independent nation supported by the majority of EU states. This makes the SRS condition for Serbia's further integration with the EU unrealistic at best. Furthermore, the SRS has announced that it will halt all forms of cooperation with the ICTY—an essential component of the EU's conditions for closer ties between the bloc and Serbia. The SRS has successfully taken advantage of the rise in nationalism which Kosovo's independence has inspired. This has allowed the party to reach out to a wider audience after having suffered in the years since the downfall of Slobodan Milosevic in 2000 due to what is being portrayed as the ineptitude of the democratic parties leading the country. He has reached out to these losers of the transition—most of whom survive on less than US$500 per month—with populist promises such as fixing prices for bread and increasing pensions for all. Its interim but effective leader is Tomislav Nikolic, who has sought to address investor and western leader concern over a possible SRS administration by issuing statement to the effect that his party is not planning to isolate Serbia and that it will seek to develop closer relations with non-EU countries, namely Russia, China and Arab nations as well as being open to building ties with individual EU countries but not with the bloc as a whole.

Pro-Western Advocates

The democratic parties in the country have decided to band together for the general elections in a bid to harness the personal popularity of DS leader and President Tadic. The Coalition for a European Serbia comprises the DS; liberal reformist G17-Plus led by Mladjan Dinkic, the monarchist Serbian Renewal Movement led by Vuk Draskovic and two minority parties—the Sandzak Democratic part (SDP) and the League of Vojvodina Social Democrats (LSV). The coalition has based its campaign on trying to convince the people that Serbia's best chance for faster growth and development lies with EU accession. Furthermore, it believes that EU membership would only strengthen Serbia's hand in the diplomatic battle to regain Kosovo, which is only just beginning. The EU has gone to great lengths in recent weeks to bolster Serbia's European perspective in a bid to increase popular support for Tadic's coalition. The EU has acquiesced to Serbia and signed a pre-membership Stabilisation and Association Agreement (SAA) on 29 April despite Serbia not fulfilling its obligations for full cooperation with the ICTY. The SAA offers trade concessions and increases eligibility for economic and financial help, gradually creating a free trade area and aligning the majority of laws with the EU as well as sending a clear signal to investors that Serbia's future lies with the EU . However, this signing as well as the announcement of a free visa deal with 17 European nations has increased nationalist criticism and solidifies the growing division between the DS and DSS. The DSS has accused the EU of looking to buy Serbia's acceptance of an independent Kosovo and that Tadic has in effect traded Kosovo for the EU .

Kingmaker Kostunica

The party which could once again prove pivotal to the outcome of Serbia's post-election landscape is the Kostunica coalition, created through his DSS and the moderate nationalist NS led by Velimir Ilic. They have been key in forming the current political situation in Serbia since they were part of the coalition government with the DS and G17. Kostunica has taken up the fight for Kosovo with a nationalist spirit which has surprised many outside the country, since he was formerly known as the mild-mannered moderate who was pivotal in the toppling of Slobodan Milosevic. The DSS-NS opposes Serbia's further integration with the EU unless it acknowledges Kosovo as part of the country. Much like the SSRS, the DSS-NS is advocating closer ties with Russia and non-European countries. The DSS-NS was pivotal following the January 2007 general election in helping the DS create a parliamentary majority and then a government—it will most likely play a very similar role in these elections. A renewed alliance with the DS is unlikely due to the bitter conflict which brought down the coalition government in March. If the DSS-NS build a coalition with the SRS, Serbia will receive a new nationalist government much to the consternation of the EU and the pro-Western forces within the country.

Economic Outlook Plagued by Political Insecurity

The immediate effects of a nationalist government are likely to be felt by Serbia's economy, which is in desperate need of 4.0 billion euro (US$ 6.19 billion) per annum of foreign investment in order to maintain its economic growth of 7%. Foreign investment has already been dwindling due to the political crisis created by Kosovo's declaration of independence. This can be perfectly demonstrated by examining the main index on the Belgrade Stock Exchange BELEX-15, which has decreased 30% since the start of the year. Several large-scale investments have already been put on hold until the present political instability is resolved. A number of agreements have been postponed until the new government is convened to vote on them, including the much publicised 900 million euro gas investment deal with Russia and construction of the Horgos-Pozeha highway by the Austrian companies PORR and Alpina, the final value of which is estimated at 1.7 billion euro. The bigger concern is that foreign investors have started reconsidering locating factories in Serbia, demonstrated by the 8 million euro investment of footwear company Geox which is on hold and the postponement of the building of a shopping centre in southern Serbia by Slovenian company Tus. Estimates put the level of investment Serbia has missed out on since the beginning of the year at a high 750 million euro. Furthermore, Serbia is the recipient of large amounts of Western aid, namely US$50 million from the United States in the last year and US$1.5 billion from the EU since 2000, which could potentially dry up should a radical-led administration take power.

Outlook and Implications

Serbia is at a crossroads—a step towards Europe or a return to nationalism and isolation. All is not lost, however, if Tadic were re-elected a period of stability and pro-European policy would return to Serbia giving foreign investors the confidence to come back. Even an SRS win would allow for some of the uncertainty to dissipate from the country's political scene, however, doubts over Serbia's long-term policy direction would undoubtedly still linger. Fears that a SRS victory would plunge Serbia back into a fresh confrontation with the West and further economic isolation, although being founded in reality, are significantly exaggerated. In order for the SRS to be able to realise its populist policies, which citizens hope would combat their increasing poverty and the 18% unemployment rate, Serbia must keep on growing, maintain foreign investment and aid—this is a reality of which the party is all too well aware. No one party is likely to win enough seats to form a government on its own, meaning that the post-election landscape will be carved through a series of possibly protracted coalition negotiations.