Serbian Leaders Reach Agreement on Pro-western Coalition

Serbian leaders sought to avoid a crisis and increasing international isolation yesterday by reaching a last-minute deal on a new pro-western coalition government after months of deadlock.

The nationalist prime minister, Vojislav Kostunica, and the pro-western president, Boris Tadic, reached agreement on a new cabinet amid warnings from the US and EU of a return to the dark days of the 1990s and the regime of Slobodan Milosevic.

In a decision this week that set alarm bells ringing in the west, Mr Kostunica broke off negotiations on a new government and supported an extreme nationalist for the post of parliament speaker.

Serbian leaders had been unable to agree on a government since elections in January resulted in a hung parliament. If no deal had been reached by next Tuesday new elections would have been called.

Brussels moved instantly to reward the signs of an agreement on a government of the "democratic bloc", mainly made up of Mr Tadic's Democratic party and Mr Kostunica's Democratic party of Serbia. Olli Rehn, the EU enlargement commissioner, said negotiations on eventual membership could resume if the government were formed.

The talks were frozen a year ago because of Serbia's refusal to arrest and hand over the genocide suspect General Ratko Mladic to the war crimes tribunal in The Hague. The EU talks could now resume, although there is little sign of Gen Mladic being captured. Control of the security services, central to any attempt to apprehend Gen Mladic, had been the main sticking point to agreement on a new government.

Under the deal Mr Kostunica would remain prime minister, while President Tadic would chair the national security council and his party would take the defence portfolio, including military intelligence.

Mr Kostunica has promised in the past to arrest Gen Mladic. It remains to be seen whether the new government will tackle the Mladic problem more seriously.

The crisis over the independence of Kosovo will be the new government's preoccupation. The EU and US are trying to steer a Kosovo independence resolution through the UN security council, with Serbia bitterly opposed and Russia threatening to veto it. European diplomats and US officials predict an upsurge of violence and a major international crisis if the Russians block independence for Kosovo.