DATE=03/22/02

TYPE=CORRESPONDENT REPORT

TITLE=Serbia Aid (L-ONLY)

NUMBER=2-287876

BYLINE=BARRY WOOD

DATELINE=WASHINGTON

INTERNET=YES

CONTENT=

VOICED AT:

INTRO: Serbia and Montenegro Friday reached a preliminary agreement with the International Monetary Fund for a huge 800 million dollar three year loan. But V-O-A's Barry Wood reports the I-M-F accord, to be ratified in May, could be jeopardized by an American demand that Belgrade comply with several political conditions.

TEXT: In order to receive more bi-lateral U-S aid Belgrade by March 31st has to meet several Congressionally mandated conditions. The U-S Secretary of state is to decide if the conditions have been met. James Lyon, the Belgrade representative of the International Crisis Group (think tank), says Serbia is not even close to compliance.

///Lyon act///

They still have 78 Albanian political prisoners in Serbian jails. We still have Serbian financing of the Republika Srbska army (in Bosnia). They are no nearer to institutionalized cooperation with the Hague than they were a year ago. Yes, there have been some individuals arrested and transferred. But these were entirely ad hoc actions.

///end act///

The Americans say the price of a continuing 117 million dollar U-S aid program is the extradition of more indicted war criminals, the transfer of Albanian detainees to United Nations administration in Kosovo, and an end of budgetary support for the Bosnian Serb army.

Mr. Lyon, speaking from Belgrade, says there is no political backing for action on any of the American conditions.

///Lyon act///

On these issues of conditionality there is no domestic constituency what so ever in Yugoslavia except for a small, small political elite that would support any of these measures. Whether it be freeing the Albanian political prisoners or cutting financing to Srbska's army or cooperating with the Hague. So if there is no outside pressure there will be no compliance. And Serbia will become another Belarus.

///end act///

Within the government there is disagreement between reformist Prime Minister Zoran Djindjic and President Vojislav Kostunica over the advisability of further measures to placate the west.

The I-M-F's willingness to undertake a long-term lending program for Serbia and Montenegro rewards the impressive economic reform measures implemented over the past year. The I-M-F deputy managing director says Belgrade has compiled an excellent record in bringing down inflation, reforming the banking sector, achieving five percent economic growth last year, and privatizing enterprises. Even the Crisis Group's Lyon concedes that economically Serbia has accomplished more in one year than Bosnia-Hercegovina has in five.

NEB/BDW/PT