Serbia-Montenegro has slipped disastrously behind the other four West Balkan states which were recognised as potential members of the Union a couple of years ago. Since then three of them (Croatia, Macedonia and Albania) have either signed, or are currently negotiating, a Stabilisation and Association Agreement (SAA), while Bosnia-Herzegovina is participating in a feasibility study which should lead on to such an agreement, the essential first step on the probably lengthy road to membership negotiations. .

Serbia-Montenegro, the largest and most populous of the states, has not even reached the feasibility study stage yet, and is sadly stuck at the end of the queue. There have been two main reasons for this. One is its failure, so far, to co-operate fully with the International Criminal Tribunal for the Former Yugoslavia (ICTY), whose chief prosecutor, Carla del Ponte, was on hand in Luxembourg on Monday to give an up-to-date report to the Foreign Ministers.

Equally to blame has been the virtual non-operation of the institutions of the state union between Serbia and Montenegro, with whom the EU was expecting to negotiate. The state union will remain, at least theoretically, in force until February 2006, after which the question of independence for Montenegro may be considered.

The EU does not want to wait until then before meaningful negotiations towards an SAA can get under way. On Monday it decided on a new twin-track policy, under which while it will still hope to deal with the state union on issues which clearly fall within its competence, the EU will talk separately to the governments of the two republics on those areas – including notably, trade and the internal market – which are, in practice, under their control

The new EU initiative may well have been prompted by the encouraging development of the election, in July, of Boris Tadic, who was in Brussels last week, as President of Serbia. Although he has few executive powers, he is an influential figure who is an outspoken advocate of full co-operation with the ICTY, political and economic liberalism and working closely with the EU

His election should act as a spur to the chronically hesitant Serbian Prime Minister, Vojislav Kostunica, to give a more decisive lead to his government. Better still it could encourage him to reinforce it by bringing in the Democratic Party (DS), of the assassinated Premier Zoran Djindzic, which is now led by Tadic.

The DS has been in opposition since March, when Kostunica finally succeeded in forming his government, three months after last December’s parliamentary elections. Although there was a clear majority in the Parliament for democratic reform, long-standing personality differences between Kostunica and Djindjic’s supporters got into the way of forming a coalition which included both their parties.

Instead, Kostunica even considered forming a coalition with the ultra-nationalist Serbian Radical party (SRS), of indicted war criminal Vojislav Seselj, which is the largest party in Parliament. Now led by Tomislav Nikolic, since Seselj surrendered himself to the ICTY, the SRS was effectively vetoed by other potential partners.

So, Kostunica ended up with a minority government, formed by his own Democratic Party of Serbia (DSS), and three smaller parties, the Serbian Renewal Movement (SPO) of Foreign Minister Vuk Draskovic, the New Serbia Party (NS) of Minister Velimir Ilic and the obscurely named G17+ party of Deputy Premier Miroljub Labus.

Ludicrously, this government has had to rely on parliamentary support form Milosevic’s Socialist Party of Serbia (SPS) to maintain itself in power, and – partly in consequence – its legislative record has since been distinctly patchy.

Fortuitously, an opportunity may soon exist for the reconstruction of the government. Within the past two weeks, Tadic has twice called on Kosovar Serbs to use their votes in the elections, on 23 October, for a parliamentary assembly, which many of their leaders had been determined to boycott since the ugly incidents of ethnic cleansing by Kosovar Albanians last March.

This was brave move by Tadic, who has since been widely demonised, and the Radicals have tabled a motion in the Serbian Parliament to remove him from the presidency. The SRS has now declared that it will back the Radicals’ initiative, thereby emphasising just how unreliable a source of support it is for the government.

If Kostunica, who ultimately if reluctantly threw his support to Tadic in the second round of the presidential election, enabling him to overhaul Nikolic who had led on the first ballot, can now bring himself to include the DS in his team, he will provide himself with a parliamentary majority and a much firmer base for pursuing his reform programme.

This would send an encouraging message to the international community, at a time when donor help is beginning to dry up, and private foreign investment is increasingly hard to come by. It will need to be backed up, however, by a number of other crucial steps.

Most urgent is the need to provide full-hearted co-operation with the Hague Court, stepping up the drive to find Radko Mladic, who is widely believed to be living in Serbia (while Radovan Karajic is more likely to be in the Serbian Republic of Bosnia), and handing over three other generals who have recently been indicted.

Equally important is to reform the judiciary and the media to make them functional and independent, and to provide increased security for national minorities, including Hungarians in Vojvodina who have recently complained of increasing harassment by Serbs, though Tadic claimed during his visit to Brussels that the incidents had been exaggerated.

Serbia – and Kostunica’s government in particular, may now be at a crossroads. If it seizes the opportunities open to it, Tadic’s claim, made last week to European Voice, that it was a “realistic expectation” that Serbia could join the EU by 2012, could prove justified. If not, his country faces a long period of isolation and further decline.