Serbian coalition talks to begin in Kosovo's shadow

BELGRADE, March 1 (Reuters) The parties of Serbia's rival president and prime minister open talks tomorrow on forming a coalition government, more than a month since an inconclusive election and in the shadow of independence moves for Kosovo.

The ultranationalist Radical Party won the biggest share of the vote, but the Democratic Party (DS) of President Boris Tadic is best placed to form a coalition with Prime Minister Vojislav Kostunica's Democratic Party of Serbia (DSS) and the G17 Plus technocrats.

''A wide range of issues will be discussed,'' said Zoran Sami of the DSS. ''The most important will be our position on Kosovo, on joining Europe and on the extremely important issue of how to run economic policy,'' he said.

''I don't expect there to be very wide differences concerning these issues,'' he said, but added: ''A government is not made overnight, there is no reason for any nervousness.'' Under the constitution, Serbia has until mid-May to form a new government or it must hold new elections. The country needs to adopt a new 2007 budget by March 31.

Political life, however, is dominated by a Western-backed process to grant independence to the Albanian majority of Serbia's breakaway Kosovo province, expected within months.

The DS and DSS formed the core of a shaky coalition that took power with the ouster of late strongman Slobodan Milosevic in 2000, but they fell out over how to come to terms with the isolation and war crimes fugitives he left behind.

The Democratic Party has been in opposition since 2004, and Kostunica's minority coalition relied for the past three years on the support of Milosevic's unreconstructed Socialist Party of Serbia, leaning increasingly towards nationalist positions.

WHO'S IN CHARGE? The DSS says Kostunica, championing a last-ditch bid to block Kosovo's independence with the help of Russia, should remain premier, despite the party coming third in the election.

Tadic's party has proposed former finance minister Bozidar Djelic to head the government. The West hopes he would take a softer line on Kosovo and hand over Serbia's remaining war crimes suspects -- the key to resuming frozen talks on European Union membership prospects.

''Kostunica has not made up his mind yet on what he really wants, whether he should remain prime minister and deal decisively with all the challenges facing Serbia,'' a senior political source told Reuters.

Serbia appears increasingly helpless to block independence for its cherished Kosovo province, which has been run by the United Nations since 1999, when NATO bombs drove out Serb forces accused of atrocities in a war with Albanian guerrillas.

Serbia will also face renewed calls from the European Union and United States to arrest and hand over Bosnian Serb wartime commander and genocide suspect Ratko Mladic.

REUTERS AD BST1909