	Political Background

Despite defeats in wars in Croatia, Bosnia and Kosovo, international isolation and theimpoverishment of his people, Serbian strongman Slobodan Milosevic remained in power for morethan a decade. His reign came to an end on October 5, 2000, when he wasdeposed from power by a popular revolt after he refused to concede defeat in an election for the postof President of the Federal Republic of Yugoslavia (FRY) won by his opponent, Vojislav Kostunicaon September 24, 2000. (1) Milosevic's party, the Socialist Party of Serbia (SPS) was also trounced in simultaneous electionsto the federal parliament and local governments. Organized crime, extremists within the Serbian military and security apparatus, and thelinks between them continue to post a threat to Serbia's democratic development and Euro-Atlanticintegration. The monarchist and moderate nationalist Serbian RenewalMovement, in coalition with the New Serbia party, won 22 seats. The mostcontroversial aspect of the Serbian government is its dependence on support from the SPS, whichdoes not have ministers in the government but provides it with a majority in parliament. On June 13, 2004, Serbia held a presidential election. These results confirmed the growing strength of Tadic's pro-WesternDemocratic Party but also continued strong support for the Radicals. In October 1997, Djukanovic was elected President ofMontenegro. After Milosevic's fall, efforts by Montenegrin leaders to push forward with independencefrom Yugoslavia were stalled by international opposition, particularly from the European Union. On May 21, 2006, Montenegro held a referendum on independence from the Serbia andMontenegro union. A series of corruption scandals have marred privatization efforts. U.S. Policy

In its policy toward Serbia and Montenegro, the Administration has supported the country'sdemocratic transition and integration into Euro-Atlantic institutions. On June 13, 2006, theUnited States recognized Montenegro as an independent country. Cooperation with the War Crimes Tribunal

The fate of Milosevic and other persons indicted by ICTY has been a controversial issue inSerbia's relations with the United States. In each of the past six fiscal years (FY2001-FY2006),Congress has conditioned U.S. aid to Serbia after a certain date in the Spring of that year on apresidential certification that Serbia has met certain conditions, especially cooperation with theICTY. The committee report for theHouse-passed version of the FY2007 foreign aid bill ( H.R. The law said that the United States should support the membership of the FRY to regionaland international organizations subject to a certification by the President that the FRY has appliedfor membership on the same basis of other former Yugoslav republics, and has taken steps to settleissues related to state liabilities, assets and property. On March 5, 2003, the House passed H.R. The provisionconditioned U.S. aid to Serbia after May 31, 2006, on "(1) cooperating with the InternationalCriminal Tribunal for Yugoslavia, including access for investigators, the provision of documents,and the surrender and transfer of indictees or assistance in their apprehension, including making allpracticable efforts to apprehend and transfer Ratko Mladic and Radovan Karadzic, unless theSecretary of State determines and reports to the Committees on Appropriations that these individualsare no longer residing in Serbia; (2) taking steps that are consistent with the Dayton Accords to endSerbian financial, political, security and other support which has served to maintain separateRepublika Srpska institutions; and (3) taking steps to implement policies which reflect a respect forminority rights and the rule of law." Figure 1.
Serbian strongman Slobodan Milosevic's long reign came to an end in October 2000, whenhe was deposed from power by a popular revolt after he refused to concede defeat in an election forthe post of President of the Federal Republic of Yugoslavia (FRY) won by his opponent, VojislavKostunica. The new government suffered a great blow in March 2003, when Serbian Prime MinisterZoran Djindjic was murdered by organized crime figures linked to the Serbian security apparatus. Organized crime, extremists within the Serbian military and security apparatus, and the linksbetween them continue to pose a threat to Serbia's democratic development.
On December 28, 2003, the extreme nationalist Serbian Radical Party won a stunning victoryin early Serbian parliamentary elections, but fell short of a majority. In March 2004, a minoritygovernment of democratic parties formed a government without the Radicals. However, thegovernment depends on the parliamentary support of the Socialists (Milosevic's former party), whoare not in the government but are in a position to extract concessions from it. Democratic forces inSerbia received a boost from Serbian presidential elections in June 2004, which resulted in a victoryfor Boris Tadic, a pro-Western, pro-reform figure over a Radical Party candidate.
In a years-long confrontation with Milosevic, Montenegrin leader Milo Djukanovic seizedcontrol of virtually all levers of federal power on the republic's territory. He sought to rapidlyachieve an independent Montenegro, but opposition from the United States, European Union andRussia stymied these efforts. After a largely unsuccessful three-year decentralized union with Serbia,Montenegro voted for independence in a referendum held on May 21, 2006. Montenegro'sindependence has been recognized by Serbia, the United States, the European Union, and othercountries.
The United States and other Western countries have sought to encourage Serbia andMontenegro's integration into Euro-Atlantic institutions. However, these efforts have been hamperedby controversy over the future status of Serbia's Kosovo province, Serbia's failure to fully cooperatewith the Yugoslavia war crimes tribunal (in particular its failure to arrest former Bosnian Serb armychief Ratko Mladic), and Serbia's fitful progress in such areas as rule of law and military and securitysector reform.
Since Milosevic's downfall, Congress has appropriated significant amounts of aid to Serbiaand Montenegro to promote reforms. In each fiscal year from FY2001 through FY2006, Congressconditioned U.S. aid to Serbia on a certification by the President that a series of conditions had beenmet by Serbia, above all cooperation with the Yugoslav war crimes tribunal. The House has passedsuch a certification provision in its version of the FY2007 foreign aid bill ( H.R. 5522 ).This report will be updated as events warrant.