The European Union is surrounded by troubles after the Irish rejection of the Lisbon treaty on 12 June 2008. But if the union's west Atlantic frontier is unsettled, there are cautious signs of movement on its Balkan fringe. After more than six weeks of negotiations following Serbia's parliamentary election on 11 May 2008, a new government was finally agreed on 24 June; the ratification of former finance minister Mirko Cvetkovic as prime minister will soon be confirmed by the appointment of a cabinet. There is little definitive or irreversible in current Serbian politics, but for pro-European Union observers seeking encouragement in turbulent times this outcome of the prolonged post-election talks offers a glimmer of light for Serbia and Europe alike.

Daniel Korski is a senior policy fellow at the European Council on Foreign Relations

Also by Daniel Korski in openDemocracy:

"Europe's Afghan test" (22 January 2008)

The news was prefaced by an announcement on 21 June by Serbia's pro-European president, Boris Tadic, that discussions about forming a governing coalition would begin with - and here is the sting - Serbia's Socialist Party (SPS). If in Serbian political discourse the "beginning" of formal talks means that effectively they are near-concluded, the fact that the government would include the party of the late Serbian strongman Slobodan Milosevic (who died in The Hague in March 2006 while on trial for war crimes) was hard for many democrats to accept.

Yet there was also - thanks to both the electoral and the political arithmetic in Belgrade - a sense of inevitability about this outcome. Boris Tadic had after all followed his narrow second-round victory in the presidential elections over the hardline Serbian nationalist Tomislav Nikolic on 3 February by seeing the pro-European bloc of parties (led by his Democratic Party [DS]) scrape a win in the parliamentary vote. Then, in the post-election poker-game, it looked as if the barely-less-hardline prime minister Vojislav Kostunica's Democratic Party of Serbia (DSS) might manage to create a nationalist and anti-EU coalition of his own with Nikolic's Serb Radical Party (SRS) and the Socialists.

This nightmare prospect - to those in Serbia and the EU with hopes that the country's path to Europe would be cleared - was averted by a number of inducements: financial support from Tadic's DS to the Socialists, promises of government jobs, and pressure from the EU and Serbia's tycoons. The outlines of a pro-European coalition Involving three parties - the DS, the Socialists and the G17 Plus - began to emerge; the SPS were assigned the key ministerial portfolios of the powerful interior ministry and the money-printing infrastructure ministry ("the ministries that Russia is interested in", in the words of political analyst Slavisa Orlovic).

Boris Tadic's party - which received the largest share of votes in the election - took the prime-ministerial slot, where the contest between the technocrat Mirko Cvetkovic and the youthful foreign minister Vuk Jeremic was resolved on 27 June in favour of the former. But the years of uneasy cohabitation in Serbia between president and prime minister have helped persuade Tadic to push for a Nicolas Sarkozy-style government run from the presidential palace.

That is for a later round of manoeuvring and calculation - though already, the marginalisation of the effective deputy prime minister Bozidar Delic does not bode well. Yet there is at least the prospect that the new government will stay for a full term and bring Serbia much-needed political stability. The Socialists will have work to do to prove to their nationalist-leaning voters the benefits of joining a moderate DS-led coalition. The government's biggest internal challenge is likely to come from Mladjan Dinkic, leader of the G17 Plus, which is still smarting from being denied the post of parliamentary speaker. The SPS and G17 Plus are reported on 1 July to have agreed a deal to distribute power within the ministries these two parties control.

Tadic may seek to avoid long-term reliance on the G17 Plus by exploiting fissures inside the opposition Radical Party and Kostunica's DSS, perhaps eventually inviting breakaway factions or defectors into government.

The SRS's position in this respect may be affected by the outcome of the war-crimes trial in The Hague of its extremist leader Vojislav Seselj. If he is acquitted by the International Criminal Tribunal for the Former Yugoslavia (ICTY) and returns to lead the party, many SRS members may be tempted to leave. Meanwhile, the relations between the Socialists and the Radicals over a coalition in Belgrade city may prove to be the first step towards a bigger deal.

A tough test

The decisive factor in shaping Serbia's political future, however - including its European orientation - will be the performance of the new government. The two main coalition partners - the DS and the Socialists - have very different worldviews as well as different policies on many issues.

Among openDemocracy's many articles on Serbian politics and the region:

Vicken Cheterian, "Serbia after Kosovo" (18 April 2007)

Ginanne Brownell, "Kosovo's Serbs in suspension" (10 December 2007)

Eric Gordy, "Serbia's presidential election: the best-laid plans..." (21 January 2008)

Eric Gordy, "Serbia chooses a future, just" (5 February 2008)

Timothy William Waters, "Kosovo: the day after" (18 February 2008)

John O'Brennan, "Kosovo: the hour of Europe" (14 January 2008)

Dejan Djokic, "Desimir Tosic (1920-2008): in memoriam" (20 February 2008)

Eric Gordy, "Serbia's political carousel" (12 May 2008)

The latter include Serbia's relations with Nato, and the even more toxic question of the future of Kosovo, after the new state's declaration of independence on 17 February 2008 and its adoption of a new constitution on 15 June. Vojislav Kostunica left a difficult legacy here by using his power to force through an amendment to Serbia's own constitution in October 2006 entrenching "ownership" of Kosovo; while Serbia's diplomats succeeded in aligning with Russia, splitting the EU and inhibiting many countries from recognising Kosovo's independence.

European diplomats, however, are hopeful that the EU can come to a modus vivendi with the new government in Belgrade: "agreeing to disagree" over Kosovo, allowing the reconfiguration of the United Nations mission into a European Union one there, expanding the EU's police-and-justice operation - all the while continuing the process of Serbia's move towards EU integration.

There are many precedents for such a policy. They include the relationship between East Germany and West Germany during the cold war, which functioned well without formal recognition; and even that between the Republic of Ireland and Northern Ireland during the period when (until the constitution was amended in 1999 after a referendum) Dublin effectively claimed sovereignty over the north.

Even though a new government will continue the harsh rhetoric, President Tadic will likely pursue a pragmatic line. On the ground, Belgrade will seek to avoid any violence and try to separate Kosovo from other issues, especially Serbia's EU integration. The convening by the Serb minority in Kosovo (mainly around the Mitrovica in the north) of its own parliament on the potent date of 28 June indicates the scale of the problems to be solved, but is not itself an insuperable barrier to progress on a larger front. As one European ambassador told us: "There are ways to disagree and with Tadic; unlike with Kostunica, we can disagree amicably".

A further sensitive issue the government will have to address is that of the arrest of Serbia's war-crimes suspects, especially the most notorious - Ratko Mladic and Radovan Karadzic. The Socialists have been virulently opposed to the Hague tribunal, and a number of party members have reason to fear indictment over their roles during the Milosevic era. This, allied to widespread popular denial of Serbia's offensive role in the wars of the 1990s, would implies that there will be little movement in this area. Yet the muted reaction to the arrest of the indicted Stojan Zupljanin on war-crime charges, and the reported (private) promise by Socialist leader Ivica Dacic to western ambassadors that he would recommend full cooperation with ICTY prosecutor Serge Brammertz, raises the prospect of a more hopeful current of pragmatism.

A stony path

A larger source of optimism relates to Serbia's European Union integration. The new parliament is likely to ratify the essential stabilisation and association agreement (SAA) - the first real step towards EU accession - and after a two-year hiatus the legislature is likely to begin passing much-needed laws required by this process.

But much remains to done to clear the hurdles between Belgrade and Brussels. They include difficult reforms of the police, defence and judicial systems. The new government lacks a bold short-term plan, and the intervnetion of the long summer holidays means that progress is unlikely to start before winter. By then, it will be clearer whether a Sarkozy-style government led by President Tadic can press difficult reforms across a number of ministries.

Amid the distress of pro-Europeans over Ireland's rejection of the Lisbon treaty, the formation of a Serbian government with a pro-European disposition - especially one whose election and formation owes much to European diplomatic legerdemain - is a cause of modest cheer. The key word, however, is modest: Serbia's summers can be hot and winters cold, in more than the climate.