Panic forces out Milosevic ally

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THE RESIGNATION yesterday of the Yugoslav Foreign Minister, Vladislav Jovanovic, marks a new stage in the bitter power struggle between supporters of the reformist Prime Minister, Milan Panic, and the nationalist President of Serbia, Slobodan Milosevic. The outcome could determine whether Serbia opts for a lasting peace or renewed war.

Mr Jovanovic, a nationalist hardliner and a close ally of Mr Milosevic, sent a furious letter of resignation to Mr Panic. He accused the Prime Minister of 'ever more openly following a policy opposed to the interests of Serbia and the Serbian people'. He added: 'I do not agree with your concepts for resolving the Yugoslav crisis.'

The Foreign Minister is the most important Milosevic supporter to be edged out of office since Mr Panic swept in with his new broom two months ago. The exit of Mr Jovanovic was forced. Mr Panic refused to let him speak at the recent London conference on Yugoslavia. He made it clear he regarded his Foreign Minister as a dud who was compromised by his involvement in two disastrous wars in Croatia and Bosnia. Without naming Mr Jovanovic, Mr Panic angrily complained he was 'tired of losers'.

His departure follows the axing of another key Milosevic ally, Mihaly Kertes, the head of the rump Yugoslavia's secret service. Mr Kertes was fired on the first day of the London conference on Yugoslavia, accused of endorsing a policy of 'ethnic cleansing' in Serbia. He was well known as an arms smuggler from Serbia to Serbs fighting in Croatia and Bosnia.

The fight between Mr Panic and the hardline nationalists in Serbia is likely to intensify in the aftermath of Mr Jovanovic's angry walkout. Last week a group of Serbian nationalists tried to sack Mr Panic in parliament. 'We gave Panic the yellow card, not the red card,' said Mihajlo Markovic, deputy chief of Serbia's ruling Socialist Party. He said the vote was a warning that Mr Panic was going too far too fast.

Nationalists were incensed by Mr Panic's performance at the London conference. He seemed bent on publicly humiliating the Serbian President, and compounded the crime by trying to hustle through on-the-spot recognition of Croatia's pre-war borders.

The irony is that Mr Panic has become the gadfly of the same nationalist leaders in Serbia who offered him the job in the first place. The multi-millionaire American was tempted back to Belgrade, which he left 30 years ago, by President Dobrica Cosic, with the support of Mr Milosevic. Mr Markovic is frank about why they wanted Mr Panic. 'We wanted him to get sanctions lifted.' In the light of his subsequent behaviour, Mr Markovic admits they took 'a calculated risk'.

To replace the Milosevic hardliners, Mr Panic is filling his cabinet with liberals. A key player in the Panic team who has aroused the special hatred of Mr Milosevic's supporters is the new Justice Minister, Tibor Varadi, a liberal and an ethnic Hungarian to boot.

To complement his youthful Serbian liberals, Mr Panic has shipped over from California a group of advisers and public relations consultants entrusted with the task of transforming the dismal relations between the Serbian leadership and the foreign press.

Out have gone the threatening phone calls and 'anonymous' hate messages left on foreign journalists' telephone answering machines. In have come offers of free trips on Mr Panic's plane to China. David Calef, one of Mr Panic's new US imports, describes his boss as dynamic, loving and exciting. Vague on the subject of borders, and all those bearded guerrillas in the Croatian hills, he says of Mr Panic: 'He just can't wait to deal with this economy.'

Mr Panic's recipe is simple. Sanctions must be lifted now. The Milosevic men, those seedy Communist bosses and mafia figures, must clear out. Serbia must promptly fulfil all the demands of the international community. If that means recognising Croatian frontiers, then the sooner it is done the better. It is a hateful message to the old regime.

Inside Serbia, although he seems set on slaughtering all Serbia's sacred cows at once, Mr Panic is popular. In the latest poll, 82 per cent of Belgraders said they approved of their new Prime Minister. His charisma, heavy American accent, flashy manners and a reputation as a multi-millionaire create a kind of awe. Many Serbs view him as a Mr Fixit with the Midas touch. 'If anyone can get us out of this mess it is Panic,' is a typical remark on the street.

His popularity may have caused Mr Milosevic to back off from publicly joining the assault in parliament. He was also saved by the refusal of President Cosic to join in the attack. Mr Cosic is a sentimental old nationalist and the bugbear of Serbian liberals, who see him as the high priest of Greater Serbianism. Mr Cosic finds Mr Panic's keenness to stitch up a deal with the Albanians and Croats painful. So his support for Mr Panic is a sign that Mr Milosevic's star is waning.

The new Prime Minister has survived his first big battle. He has not won the war. Many of the big vested interests in Serbia, the state company chiefs, the state media, the apparatchiks, the police, a segment of the army, the nationalist paramilitaries, the war profiteers, the Serbs from Croatia, are umbilically linked to Mr Milosevic.

But key figures in the Serbian establishment, in the Orthodox church and in the prestigious Academy of Arts and Science, who formerly backed Mr Milosevic are switching allegiances. Mr Markovic sneers at Mr Panic's supporters. 'They are the kind of people who cannot live without foreign holidays and imports.' The old men of Serbia will not see their man, and their interests, go down before this imported whizzkid without a fight.

(Photograph omitted)