Milosevic offered support by allies in Montenegro

A day into his presidency, Vojislav Kostunica faces challenges to his authority in parliament and his choice of prime minister

Cronies of the deposed Yugoslav president, Slobodan Milosevic, threw a spanner in the works of the new administration of Vojislav Kostunica on his first day in office yesterday.

Cronies of the deposed Yugoslav president, Slobodan Milosevic, threw a spanner in the works of the new administration of Vojislav Kostunica on his first day in office yesterday.

The pro-Milosevic party in Montenegro, Serbia's sister republic in the Yugoslav federation, insisted that it would remain in coalition with Slobodan Milosevic's Socialist Party - thus allowing Mr Milosevic's allies to keep their parliamentary majority.

This would provide President Kostunica with a political nightmare: a democratic presidency cohabiting with Mr Milosevic's wounded but not yet dead government.

The Montenegrin SNP has flirted heavily with the opposition in recent days, but now appears to realise that it can substantially raise its price, because its support is essential.

The Montenegrin alliance with the Socialists still looks likely to fall apart in due course. But the pro-Kostunica DOS coalition may have to make uncomfortable compromises if it is to persuade the Montenegrins to come on board. Predrag Bulatovic, vice-president of the SNP, said yesterday that his namesake (but no relation) Momir Bulatovic, a long-time Milosevic supporter, should remain Prime Minister. The DOS coalition would like to see the Belgrade non-party economist, Miroljub Labus, installed. It could be the recipe for an unholy Balkan mess.

Despite the confusion, there were clear signs yesterday that Serbs were beginning to believe that normality may be on the way. The Yugoslav dinar, which has been in free fall in recent weeks because of fears of violence and civil war, almost doubled its street value against the Deutschmark, which is used in Belgrade as a standard second currency. In the latest signal that Belgrade is rejoining the world, the European Union looks likely to lift its sanctions against Yugoslavia today.

The swearing-in ceremony on Saturday night of President Vojislav Kostunica was a reminder both of the surreal transformation that has sopeacefully taken place, and of the political chaos that remains.

The ceremony at the Sava Centre, where the Yugoslav Communist Party used to hold its congresses, was originally scheduled for 5pm, but was delayed for hours while the various parties haggled over coalitions and the legitimacy of MPs' mandates. MPs bustledthrough the smoke-filled lobbies, some accompanied by bodyguards, marching from one crisis meeting to the next.

The chaos continued at the swearing-in itself. Ceiling panels slid open to reveal the members of the lower house of Parliament, the Chamber of Citizens. Then, however, the panels closed again, rendering the MPs invisible once more.

The list of attendees included not just the MPs from both parliamentary chambers, and religious leaders, but also the military leadership, including Nebojsa Pavkovic, chief of staff of the armed forces. It was Mr Pavkovic who arranged the meeting on Friday night between Mr Kostunica and Mr Milosevic, at which Mr Milosevic finally admitted defeat. Indeed, the only really important absentees at the ceremony were Mr Milosevic and his wife Mira, also an MP.

Milo Djukanovic, President of the republic of Montenegro, who has said that a Kostunica government would be "illegitimate", was not invited.

President Kostunica is not a man to set the world alight - which is perhaps one of his greatest assets. Yugoslavia has been ablaze too many times in the past decade. Dullness, and a dogged sense of decency, may prove to be his strongest suit. In his swearing-in speech on Saturday night, he emphasised the need for a culture in which both sides would talk to each other. He clearly hopes to persuade Mr Milosevic's Socialists to remain on board the democratic process, instead of becoming - as they theoretically could - a destabilising force.