BELGRADE, Jul 9 (IPS) - Two months after the May 11 elections dubbed as "crucial" for country's future, Serbia has now a pro-European coalition government made of former arch-enemies -- the Democrats of President Boris Tadic and the Socialists of late leader Slobodan Milosevic -- and parties of minority ethnic Hungarians from the north and Bosniaks living in south-western Serbia.

"This government is not a simple marriage of convenience, it's a marriage of strong interest," analyst Zoran Stojiljkovic told IPS. "From the beginning of talks between the Democrats and Socialists, it was defined as pro-European, socially responsible. Both parties strongly put an accent on that in their coalition agreement, although their rapprochement looked like an earthquake on the political scene." 

The new Prime Minister is Mirko Cvetkovic, a low profile Democrat and economist. He has promised quicker economic reforms, European Union (EU) membership and improved living standards for the nation of 7.5 million. 

These issues are mutually linked, and mostly depend on the international community, which has clearly repeated that Serbia's cooperation with the International Criminal Tribunal for former Yugoslavia (ICTY) is a precondition for any EU ambitions. The ICTY was set up to try war criminals. 

The remaining three suspects still at large from the wars of the 1990s are Bosnian Serb leader Radovan Karadzic, his army commander Ratko Mladic, and Croatian Serb Goran Hadzic. 

Once the issue of cooperation with the ICTY is solved, access to EU funds will be quicker, and candidate status given, top EU officials say. 

A well-informed EU diplomatic source in Belgrade, who requested anonymity, told IPS that candidate status could be "accepted by October, if all goes well." 

Serbs went to the polls in a hastily called election after the government of former prime minister Vojislav Kostunica, in coalition with President Tadic's Democrats, collapsed due to insurmountable differences. 

The collapse came shortly after the southern province of Kosovo declared independence from Serbia in February. Kostunica stood for cutting all ties with Western countries that recognised the newly created entity, regardless of the cost to the nation. 

Tadic's Democrats stood for continued links with the West, particularly aiming at European Union (EU) membership. 

The Democrats came out of the elections with the largest number of MPs -- 102 out of 250 in the parliament, but with a need for a coalition partner. The only possibilities were 20 Socialists from the party of late leader Slobodan Milosevic, and seven MPs from Hungarian and Bosniak minority parties. 

Such a coalition faced strong objections within a deeply divided public. 

The Democrats are held responsible for ousting Milosevic in 2000 and handing him over to the ICTY in 2001. He died in detention there in 2006 while still on trial. 

Milosevic sympathisers objected to Socialists – that were his party – teaming up with the Democrats. They said the Socialists' natural option would be the ultranationalist Serbian Radical Party that ranked second in the elections (78) and the conservatives of Kostunica's Democratic Party of Serbia (30). 

"Socialist leader Ivica Dacic was smart," analyst Dusan Pavlovic told IPS. "For that party, which he aims at turning into a modern leftist one, the real choice was between the past and the future. He chose the future. He was fully aware that no economic development could come from any other policy than cooperation with the EU." 

The weeks of talks between Democrats and Socialists focused on economic and social issues. Serbia has seen slow economic recovery since the ousting of Milosevic. 

"It will not be easy for Cvetkovic to fulfil the promise of 200,000 new jobs, but it is good to hear the word 'reforms' again," analyst Dimitrije Boarov told Belgrade Radio B92. "Without continued reforms there is no sustainable development for Serbia." 

Many blame the previous Kostunica governments (2004-2007 and again 2007-2008) for placing Kosovo above the economy. The Kostunica government also turned the country towards Russia, relying on its political support in denying Kosovo independence. 

The polling agency Strategic Marketing says that in June, 80 percent of Serbs were preoccupied with economic matters. Forty-five percent said they first want unemployment down; 35 percent said their major problem is the poor standard of living. 

For the new government, Kosovo remains a "diplomatic issue," as Cvetkovic told Parliament. He said Serbia will not recognise the independence of Kosovo, but he did not use strong language on the issue. 

"It all looks to me as if we are turning a new page," Zorana Stojanovic (42), a vendor at a Belgrade food store told IPS. "There is definitely a change of generation in Serbian politics -- Milosevic is dead, Dacic is young, 42, ambitious, speaks about Europe. Cvetkovic -- we hardly heard about him. We're now seeing something completely new here."