Order Code RS21686
Updated January 5, 2006
CRS Report for Congress
Received through the CRS Web
Conditions on U.S. Aid to Serbia
Steven Woehrel
Specialist in European Affairs
Foreign Affairs, Defense, and Trade Division
Summary
In each of the past six fiscal years (FY2001-FY2006), Congress has conditioned
U.S. aid to Serbia on a presidential certification that Serbia has met certain conditions,
including cooperation with the International Criminal Tribunal for the Former
Yugoslavia (ICTY). The second session of the 109th Congress may consider similar
certification provisions in the FY2007 foreign aid bill. Supporters of aid conditionality
say such provisions may have spurred Serbia’s cooperation with the Tribunal. While
the certification process continues to enjoy support in Congress, the Administration
appears to favor ending it soon. This report will be updated as events warrant. For more
information on Serbia and Montenegro, see CRS Report RL30371, Serbia and
Montenegro: Current Situation and U.S. Policy, by Steven Woehrel.
Background
In each of the past six fiscal years (FY2001-FY2006), Congress has conditioned U.S.
aid to Serbia after a certain date of that year on a presidential certification that Serbia has
met three conditions. They are cooperating with the International Criminal Tribunal for
Yugoslavia (ICTY); ending support for separate Bosnian Serb institutions; and protecting
minority rights and the rule of law, including the release of political prisoners. The
provision also has recommended that U.S. support for loans from international financial
institutions to the Federal Republic of Yugoslavia (the now-defunct federation of Serbia
and Montenegro) be conditioned on the certification. The certification does not apply to
aid to Montenegro, now Serbia’s partner in a loose union simply called “Serbia and
Montenegro,” or Kosovo, which is nominally a Serbian province but is administered by
a U.N. mission. The provision also has not applied to humanitarian or democratization
aid to Serbia.1 The amounts of aid affected by these conditions may be relatively modest
in the context of the global U.S. aid program, but are significant for Serbia and
1 Another provision in foreign operations appropriations bills in recent years has dealt with U.S.
aid to Serbia (in the FY2006 bill, it is Section 561). It has conditioned U.S. aid to all countries,
entities and municipalities in the region on cooperation with the ICTY. However, this provision
has not been the main stumbling block to aid to Serbia, due to extensive use by the
Administration of waiver authority in the legislation.
Congressional Research Service ˜ The Library of Congress

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Montenegro. In FY2001, the United States provided $133.8 million in aid to Serbia, and
$106.7 million was provided in FY2002. The Administration allocated $110 million for
Serbia for FY2003 and $95 million in FY2004. The FY2005 foreign aid measure
provided $73.6 million for Serbia, and the FY2006 bill provided $70 million. SEED aid
is being used to help Serbia establish a free market economy, including advice on
restructuring the banking sector, privatizing large firms, assisting legislative and judicial
reform, and providing credit facilities to help small business and develop a mortgage
market. Other SEED aid is aimed at strengthening democratic institutions and civil
society, including local government. The certification process typically affects only a
modest portion of the amount allocated for any given year, due to the deadline being set
in March of the fiscal year or later, and the exclusion of humanitarian and democratization
aid.
In addition to U.S. bilateral aid, the aid conditions have said that the United States
“should” vote against financing from the international financial institutions, a key source
of funding for Serbia. However, despite this provision, Serbia’s non-cooperation with
the ICTY does not seem to have affected its access to international loans, such as those
from the IMF and World Bank. Moreover, the European Union, a key aid donor, has not
explicitly conditioned its aid to Serbia on war crimes cooperation.
On the other hand, the impact of the aid conditions are boosted by Western policies
that limit Serbia’s Euro-Atlantic integration until Belgrade cooperates with the ICTY.
The United States has ruled out Serbia’s membership in NATO’s Partnership for Peace
program until indictee Ratko Mladic is in ICTY custody. Although the European Union
opened talks on a Stabilization and Association Agreement with Serbia and Montenegro
in October 2005, it has said that it will not sign the agreement unless Serbia cooperates
with the ICTY. Both of these programs are stepping stones to possible NATO and EU
membership for Serbia in the future.
Serbian Compliance FY2001-FY2005
Since the overthrow of the Milosevic regime in late 2000, Serbian cooperation with
the ICTY has followed a similar pattern each year: Serbia delivers several indictees to the
Tribunal just before or, at most, a few weeks after the certification deadline. The
Administration makes the certification as required by the legislation, and urges Serbia to
do more, in particular calling for the surrender of Mladic and fellow indictee Radovan
Karadzic. However, Serbian cooperation then slows, with Serbian leaders claiming that
political and legal obstacles preclude greater efforts. Nevertheless, more indictees are
delivered as the next deadline for certification approaches, and so on.
For example, the conditions on U.S. aid to Serbia were an important factor in the
timing of the arrest of Milosevic by Serbian police on April 1, 2001, one day after the
March 31 certification deadline set by the FY2001 legislation. When making the
certification on April 2, Secretary of State Colin Powell warned that U.S. support for an
international aid conference for Serbia would depend on Milosevic’s delivery to the
Tribunal. Milosevic was delivered to the Tribunal in The Hague on June 28, 2001, one
day before the donors conference. Serbian cooperation then decreased significantly. The
FY2002 deadline passed without certification, but Serbia encouraged six indictees to
surrender to the Tribunal in late April and early May 2002. The Administration made the
FY2002 certification on May 21, 2002.

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The FY2003 foreign aid appropriations measure was included as part of the
Consolidated Appropriations Resolution for FY2003 (P.L. 108-7). The bill contained
certification provisions on aid to Serbia similar to the FY2001 and FY2002 bills, and
required the President to make the certification by June 15, 2003. In a demonstration of
the power of dangerous forces threatening cooperation with the ICTY and democracy in
Serbia, on March 12, 2003, Serbian Prime Minister Zoran Djindjic was assassinated.
Investigators discovered that the crime was committed by organized crime figures who
reportedly feared prosecution for war crimes and other criminal activities. Djindjic’s
murder appeared to galvanize Serbian leaders in the fight against organized crime leaders
and war criminals. Indictees Miroslav Radic, Veselin Sljivancanin, paramilitary leader
Franko Simatovic, and former intelligence chief Jovica Stanisic were turned over to the
ICTY in May and June 2003. Secretary of State Powell made the FY2003 certification
on June 15, 2003.
It should be noted that ICTY cooperation is only one of the three conditions for U.S.
aid to Serbia. However, in FY2001-FY2003, the Administration accepted the assurances
of Serbian authorities that they had ended support to separate Republic Srpska institutions
(which had included paying the salaries of RS army officers). Neither this condition, nor
the third condition, dealing with minority rights and the release of ethnic Albanian
political prisoners, has proved to be a stumbling block to certification, particularly after
the release of Kosovar prisoners from Serbian jails in March 2002.
The FY2004 foreign operations appropriations bill (incorporated into H.R. 2673, an
omnibus appropriations bill) contained the same certification provisions as previous years,
requiring the President to make the certification by March 31, 2004. The Administration
did not make the FY2004 certification and suspended $16 million in FY2004 aid to
Serbia.
The FY2005 foreign aid appropriations were incorporated into an omnibus spending
bill (P.L. 108-447). It contained the same certification process as previous years, with a
deadline of May 31, 2005. In January 2005, the Administration announced that because
there had been “no improvement” in Belgrade’s cooperation with the Tribunal, the United
States would withhold $10 million in FY2005 aid from Serbia. U.S. Ambassador to
Serbia and Montenegro Michael Polt said that the aid cuts could lead to the withdrawal
of U.S. technical advisors from Serbian ministries working on such issues as World Trade
Organization membership and economic reform. However, an Administration spokesman
noted that the remaining portion of the $73.6 million in aid to Serbia would still go to
“organizations and programs outside of the central government that are committed to
reform.”2
On June 9, 2005, the Administration certified that Serbia had met the conditions set
out in the FY2005 legislation, freeing up the $10 million that had been suspended in
January. In the first half of 2005, Serbia transferred 14 indictees to the ICTY, according
to ICTY Chief Prosecutor Carla Del Ponte. However, Del Ponte and U.S. officials
continued to note with regret that Mladic and Karadzic were still at large.
2 Statement by Richard Boucher, Spokesman, January 13, 2005, from the State Department
website [http://www.state.gov].

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FY2006 Legislation and Serbian Compliance
The conference version of FY2006 foreign operations appropriations bill (H.R. 3057)
was approved by the House on November 4 and the Senate on November 10. It was
signed by the President on November 14, 2006 (P.L. 109-102). Section 563 contains the
Serbian aid conditions. The provision conditioned U.S. aid to Serbia after May 31, 2006,
on “(1) cooperating with the International Criminal 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 all practicable efforts to
apprehend and transfer Ratko Mladic and Radovan Karadzic, unless the Secretary of State
determines and reports to the Committees on Appropriations that these individuals are no
longer residing in Serbia; (2) taking steps that are consistent with the Dayton Accords to
end Serbian financial, political, security and other support which has served to maintain
separate Republika Srpska institutions; and (3) taking steps to implement policies which
reflect a respect for minority rights and the rule of law.” It says the Administration
“should” vote for loans and aid for Serbia and Montenegro from international financial
institutions after May 31, 2006, if the certification is made. The aid conditions do not
apply to Montenegro, Kosovo, humanitarian aid, or assistance to promote democracy.
The provision is identical to that in FY2005, with a few exceptions. First, it
specifically names Karadzic as well as Mladic as persons Serbia should detain. Second,
it allows the Administration to issue a certification even if the two men are not
transferred, if it determines that the two are not living in Serbia. (The exact whereabouts
of the two men are uncertain. Mladic is widely assumed to be living in Serbia under the
protection of former and serving military and security officials. Most speculation on
Karadzic’s location places him in Bosnia.)
In a December 2005 report to the U.N. Security Council, ICTY Chief Prosecutor
Carla Del Ponte said Serbia’s cooperation with the Tribunal had “deteriorated” since her
last report in June 2005, which provided an upbeat assessment of Serbian compliance.
She said that, although some government agencies are cooperating well with the ICTY,
the Army of Serbia and Montenegro has been particularly unhelpful, including on such
issues as access to documents. Moreover, Del Ponte said the Serbia continues to lack a
“serious” action plan to transfer the remaining fugitives to the Tribunal. Of the six
remaining fugitives sought by the ICTY, Del Ponte said that Mladic, Karadzic, and three
other indictees are “within reach” of Serbian authorities (the sixth indictee is in Russia).3
In January 2006, the Serbian government admitted that Mladic had been drawing a
Serbian Army pension as late as mid-November 2005.
U.S. Policy
Although it has used the aid conditions to extract at least partial Serbian cooperation
with the ICTY, the Administration has shown signs of impatience with the certification
process and what the Administration believes is the seemingly open-ended nature of the
ICTY’s prosecutions. The Administration favored shifting responsibility for prosecuting
all but a handful of major war crimes cases from the ICTY to Serbian courts. The United
3 For a transcript of Del Ponte’s remarks to the Security Council, see the ICTY website,
[http://www.un.org/icty].

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States, along with other countries, successfully pushed for the adoption of U.N. Security
Council Resolution 1503 in August 2003. The resolution calls for ICTY to complete its
trials by 2008 and all appeals by 2010. The United States is assisting Serbia’s efforts to
prosecute war criminals itself by providing assistance in such areas as helping to set up
witness protection programs, providing training to judges and contributing funds to help
establish a new Serbian court to try organized crime and war crimes cases.
In addition to the aid conditions, the Administration has also used positive
inducements to show Serbia the benefits of a better U.S.-Serbia relationship that would
follow from ICTY cooperation. For example, in November 2003, the Administration
certified that Serbia and Montenegro is eligible for Normal Trade Relations (NTR) with
the United States. The FRY’s NTR status was suspended in 1992, in response to its role
in the war in Bosnia, according to the terms of P.L. 102-420 (106 Stat. 2149). The
legislation permits the Administration to restore NTR to Serbia and Montenegro if the
President certifies that the FRY had ceased armed conflict with other peoples of the
former Yugoslavia, agreed to respect the borders of the former Yugoslav states, and ended
support to Bosnian Serb forces.
Administration officials say the move was made in response to the improved
situation in Serbia, especially in defense reform and cutting links between the Serbian and
Bosnian Serb armed forces. Serbian officials hailed the restoration of NTR, saying it
would give a significant boost to Serbia’s exports to the United States in such areas as
furniture, hunting rifles and pharmaceuticals. One Serbian leader added that the granting
of NTR was more important to Serbia than the aid certification issue.4 In June 2005, after
the FY2005 aid certification, the Administration announced that it had granted duty-free
treatment to some products from Serbia and Montenegro under the Generalized System
of Preferences (GSP).
Some have argued that certification has played an important role in encouraging
Serbian leaders to deal with difficult issues that they would have rather avoided. Serbia’s
democracy will be healthier in the long run, proponents of certification say, if Serbs come
to terms with the war crimes issue, especially since those supporting the war criminals
continue to be threats to reform and reformers, as demonstrated by the murder of Prime
Minister Djindjic. On the other hand, it can be argued that while they may be positive for
Serbia in the long term, the aid conditions have been a domestic political liability for
Serbian reformers. Serbian leaders complain that what they see as unending Western
demands upon them reduce their credibility in the eyes of the Serbian public. Cooperation
with the Tribunal has aggravated tensions among reformers, but it should be noted that
it is only one of many issues dividing them, which include poor economic performance,
scandals, and personal ambitions of their leaders. Moreover, skeptics of the certification
process claim that it hinders accomplishment of the most important U.S. goal in the
region, which is the Euro-Atlantic integration of Serbia and other countries in the region.

The FY2004 and FY2005 certification provisions and resulting suspension of some
U.S. aid to Serbia were slower to improve Serbian cooperation with the ICTY than in past
years, although some cooperation did eventually take place. A key reason is the political
situation in Serbia. The current Serbian government, elected after December 2003
4 Tanjug news agency dispatch, November 2, 3003, as carried by BBC Monitoring International.

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elections, is a minority government of democratic parties, led by Prime Minister Vojislav
Kostunica, leader of the moderate nationalist Democratic Party of Serbia (DSS). The
most controversial aspect of the government is its dependence on support from the
Milosevic’s Socialist Party of Serbia (SPS), which does not have ministers in the
government but provides it with a majority in parliament. SPS leaders have repeatedly
threatened to bring down the government if it transfers indictees to the Tribunal. If the
government falls in 2006, it could be replaced by one headed by the ultranationalist
Radical Party, particularly if the issue of Kosovo’s status, currently under negotiation, is
settled in a way that most Serbs see as a defeat for Serbian national interests. The Radical
Party would be unlikely to cooperate with the ICTY. On the other hand, a victory by the
pro-Western Democratic Party, headed by Serbian President Boris Tadic, could lead to
better ICTY cooperation.

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