The war crimes trial of the former Bosnian Serb leader is a triumph for the delicate diplomacy patiently pursued by Belgrade's new government

As the crisis in the Caucasus threatens to lead to a new Cold War, Radovan Karadzic’s court appearance in front of the International Criminal Tribunal for the Former Yugoslavia will remind the world of another recent conflict in former communist Europe.

The former Bosnian-Serb leader's second court hearing, following his arrest in July, will undoubtedly lead to fresh debates about the future status of Bosnia, still internally divided under the terms of the 1995 Dayton peace agreement. But it is Serbia that holds the key to the region’s stability, due to its size, geographic position and links with large Serb communities in neighbouring states.

As 2008 began, prospects for Serbia seemed bleak. In Kosovo, the majority Albanians were preparing for independence. In January's presidential election, president Boris Tadic faced a serious challenge from Tomislav Nikolic, leader of the ultra-nationalist Serbian Radical Party.

Both Tadic and Nikolic publicly rejected independence for Kosovo but the president argued that Serbia would continue to pursue a pro-European course regardless. Nikolic – joined by then prime minister Vojislav Kostunica – warned that Serbia would abandon its road to the EU if the West recognized Kosovo. Tadic was re-elected - but only just.

Kosovo's declaration of independence in February and its almost instant recognition by Washington, London, Berlin and Paris seemed to deal another serious blow to Tadic's pro-western forces. That is why the country's parliamentary elections in May were hailed as historic.

Defying expectations, the Democrats emerged as comfortably the largest party, while the Radicals and Kostunica's Democratic Party of Serbia fared far worse than had been projected. With only 39 per cent of the vote, though, the Democrats still risked being outmaneuvered by a coalition between the Radicals, Kostunica and the Socialist Party of Serbia once led by Slobodan Milosevic.

Following nearly three months of negotiations with both sides, the Socialists finally lent their support to the Democrats, enabling Tadic's close ally Mirko Cvetkovic to form a cabinet in July. Serbia finally had a pro-western government, albeit with Ivica Dacic, Milosevic’s successor as the Socialists’ leader, as interior minister and vice-premier.

Tadic received strong criticism in Serbia for allying his party with the Socialists. The president’s domestic critics feared Dacic’s appointment would result in the Socialists taking over intelligence services, that Milosevic and the old regime would be rehabilitated, and that the country would gradually slide back to the 1990s.

But Karadzic’s arrest and its timing suggest that Tadic possesses political skills his critics had failed to appreciate, sending a powerful signal to the West – and to his right wing opponents at home – that Belgrade is taking a new course.

Karadzic's capture also makes the arrest of his former military commander, General Ratko Mladic, more likely than ever before. A genuine reform of Serbia's infamous intelligence services seems to be finally taking place, with a new head being appointed only days after the government was formed and the relatively small, if violent, demonstrations that broke out after Karadzic was apprehended suggested that right wing nationalists would not be able to destabilize the government in the event of Mladic’s detention.

As for Dacic, the arrest of Karadzic has shown that the interior minister is willing to remain in a government that cooperates with The Hague, despite his continued public criticism of the tribunal.

Tadic has been able to defeat his domestic opponents partly because most Serbs are tired of nationalist rhetoric and want the better living standards which they believe EU membership would bring.

Kosovo is still an important issue, but one wonders how many Serbs would object so strongly to the region’s independence if the international community handled the whole issue more sensitively. Even the traditionally nationalist Serbian Orthodox Church is divided over Kosovo, with a majority faction favouring cooperation with whoever governs the province.

The Serbian president has also attracted some of the nationalist vote by maintaining that Kosovo is still part of Serbia. On 15 August, Belgrade submitted a draft resolution to the UN seeking the International Court of Justice’s opinion on whether Kosovo’s declaration of independence was legal.

The ICJ ruling would not be legally binding, but should it declare Kosovo’s independence illegal, countries that have not yet recognized the new state might be even more reluctant to do so (at present around 50 countries recognize Kosovo, including the US, the UK, France and Germany, but excluding Russia, China, Spain and India).

It remains to be seen whether the Caucasus conflict will affect the ongoing dispute. Superficially, the crises appear very similar, with the two major powers involved apparently switching roles: the US advocating Kosovo's independence at the expense of Serbian territorial integrity; Russia advocating South Ossetian and Abkhazian sovereignty at Georgia's expense.

Kosovo Albanians and Serbs have adopted relatively neutral positions in that dispute. Albanians are aware that the Americans have been their chief allies but can sympathize with South Ossetian and Abkhaz aspirations.

Serbs, on the other hand, surely recognize that Moscow’s justification for intervention in Georgia could have been copied from a NATO manual produced during the 1999 bombardment of Serbia, yet Russia is Belgrade’s main ally over Kosovo.

For the time being, Tadic and the Serbian government appear to have achieved a fine balance between a pro-western and a patriotic discourse at home. Internationally, Belgrade maintains friendly relations with Moscow, but remains committed to western integration and full cooperation with The Hague. Karadzic’s appearance at the court will remind everyone of the latter.

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