By
The Associated Press
BELGRADE, Yugoslavia - President Vojislav Kostunica met yesterday with a senior U.S. envoy - the first high-level contact between the two governments since Belgrade broke relations with the United States last year on the eve of the NATO bombing campaign.
The meeting between Kostunica and Balkan envoy James C. O'Brien followed welcome news from Washington for the moribund Yugoslav economy. President Clinton announced yesterday he was lifting an oil embargo and a flight ban on Yugoslavia imposed in 1998 after former President Slobodan Milosevic launched a crackdown on Kosovo Albanians.
"The victory of freedom in Serbia is one of the most hopeful developments in Europe since the fall of the Berlin Wall," Clinton said. "It ended a dictatorship and it can liberate an entire region from the nagging fear that ethnic differences can again be exploited to start wars and shift borders."
Kostunica also met with Italian Premier Giuliano Amato, the first head of government to travel to Belgrade since Kostunica took office Saturday.
"The factors that distanced Yugoslavia from a democratic society are now gone ... This enables us to work as friends on the task of reintegrating Yugoslavia into international institutions," Amato said after the meeting.
Even as Kostunica reached out to the West, he kept a close eye on political developments within Yugoslavia, where Milosevic supporters tried to stem the steady erosion of their power.
Milosevic's Socialist Party said its hard-line secretary-general, Gorica Gajevic, had been replaced by the more moderate Zoran Andjelkovic, head of the Serb-run Kosovo government.
Serbian President Milan Milutinovic was named the party's vice president. Milosevic apparently remained at the helm despite losing the presidency, and the Socialists also called a party congress for Nov. 25.
Later today, Beta news agency quoted Socialist official Miloje Mihajlovic as saying Milosevic would resign and that further changes in the party were "necessary."
There were also signs of a rift between the Socialists and their neo-communist allies, the Yugoslav Left, the party of Milosevic's influential wife Mirjana Markovic. Both parties said unlike in last month's elections, their candidates would run independently in the next Serbian vote.
The shake-up could mean Milosevic is trying to regroup and consolidate his followers so he can remain a political player.
Prominent analyst Bratislav Grubacic, however, suggested Milutinovic might be trying to take over Milosevic's party by sacking its staunchest hard-liners.
"The final showdown with Milosevic will be at the party congress," Grubacic said.
Allies of the current and ousted president are locked in a power struggle as Kostunica seeks to dismantle the last vestiges of Milosevic's authoritarian regime and open ties to the West, which will be a key factor in revitalizing the moribund Yugoslav economy.
The lifting of the oil embargo will help relieve terrible shortages of fuel. However, "the embargo has been leaking for some time," said Leo Drollas, chief economist at the Center for Global Energy Studies in London.
The head of Croatia's Adriatic oil pipeline operator, JANAF, Ante Cicin Sain, said the company could begin supplying oil to Yugoslav refineries soon.
In addition to economic support, the West also moved to provide Kostunica with a political boost.
"We also talked about relations between our two countries and I think our open and warm discussions of the issues that have intruded on our relationship set a good tone," O'Brien said after meeting Kostunica.
"We hope our relations will normalize.. it's now different," Kostunica said.
But Kostunica still faces a host of domestic political obstacles to full consolidation of his power.
Kostunica's camp has set a tomorrow deadline for Milosevic's loyalists to agree to form a transitional government in Serbia and call early elections in December. Serbia is Yugoslavia's dominant republic and Milosevic's allies still hold a majority in the republic's parliament.
The deadline was set after attempts by Milosevic officials to reclaim control of the 100,000-strong Serbian police and government posts the ousted president's followers still hold.
