BELGRADE, May 12 (Reuters) - Serbia and Montenegro should be building a strong and stable democracy deserving of a place in the European Union and NATO but its leaders right now lack the vision, the United States ambassador said on Friday.
Michael C. Polt said 2006 would be a momentous year for the union of two republics that is all that remains of Yugoslavia. It must hand over a top war crimes fugitive, negotiate a new future for the province of Kosovo and settle its own status.
In a statement to Reuters, Polt said the country needed its leaders to show courage, boldness and initiative.
"Serbia and Montenegro's leaders need to articulate and act on a strong, realistic vision for the future, a future in the European Union and in (NATO's) Partnership for Peace," he said.
The country should be "a leader in the Balkans, an example of prosperity and a keystone of regional stability", he said.
"But right now, I don't see that vision."
Instead, Brussels had this month suspended talks on closer ties because of Serbia's failure to hand over war crimes fugitive Ratko Mladic and Washington "may soon be forced to suspend aid" for the same reason, Polt said.
"Mladic must go to The Hague -- not next week, not in September, not by the end of the year, but now."
Mladic, the wartime commander of the Bosnian Serb Army, is wanted on two charges of genocide in the 1992-95 Bosnian war, for the 1995 Srebrenica massacre of 8,000 Muslims and the siege of Sarajevo which took over 10,000 civilian lives.
The United Nations war crimes tribunal prosecutor says he is hiding in Serbia with protection from hardliners in the military and intelligence services. But local analysts generally doubt his arrest would lead to unrest or political instability.
CLEARING THE AIR
However, failure to deliver Mladic this month opened a big crack in Serbia's two-year-old minority coalition. Deputy prime minister Miroljub Labus walked out of the cabinet of Prime Minister Vojislav Kostunica, saying he had betrayed the people.
The resignation -- applauded by Polt -- stoked talk of a coalition collapse leading to an early election -- a possibility that analysts say would not be unwelcome to those of Serbia's western mentors who favour a clearing of the political air.
Polls consisently show one third of voters in Serbia back the hardline nationalist Radical Party, but whether it could win sufficient allies to form a government is another question.
Polt urged the current leadership to display responsibility and vision as strains pile up, with Montenegro deciding its future in an independence referendum on May 21.
The rules say the referendum fails if less than 55 percent chose independence. But pro-independence leaders see 50 percent or more as a mandate to continue the drive for a separate state. "The decision of voters in Montenegro on May 21 is only part of the story," Polt said. "The world is watching how Serbia and Montenegro will handle the referendum results, and whether its leaders will choose to work together."
He also urged Serbian leaders to persuade Serbs that the cherished province of Kosovo -- populated by a 90 percent ethnic Albanian majority and under U.N. administration for the past seven years -- would have its future decided this year.
It must be "a decision ... that respects the rights of all of Kosovo's residents. And Serbia's leaders must work to gain the people's support for that decision", he said.
Kosovo is widely expected to win a form of conditional independence at the conclusion of U.N.-mediated talks this year. The question is whether Belgrade will acquiesce or carry out a threat to declare the province "occupied territory".
"How Serbia and Montenegro handles these three issues will have a decisive impact on its path to regional integration and economic prosperity. It will have a decisive impact on the future of the country, and future of its people," Polt said.