Breaking News: Serbian government sacks Kosovo policy coordinator

BELGRADE, Aug 25 (Reuters) - The Serbian government on Thursday sacked its Kosovo policy coordinator because his party, a member of the ruling coalition, failed to support a crucial reform law which scraped through parliament this week.

A statement said that Nebojsa Covic, who heads the leftist Social Democratic Party (SDP), would be relieved of his duties as president of the coordination centre for Kosovo and another body for southern Serbia's Presevo region.

A source close to Covic said the sacking had nothing to do with the close vote but was really about Prime Minister Vojislav Kostunica's determination to remove Covic, seen as a hardliner, from coming talks on the future of disputed Kosovo province.

"This is the start of the handover of Kosovo," the source told Reuters. Kosovo's 90 percent ethnic Albanian majority is demanding independence from Serbia.

Covic refused to comment on his sacking, telling state news agency Tanjug that he was still on holiday.

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On Monday, Kostunica's coalition survived a vote on the future of the state-run oil monopoly NIS after assuring trade unions and opposition parties that restructuring of the company did not mean swift privatisation.

The coalition only just achieved a parliamentary quorum of 126 deputies for Monday's vote in the 250-seat parliament, with 122 deputies voting in favour.

Kostunica on Wednesday asked officials of Covic's SDP to resign from government posts, saying they had acted like an opposition party and not as members of the government.

Two party officials, including Labour Minister Slobodan Lalovic, dissociated themselves from the party and sided with the government while the others refused to resign and said they would wait for Kostunica to sack them.

Kostunica's centre-right minority coalition had 109 seats in parliament when it came to power in March 2004. They rely on the opposition Socialists of Slobodan Milosevic, with 22 seats, for voting majorities. Covic's SDP commands just two seats.

The government also asked for the dismissal of SDP official Slobodan Orlic, the information secretary for the union of Serbia and Montenegro. His removal, however, would have to be endorsed by the union government.

Orlic said that from next Monday the SDP would launch a fierce opposition campaign.

Serbian Economy Minister Predrag Bubalo said the government now had a small but stable majority. "Once it loses that majority it will call an election," he told reporters.

Political analyst Slobodan Antonic told B92 radio that every deputy's vote in parliament would now carry greater weight as the government struggled to stay afloat.