Serbian President Losing To Nationalist Challenger

(Reuters) - Serbia's rightist opposition leader Tomislav Nikolic was leading in a presidential run-off on Sunday against liberal incumbent Boris Tadic by 50 percent to 47.7 percent, according to a preliminary unofficial projection based on a 30-percent vote sample.

In a vote marred by opposition accusations of fraud, Tadic had been tipped to defeat Nikolic for the third time since 2004 as Serbia slowly sheds the legacy of a decade of war and isolation under late strongman Slobodan Milosevic.

A Tadic victory would have kept power firmly in the hands of his Democratic Party, which is trying to form a new ruling coalition to tackle rising unemployment and economic stagnation in the former Yugoslav republic.

But opposition allegations of fraud in parliamentary and first-round presidential elections two weeks ago could cause an upset, or cast a shadow over the result if Nikolic carries out a threat to call supporters into the streets.

This time we'll watch every single polling station, Nikolic said after voting in the Socialist-era Novi Beograd (New Belgrade) municipality of the capital Belgrade. Serbia does not deserve a president suspected of stealing.

Election authorities and foreign monitors found no evidence of the 500,000 votes Nikolic says were forged in the May 6 elections. The Democratic Party has accused him of trying to stir unrest.

Nikolic is a former member of the ultranationalist Radical Party and was in government with Milosevic when Serbia was bombed by NATO in 1999, but since last losing to Tadic in 2008 he has tried to reinvent himself as a pro-European conservative.

His unproven accusations will cause unease in the West, which is weighing up whether Nikolic's conversion to the ultimate goal of EU membership is genuine. Diplomats say they are unsure about the substance of his policy.

Early signs suggested turnout would be low, which analysts say will suit Nikolic, whose voters are seen as more disciplined. Three hours after polls opened at 7 a.m., turnout was 8.4 percent, 2.6 percent down on May 6.

After all the unfulfilled promises and corruption under Tadic, I believe Serbia needs to be refreshed and that's why I voted for Nikolic, said Miodrag Petrovic, a 38-year-old marketing executive.

Nikolic's Serbian Progressive Party says its monitors will confiscate ballot boxes and close polling stations if they observe irregularities.

Tadic, who beat Nikolic by less than one percentage point in the first round, says his opponent's change in direction is purely cosmetic.

Handing power to Nikolic, he says, would slam the brakes on reform and reverse the process of reconciliation between Serbia and its ex-Yugoslav neighbors since Milosevic's ouster in 2000.

Today is a crucial day, Tadic, 54, said after voting in the heart of Belgrade's upmarket old town. It's an opportunity for us to reaffirm the orientation of the country towards the European civilization.

The lean, tanned and telegenic Tadic, campaigning in rolled-up sleeves and open-necked shirt, is seen as a safe pair of hands in a region that has seen enough loose cannons.

Nikolic, 60, is a dour former cemetery manager. A stiff and uninspiring orator, his straight-talking, man-of-the-people manner nevertheless appeals to rural Serbs and voters tired of the grinding transition from socialism to capitalism.

Nikolic is a man of the past, said Ksenija Govedarica, 54, a schoolteacher. Tadic is also feeble and unconvincing, but I voted for the lesser evil. And at least Tadic is much better looking.

At least rhetorically, the two sides differ little in economic policy or their approach to Kosovo, Serbia's former province where Belgrade is propping up a de facto ethnic partition four years after the Albanian-majority territory declared independence.

The EU made Serbia, with a population 7.3 million, an official candidate for membership in March, and could set a date for talks early next year if Belgrade takes steps to improve relations with Kosovo.

A Nikolic victory would likely usher in a difficult period of cohabitation with a Democrat-led government. Under the constitution, the prime minister is more powerful than the president, but the head of state can hold up legislation.
Nikolic's party narrowly won the parliamentary vote but the Democrats, who came second, are widely expected to finalize a coalition deal with the Socialist Party once led by Milosevic and form a government.

Nikolic accuses Tadic of overseeing a creeping culture of cronyism, deepening government control over the media and an economic slide that has seen unemployment reach 24 percent.

The economy will struggle to avoid stagnation this year, pummeled by the crisis in the euro zone, the Balkans' main source of investment and trade.

Political uncertainty has seen the dinar currency fall 5.81 percent against the euro this year, and in January the International Monetary Fund froze a standby loan deal over Serbia's rising budget deficit and public debt.