Serbia calls crucial May 11 election

By Ellie Tzortzi

BELGRADE (Reuters) - Serbian President Boris Tadic disbanded parliament on Thursday and called an early general election for May 11, widely seen as Serbia's most important vote since the fall of Slobodan Milosevic in 2000.

The 10-month old government collapsed at the weekend, with nationalist Prime Minister Vojislav Kostunica blaming deep disunity in his coalition with pro-Western liberals over defending Kosovo versus pursuing a place in the European Union.

"The election is a democratic way for citizens to say how Serbia should develop in the years to come," Tadic, also the head of the pro-Western Democratic Party, said in a statement.

He appealed for "a fair campaign in a peaceful and democratic atmosphere in order to enable Serbia to get stable institutions that will work efficiently."

The election will be a close race between Tadic's Democrats and the nationalist Radicals, Serbia's strongest party, who are seen to have gained further on Serb bitterness over Western backing for Kosovo's secession last month.

The forecast is that neither grouping will get more than 45 percent, producing a hung parliament. Kostunica, who appears to have lost voters to both rival blocs and has just 10 percent support, could emerge as kingmaker.

Analysts say lengthy coalition talks would delay reforms and erode investor confidence, already shaken by Belgrade's recall of ambassadors from states that recognised Serbia's former province and by protests against embassies and foreign firms.

Standard & Poor's revised its outlook on the country to negative earlier this week, noting the impact that an anti-EU government would have on macroeconomic policy and reforms.