Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Yugoslavia Opts for Rejuvenation

BELGRADE, Yugoslavia -- Serbia and Montenegro signed an historic accord Thursday that will radically restructure Yugoslavia, giving the nation a new name and its republics greater autonomy to prevent the country's final breakup.

The agreement, reached under mediation by the European Union, was signed by Yugoslav President Vojislav Kostunica, Montenegrin President Milo Djukanovic, EU foreign policy chief Javier Solana and other Serbian and Montenegrin officials.

The new country, consisting of two semi-independent states, will be renamed Serbia and Montenegro, said Serbian Prime Minister Zoran Djindjic. Both republics will share a defense and foreign policy but will maintain separate economies, currencies and customs.

"The new country would be neither a federation nor a confederation, but would represent a new original solution," Kostunica said earlier Thursday.

Kostunica told reporters that the political accord calls for new federal elections in the autumn, and that the parliaments of both republics were set to work on constitutional changes.

"This is a new beginning in relations between Serbia and Montenegro," Kostunica declared. "We have reached an agreement which is acceptable for both Serbia and Montenegro."

Kostunica said his office as federal president would remain and the country would have one seat in the United Nations, just as Yugoslavia does now.

Montenegro agreed to set aside its drive for a referendum on independence that was to be held this May, Djindjic said, adding: "We accept reality as it is."

The West opposes Montenegrin secession, fearing the breakup could encourage independence-minded groups in the region -- in particular, ethnic Albanians in Kosovo and Macedonia.

Arguing that secession would hurt Montenegro's economy and slow down the process of integrating it into mainstream Europe, the EU was pushing for a new Yugoslav constitution that would preserve a joint state while granting the two republics greater self-governance.

Both republics agreed that for the time being, at least, Montenegro could maintain the euro as its currency instead of the Yugoslav dinar used in Serbia.

Djukanovic, who advocates independence for Montenegro, rejected the Yugoslav dinar in exchange for the German mark two years ago. Since January, the euro has circulated as the republic's official currency.

Montenegro's 650,000 people are divided on whether to stay in a federation with Serbia, whose 8 million inhabitants effectively determine Yugoslav affairs.

Serbia and Montenegro stayed together when four other republics started leaving Yugoslavia in the early 1990s, but their alliance began to crumble in 1997 when Djukanovic distanced himself from then-Yugoslav President Slobodan Milosevic and began advocating independence for Montenegro.