Milosevic 'in plot to oust Panic'

THE Serbian leader, Slobodan Milosevic, plans to rid himself of the reformist team of Milan Panic, the Yugoslav Prime Minister, and to reassert his grip on Serbian politics before the year is out, say sources in his ruling Socialist Party.

The plan is to start with Mr Milosevic resigning as President of Serbia next month, and taking the theoretically less important but no less powerful post of leader of the large Serbian Socialist Party - the former Communists. In an interview with the Independent after the London conference on Yugoslavia, Mr Milosevic insisted that he did not plan to retire from politics, as had been hinted recently, and that he was sure of electoral victory.

The Socialist Party expects to win November's elections in Serbia using the tightly controlled media to fend off any challenge from fractious opposition groups. Party insiders dismissed reports that Mr Panic poses a threat to Mr Milosevic's five-year leadership, saying Mr Panic can be useful, but is at worst a harmless nuisance.

His usefulness lies in getting sanctions against Serbia lifted. If he succeeds, Mr Milosevic's project of forging a Greater Serbia, at the cost of thousands of lives, will appear vindicated. But if he fails to get sanctions lifted, Mr Panic is expected to be out by the end of the year.

Mr Milosevic's party can expect to win any vote of confidence in Mr Panic's record. With or without sanctions, they say Mr Milosevic remains firmly in power. Sources in the ruling party say Mr Panic is bluffing when he claims army support. They admit that Mr Panic has forged links with army and air force heads, but say the officer corps remains solidly behind Mr Milosevic.

A vote of no confidence in Mr Panic would probably be preceded by a media boycott - of the kind to which the last federal premier, Ante Markovic, was subjected before his removal last year. Mr Panic's supporters say he is aware of the dangers awaiting him, in the form of a no-confidence motion, if sanctions against Serbia are not lifted soon. However, there is little chance that they will be. Instead, Western countries are working on measures to close sanctions-busting loopholes.

Mr Panic is said to be preparing a trump card against Mr Milosevic: a snap referendum, when voters will have to choose between Mr Milosevic and himself.

Mr Panic appointed five new ministers yesterday. Ilija Djukic was made Foreign Minister and Dragan Jovanovic was brought in as Finance Minister.