For a city that has been invaded some forty times, Belgrade is in surprisingly good shape. Elegant shops in its tree-lined streets do brisk business, notwithstanding official unemployment of around thirty per cent. Beggars are fewer than in large English towns and usually old. Young, able-bodied beggars would get little sympathy as there is said to be plenty of what is called "private work" available.

For a country which ten years ago printed a 500 billion Dinar note and saw its value fall from six to two dollars on its day of issue, the present inflation rate of around fifteen per cent represents a high level of fiscal prudence. Private citizens can exchange their new Dinars for any currency at
the numerous bureaux de change.

The process of privatisation goes slowly and many parts of the economy are sclerotic. Whilst cash is freely convertible at bureaux and savings banks, travellers' cheques fall within the state commercial banking system and the process of changing them is long drawn out, taking three bank officials a total of well over one man (or rather woman) hour. Contrary to the only
guidebook I could find in Britain, street cash machines are now back in use.

The huge grain harvest of the fertile, flat, northern Voivodina region is purchased by a state monopoly at low prices. Its export provides a substantial part of Serbia's foreign exchange and government revenue. This sort of arrangement is slow to change and many people are impatient of sluggish economic and political progress. Salaries in state organisations are low. We were told that clocking on, catching the boss's eye and then departing for more lucrative work is widespread, as a second or third income is necessary to stay afloat. The dominance of the cash economy takes liquidity out of the banking system and reduces its ability to provide finance for business development. That said, home grown produce is cheap and plentiful.

The Federal Republic of Yugoslavia is no more. The country is now called Serbia-Montenegro (Srbija-Cernagora, SCG on car number plates). With EU encouragement, Montenegro has adopted the Euro as its currency and asserted control over its own taxes and customs. It is not quite clear what functions are left to the central government of the combined state. Rugged Montenegro was a beacon light of independent Christian Serbdom during the long night of
Turkish rule and was internationally recognised as a state until in 1918 it joined what eventually became Yugoslavia.

Serbia itself now consists of the semi-autonomous region of the Voivodina which includes a Hungarian minority and is subject to irridentist claims by ethnic Germans who were expelled in 1945, Serbia proper and Kosovo-Metohija which is effectively an EU protectorate under UNMIK (United Nations Mission in Kosovo). This administration and the armed forces supporting it have not gone out of their way to protect the remaining Serbian minority from attacks by the Albanian Muslim majority.

To the West of Serbia, Bosnia-Hercegovina, inhabited by Croats, Serbs and Bosniaks, is ruled by a similar arrangement with Paddy Ashdown as the EU's Gauleiter. His power over all institutions is akin to that awarded to Strephon by the Fairy Queen in "Iolanthe"

"Every Bill and every measure,
That may gratify his pleasure,
Though your fury it arouses,
Shall be passed by both your Houses"

At the beginning of August, in the teeth of Serb and Croat opposition, a law concerning the status of war veterans defined the Muslim war dead as "Shahid" - that is as martyrs for Islam in a holy war (Jihad) against unbelievers. Ashdown's multiculturalism is decidedly lop-sided and he is determined to saddle the Serbs with the major war guilt for atrocities. At the recent reopening of the old Turkish bridge at Mostar, he sanctioned a parade dressed as Turkish Janissaries. To the Christian Serbs and Croats alike (who together outnumber the Muslim Bosniaks), this was about as culturally sensitive as an SS parade in Tel Aviv - the emollient, multicultural presence of Prince Charles notwithstanding. Every public employee from Minister to dog catcher holds office only with Ashdown's permission.

The most recent Kosovan pogrom occurred on March 17th when there were massive co-ordinated attacks on Serbs and their churches. Over thirty Serbs died and hundreds were injured. The commander of the Italian contingent had occasion to complain of the supine, unsoldierly conduct of German troops who did little to intervene.

UNMIK has not honoured its side of the peace agreement which provides that Serbian forces should be responsible for the external borders of Kosovo, nor has it effectively disbanded the Kosovo Liberation Army (which has large drug dealing and criminal elements). To give an idea of how this feels in Serbia, imagine that the South East of England had received a wartime influx
of Muslim immigrants and that their numbers had increased to the proportions of central Leicester or Bradford. As this was happening, the highly devolved regional administration used planning regulations and tax payers' money to buy up the homes of Englishmen and offered them only to Muslims. Add in the sort of thuggery suffered by Unionists in Southern Ireland during the Twenties and in "mixed" areas of Northern Ireland today. You will then get some idea of the Serbian predicament.

Churches and cathedrals of comparable status to Canterbury, Winchester and Salisbury are sited in Kosovo. UNMIK does not protect them adequately and the Muslim Albanians take every opportunity to blast them into powder so that no Serbian trace will remain. This is happening on ground as central to Serbia's national history as Runnymede, Westminster, Hastings and Naseby
combined are to England's .

It was Marshal Tito who favoured the Albanians and permitted those settled in Kosovo during German occupation to stay. They were then offered incentives to have large families. The present Serbian government is cooperating fully with UNMIK whilst keeping its diplomatic options open. Realistically they know that Kosovo cannot go back to its previous status but they are not willing to see it totally amputated from Serbian national territory.

The Serbs had the misfortune to be subject to Muslim aggression before the Americans experienced their rude awakening on September 11th 2001. They also have a poisoned inheritance from the communist era. Marshal Tito, himself a Croat, wanted to ensure that Serbia did not predominate in communist Yugoslavia, as had tended to be the case in the pre war kingdom of Yugoslavia. He also had a score to settle because Serbian resistance to the
Nazis had formed around the royalist army and not the communist partisans.

So he drew the administrative boundaries in such a way as to reduce the size of Serbia itself and to place large minorities of Serbs in the surrounding republics which made up the federation. John Prescott has much the same idea in balkanising England into trumpery regions, approximately similar in population to Scotland and Wales.

Whilst Tito's writ ran, this did not make too many problems in united Yugoslavia. Serbs, Croats and Bosniaks speak only slightly differing dialects of the same language. In some areas, rates of intermarriage between these groups approached twenty per cent.

The Western powers chose to look upon Tito's politically correct, gerrymandered boundaries as the sacrosanct basis for the successor states. Where they have not been expelled, Serbs within the new states are unwelcome minorities. Two million live west of the Drina and it would surely make for greater stability if they were politically reunited with the Serbian state.

In the most extreme example of racial persecution in post war Europe, some 800,000 Serbs were ethnically cleansed from The Krajina and other regions of Croatia. With the assistance of German arms, US airpower and the Vatican's blessing Croatia became the most ethnically and religiously "pure" state in Europe - and now an acceptable candidate for EU membership.

Despite all this, the atmosphere in Belgrade is relaxed and cosmopolitan. Croatian democrats, fleeing the wrath of their dictator Tudjman, made a bee-line for Belgrade and members of the other ethnic groups of Yugoslavia continued to live there throughout the troubles. In the face of Western media manipulation, this long-standing tolerant hospitable tradition is quite overlooked. The plight of the refugees, up to a million of them including Jews, Gypsies and Turks has slipped from international consciousness.

Nonetheless Serbia is working hard to democratise the structures inherited from communism , to normalise its relations with the successor states and with the surrounding Balkan countries which ganged up with NATO. There is a strong aspiration to join NATO and the EU, as it looks like a club within which it would be impossible to be again the outcast, the attacked and the despised. Small numbers of tourists have started to arrive from Slovenia and Croatia. "Everything is regulated there" our guide explained "and they like to come and relax here where things are a bit more ...balkan". (Note that such regulation and control are the hallmarks of corporatist and fascist systems - precisely those political systems which, dating from the last conquest by German Europe, fascist Italy and catholic bigotry in the Balkans! - ed)

The government is headed by Boris Tadik, successor to (the former Marxist German placeman) Zoran Djindic who was assassinated in March. Tadic had previously served as Minister of Communications and Defence Minister. His Democratic Party is fully committed to liberalisation, NATO and the EU. The elections had to be held three times because less than fifty per cent of the electorate bothered to turn out. This requirement was dropped on the third ballot.

The main opposition, known as the Radicals, are headed by Tomislav Nicolic, a former ally of Slobodan Milosevic. He was ahead in the first round of voting but his Serbian Radical Party received just over 45% of the vote in the final ballot, compared to 53.5% for the Democratic Party.

The abstention rate of over 50% probably represents a realistic fatalism on the part of the voters. The politicians, the EU and NATO will stitch up the country one way or another and there is not much to be done but to let them get on with it. Municipal elections were held on Sunday 19 September with much the same result - a narrow win for the Democrats but on a turnout of
less than 50% - so the whole thing will have to be done again. A country grammar school near Novi Sad in the Voivodina, polling station for a large surrounding area, was almost deserted around midday although the market place outside was thronged with people who had come in for the fair to celebrate the new vintage. The Apathy Party won hands down.

That is a continuing problem for democratic legitimacy, perhaps an attitude borne of defeat. For a non Serb speaker it is difficult to know how people are really feeling. Manners are polite and reserved, rather pleasant and not unlike the England of fifty years ago. It is difficult to square this with such a turbulent political history in which only one ruler of the last century managed to die in bed.

There is a paradox too in the enthusiastically pro EU stance of people like our tourist guide, the son of one of Tito's partisans - a man who regrets the break-up and sees Germany's hand in it clearly. We were discussing Prague and the preservation of its old town compared with Belgrade's harder fate. "Of course" he said "The Czechs surrendered and the Germans just
marched in, so there was no damage. That could never happen here". If Serbia achieves its government's aim to join the EU, what will happen when this sturdy nation finds out that it has been taken over just as thoroughly by European Treaty as by invasion and occupation?