Kostunica vowed to end Yugoslavia's international isolation

As a result, Belgrade has been allowed to return its forces to a previously demilitarised zone along Serbia's boundary with Kosovo.

And after nearly 10 years of fruitless negotiations with Bosnia-Hercegovina, Croatia, Macedonia and Slovenia, it has finally reached an agreement on dividing up the assets of the old Yugoslavia.

On the domestic front, the return of Belgrade's security forces to the region bordering Kosovo has helped put an end to the conflict with ethnic Albanian guerrillas in the Presevo Valley.

Kosovo deadlock

However, no progress has been made in resolving the dispute over Kosovo's future status. In next month's elections, the ethnic Albanian majority is expected to vote overwhelmingly for parties that want independence from Belgrade.

More immediately, talks over the future of the Yugoslav federation remain stalled as Serbia and its junior partner, Montenegro, remain deeply divided over what shape their association should take.

Failure to reach a compromise in the coming weeks could lead to Montenegro going ahead with a referendum on independence early next year. A vote for independence would spell the end of the Yugoslav federation - and would also leave Mr Kostunica without a job.

For most Serbs the political changes - however desirable - have not been matched by any visible improvements in their financial circumstances

Differences between Serbia and Montenegro have been echoed by divisions within Serbia's governing coalition.

President Kostunica and Prime Minister Zoran Djindjic have been at odds over a number of issues.

This came to a head in June over the extradition of Mr Milosevic to the war crimes Tribunal in The Hague - a move that was pushed through by Mr Djindjic's Serbian Government in the face of opposition from Mr Kostunica.

For his part, Mr Milosevic is now awaiting trial on war crimes charges in The Hague, where he is continuing his defiance of the tribunal which he refuses to recognize.

Economic woes

For most Serbs, though, the political changes - however desirable - have not been matched by any visible improvements in their financial circumstances.

Inflation - heading for 50% by the end of this year - and unemployment at 20% both remain obstinately high.

Meanwhile, average household incomes are under $150 a month.

Although Serbia's major foreign partners have pledged to give over $1.2bn in reconstruction aid, there have been long delays in transferring the badly-needed money.

Many Yugoslav workers believe standards of living have not improved

Foreign investors have been kept away by the continuing uncertainty over Yugoslavia's future and the often paralysing divisions within the Serbian Government.

Growing discontent has been signalled by a strike this week at the Kolubara open cast mines - an action launched, paradoxically, by the same workers who helped bring down Mr Milosevic a year ago.

There is increasing concern that if Serbia fails to get a large injection of foreign aid in the near future, discontent may spread.

And that could undermine some of the remarkable - though only partial - achievements of the past year.